BAKER v SEVEN SEAS LIMITED [2021] NZCA 150

BAKER v SEVEN SEAS LIMITED [2021] NZCA 150 [3 May 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA655/2020[2021] NZCA 150BETWEEN TREVOR BAKER and MARY ANNASMITH as trustees of the TREVOR BAKERand MARY ANNA SMITH FAMILYTRUSTApplicantsAND SEVEN SEAS LIMITEDRespondentCourt: Clifford and Courtney JJCounsel: D J G Cox for ApplicantsS J Tee for RespondentJudgment:(On the papers)3 May 2021 at 2.00 pmJUDGMENT OF THE COURTThe application for extension of time to appeal is declined.____________________________________________________________________REASONS OF THE COURT(Given by Clifford J)Introduction[1] This is an opposed application for an extension of time1 in which to file an"as-of right" appeal against a decision of Associate Judge Sargisson at the High Court1 Court of Appeal (Civil) Rules 2005, r 29A.in Auckland setting aside in part a statutory demand issued against the respondent,Seven Seas Ltd.2Background[2] The applicants Trevor Baker and Mary Smith are trustees of their family trust(the Trust). The Trust leases part (one-half) of a commercial property to therespondent, Seven Seas Limited. Seven Seas operates a franchise "pack and send"business from those premises.[3] On 19 July 2019 the Trust invoiced Seven Seas for rent and outgoings totalling$16,635.89 (GST inclusive). Of that amount $5,865.02 comprised Auckland CityCouncil rates for the full year 1 July to 31 June 2020. That amount reflected a discountavailable to the Trust if those rates were paid in advance, rather than by the permittedmonthly instalments.[4] Seven Seas paid part of the invoiced sum, $7,344.96, on 29 July 2019.Seven Seas said it was not liable to reimburse rates payments other than, in arrears, ona monthly basis.[5] The Trust subsequently served a statutory demand on Seven Seas for thebalance of $9,290.93, and a further $402.50 for the cost of issue and service of thestatutory demand, a total of $9,693.43. On receipt of that demand Seven Seas paid thefull amount demanded to its solicitors' trust account, raised its dispute and invited theTrust to withdraw its demand.[6] Some time later, Seven Seas paid a further $2,546.16, leaving $7,147.27 owingunder the statutory demand of which all but the $402.50 related to Council rates.[7] Seven Seas then applied for the statutory demand to be set aside. The Judgefound there was a genuine dispute as to the rates component of that amount because,at the time of its issue, the Trust's obligation to pay those rates had not accrued.3On that basis, the only amount undisputed and outstanding under the statutory demand2 Seven Seas Ltd v Baker [2020] NZHC 616 [High Court judgment].3 At [20].was the $402.50 for the incidental costs of the issue and service of the statutorydemand.[8] The Judge upheld the demand for that amount, set it aside from the balanceand noted that, in default of the payment of the $402.50, the Trust could apply to putSeven Seas into liquidation.4 As to costs, the Judge said that as the parties were eachin effect successful in part, costs should lie where they fell.5[9] That judgment was dated 24 March 2020. On 31 March Seven Seas paid the$402.50 into the Trust's bank account. In giving judgment the Judge also noted thatthe technicality on which she had recognised a dispute, non-accrual, had by the timeof her judgment fallen away: the rates had by then become due and payable. On thatbasis the Judge indicated that Seven Seas would be well advised to pay the outstandingamount of the original invoice.6 Counsel for Seven Seas advises that amount wassubsequently paid in full.[10] It is common ground the judgment was not received at that time by theapplicants' solicitors. An email error (typo) was responsible but was not detected,principally due to Covid implications it would appear. The applicant's solicitorsfinally received the judgment on 12 October 2020.[11] The Trust's solicitors, having finally received the judgment, prepared theirapplication for leave to appeal, their notice of appeal and the affidavit in support by6 November 2020.[12] As a result of an administrative oversight those documents were not served onthe respondents, nor dispatched to this Court, until 10 November 2020. They wereaccepted for filing on 12 November 2020 — two working days outside the recalculatedcut-off date,7 based on delivery/actual receipt on 12 October 2020, of 10 November.Hence this application.4 At [37].5 At [38].6 At [39].7 The usual time to appeal is 20 working days from the date of the judgment: Court of Appeal (Civil)Rules 2005, r 29(1)(a).Analysis[13] The Trust has — subject to the grant of an extension of time — the right toappeal the Associate Judge's decision.8 In terms of the Supreme Court authority inAlmond v Reed, the delay (two days) is minimal and itself causes no prejudice to therespondent.9 At this point, the merits are rarely relevant, much less determinative.Accordingly, such an extension would normally be granted, with an award of costs tothe Trust.[14] However, this is an unusual situation and we are satisfied that this is one ofthose unusual circumstances in which, notwithstanding the short period of delay andthe absence of prejudice to the respondent, leave to commence this appeal out of timeshould be declined.[15] At the time of the Trust's original statutory demand, the respondent paid theamount then disputed into its solicitors' trust account. That went a considerable wayto demonstrating its solvency, even though it was not a complete answer to thestatutory demand. Moreover, in our view it is significant that, followingAssociate Judge Sargisson's judgment Seven Seas paid that part of the invoice relatingto the Auckland City Council's rates, having earlier also paid the $402.50 incidentalcosts confirmed by the Associate Judge as owing under the notice of demand.[16] There is, therefore, no point in the appeal other than, as the applicantsacknowledge, if it is shown the Judge was wrong to have found a genuine dispute overthe respondent's liability at the time of the statutory demand for the payment of thoserates. Then, rather than costs lying where they fall on that application, the applicantswill argue costs should have been awarded in their favour.[17] But, in our view, there is little if any prospect of the applicant's challenge tothe Associate Judge's decision setting aside the statutory demand succeeding. As theJudge noted, the terms of the lease held to apply required Seven Seas to pay outgoings"properly and reasonably incurred in respect of the property".10 The Judge's8 Senior Courts Act 2016, s 56(1)(a).9 Almond v Reed [2017] NZSC 80 at [39(b)].10 High Court judgment, above n 2, at [16].conclusion that, in effect, whilst the Trust had an option to pay rates in advance thoserates had not been incurred at the relevant time appears orthodox.[18] Furthermore, this relatively minor dispute has already involved not only theHigh Court, but also the Disputes Tribunal, to a surprising extent. Whilst neither partyis without fault, we accept on the basis of the affidavit evidence before us that aspectsof the Trust's behaviour — including writing to Seven Seas' master franchisee,franchisee support, accountant and business affiliates — demanding unusual forms ofundertaking from Seven Seas, indicates a lack of objectivity as to the significance ofthe matters involved. Pursuing an appeal against the Associate Judge's decision, givenall that has now transpired, does likewise. That too counts against the grant ofthis extension.Result[19] The application for extension of time to appeal is declined.Costs[20] The applicant sought costs. The respondent did not. It is unusual for anapplication for a short extension of time, such as involved here, to be declined. In thecircumstances, we make no order as to costs.Solicitors:Rennie Cox, Auckland for ApplicantsMorton Tee Limited, Takapuna for Respondent