KUMAR v SMARTPAY LTD [2022] NZCA 490

KUMAR v SMARTPAY LTD [2022] NZCA 490 [25 October 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA427/2022[2022] NZCA 490BETWEEN MANAS KUMARApplicantAND SMARTPAY LTDRespondentCourt: Gilbert and Katz JJCounsel: Applicant in PersonD J Chisholm KC and J D Ryan for RespondentJudgment:(On the papers)25 October 2022 at 9.30 amJUDGMENT OF THE COURTA The application for an extension of time to appeal is granted.B The appeal must be brought within 10 working days of the date of thisjudgment.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)[1] Mr Kumar applies for an extension of time to appeal against an interimjudgment of Downs J delivered on 13 May 2022.1[2] Following a four-day hearing in May 2022, the Judge found that Mr Kumarhad breached his duties under ss 131, 135 and 136 of the Companies Act 19931 Smartpay Ltd v Kumar [2022] NZHC 997 [High Court judgment].(the Act) as a director of 4468440 Ltd (previously known as Optimizer CorporationLtd) (in liquidation) (OCL).2 Smartpay Ltd is a creditor of OCL and brought the claimpursuant to s 301 of the Act. The judgment was interim because the Judge acceded toSmartpay's request in closing submissions to hold a separate hearing on the questionof quantum.3 The quantum hearing was originally scheduled to be heard on22 August 2022. However, that hearing was adjourned because counsel for Mr Kumarwas granted leave to withdraw. Downs J directed that the matter be heard not earlierthan 26 September 2022.4 As far as we are aware, the question of relief has not yetbeen determined.[3] Smartpay opposes the application for an extension of time to appeal. It arguesthat the proposed appeal has no merit and raises no issues of significance to the partiesor generally, there is no legitimate reason for the delay, Mr Kumar and entitiesassociated with him have a history of delaying court proceedings and Smartpay isprejudiced by the continuing delay because it anticipates that Mr Kumar will usethe appeal as a means of resisting payment of any quantum award.[4] The question as to whether an extension of time to appeal should be grantedunder r 29A of the Court of Appeal (Civil) Rules 2005 ultimately depends on whatthe interests of justice require in the particular case. The factors likely to requireconsideration were set out by the Supreme Court in Almond v Read as includingthe length of the delay, the reasons for it, the conduct of the parties (particularlythe applicant), any prejudice and the significance of the issues raised by the proposedappeal, both to the parties and more generally.5 It is not normally possible to makemore than a superficial assessment of the merits of the proposed appeal in the contextof an application to extend time. For this reason, the merits will not generally berelevant, except in clear cases.6[5] For the reasons briefly summarised below, we are persuaded that a shortextension of time to appeal should be granted.2 At [42].3 At [66]–[68]; and Smartpay Ltd v Kumar HC Auckland CIV-2020-404-1775, 14 June 2022(Minute No 3).4 Smartpay Ltd v Kumar HC Auckland CIV-2020-404-1775, 22 August 2022 (Minute No 4).5 Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].6 At [39(c)].[6] The application for an extension of time was filed on 22 August 2022,approximately 10 weeks out of time. The delay is therefore reasonably significant.However, it seems clear that Mr Kumar wanted to appeal against the judgment shortlyafter it was delivered and sought to do so.[7] Within days of receiving the judgment, Mr Kumar asked counsel then actingfor him whether it could be appealed. Junior counsel responded that she would discussthis with senior counsel and respond. Mr Kumar followed up on 17 May 2022 butreceived no substantive response. A month later, on 17 June 2022, counsel soughtMr Kumar's instructions to proceed with an appeal. Mr Kumar confirmed theseinstructions by return. On 21 June 2022, counsel advised Mr Kumar of the costs offiling the appeal. Mr Kumar again confirmed his instructions to proceed.[8] Mr Kumar followed up on 1 July 2022 as to whether the appeal had been filed.Junior counsel advised that the appeal had not been lodged but she was liaising withsenior counsel. Mr Kumar sent a further email seeking clarification on 5 July 2022.Junior counsel again stated that she was waiting for senior counsel to respond.[9] On 21 July 2022, junior counsel again sought instructions from Mr Kumar,advising that the appeal would be filed the following day if he agreed. Mr Kumarresponded promptly, confirming his instructions to proceed. He sought confirmationon 22 July 2022 that the appeal had been filed and followed up on 29 July and 3 Augustafter receiving no response. There was further correspondence with junior counsel on15 August regarding the appeal. Junior counsel sent an email on 19 August attachingthe notice of appeal and advising Mr Kumar that he should file this himself. Mr Kumardid so promptly, filing the appeal on 21 August 2022. Counsel withdrew from actingfor him the following day.[10] In summary, it is clear that Mr Kumar wished to exercise his right of appealimmediately following delivery of the judgment and thereafter made diligent effortsto secure his appeal right. Most, if not all, of the delay appears to have beenattributable to counsel. This is not a case where it could fairly be said that the appellanthas in any way slept on his rights.[11] We do not consider Mr Kumar's conduct (and that of his associated entities) inother litigation has any material bearing on whether an extension of time should begranted in this case. There is nothing about his conduct in connection with the presentappeal that could be seen as disqualifying.[12] It does not appear that Smartpay will suffer any real prejudice if an extensionof time is granted. The concern identified is that Mr Kumar might use the appeal as away of resisting payment of any quantum award. However, an appeal does not operateas a stay of execution.7 In any event, the relevant prejudice is that caused by the delay,not from the fact of the appeal. Once quantum has been determined, Mr Kumar willbe able to appeal against that judgment as of right.8 In that event, both appeals wouldlikely be heard together. The delay in bringing the present appeal is therefore notlikely to cause any material prejudice to Smartpay.[13] In all the circumstances, we are satisfied that it would be unjust to depriveMr Kumar of his right of appeal which he diligently sought to exercise in a timelymanner. The proposed appeal may not raise any issue of general or public importance.However, we accept that the issues are of importance to the parties and the appeal isbrought bona fide. While we are inclined to agree with Smartpay that the appeal doesnot appear to be strong, it would not be safe to dismiss it as being in the clearlyhopeless category on the basis of the very limited information available to us inthe context of the present application.Result[14] The application for an extension of time to appeal is granted.[15] The appeal must be brought within 10 working days of the date ofthis judgment.Solicitors:Claymore Partners Ltd, Auckland for Respondent7 Court of Appeal (Civil) Rules 2005, r 12(1).8 Senior Courts Act 2016, s 56(1).