WARWICK HENDERSON GALLERY LTD V E L WESTON CA CA80/04

WARWICK HENDERSON GALLERY LTD V E L WESTON CA CA80/04 1 March 2005IN THE COURT OF APPEAL OF NEW ZEALAND CA80/04BETWEEN WARWICK HENDERSON GALLERY LIMITED Applicant AND EMMA LOUISE WESTON Respondent Hearing: 14 February 2005 Court: McGrath, William Young and O'Regan JJ Counsel: C H Toogood QC for Applicant P B Churchman and B A Fleming for Respondent Judgment: 1 March 2005JUDGMENT OF THE COURT A. The application for extension of time to bring the appeal will be treated as an application for an extension of time to bring a fresh application for leave to appeal and as a further application for leave. We grant both the extension of time and leave to appeal on the same question of law as is set out in this Court's judgment of 5 July 2004. B. The application for leave to appeal against the costs judgment is declined. C. We award costs to the respondent of $5,000 plus disbursements (including the travel and accommodation costs of counsel, where appropriate) to be agreed by counsel or, failing agreement, to be fixed by the Registrar.REASONS(Given by O'Regan J)Introduction[1] The applicant, Warwick Henderson Gallery Limited, has made two applications which, for convenience, were heard together. The first is an application for extension of time for filing a notice of appeal (leave to appeal having previously been granted by this Court). The second is an application for leave to appeal against a decision of the Employment Court awarding costs to the respondent.Background[2] The background to this matter is set out in the judgment of the Court granting leave to the applicant to appeal against the substantive Employment Court judgment on one question of law: CA80/04, 5 July 2004 at [2]. Leave was declined in relation to other questions of law in respect of which the applicant wished to appeal. [3] Under r 5(3) of the Court of Appeal (Civil) Rules 1997, an appeal must be brought, if leave is given, by the date fixed when the Court grants leave or, if the Court fails to fix a date, within 20 working days after the grant of leave. As no date for the bringing of the appeal was fixed in the judgment of this Court of 5 July 2004, the default position in r 5(3)(b) applied. So the appeal ought to have been brought within 20 working days after the date on which leave was given, namely 5 July 2004. [4] The solicitor acting for the applicant did not arrange for the appeal to be brought as required under r 5(3). There was considerable debate about why this situation arose, but we are satisfied that it is a case of genuine error on the part of the solicitor and propose to deal with the application for extension of time on that basis. There was also some debate about any resulting prejudice to the respondent, but weare satisfied that the delay in bringing the appeal has not caused her substantial prejudice.Costs judgment[5] In the meantime, the Employment Court determined the issue of costs in relation to the substantive Court proceedings. The costs judgment of the Employment Court was, coincidentally, issued on 5 July 2004 (the same day as the date of this Court's judgment granting leave to appeal against the substantive judgment). In that judgment, Judge Shaw awarded costs to the respondent of $39,143, plus disbursements of $2,670. The Judge also set aside a costs determination of the Employment Relations Authority which provided for a payment of costs of $2,500 by the respondent to the applicant, and also set aside an order made by the authority that the respondent contribute $5,500 towards the fees of the forensic expert engaged by the applicant for the purposes of the proceedings in the Authority. [6] Judge Shaw noted that: (a) The respondent had been almost completely successful in her challenge to the outcome of the proceedings in the Authority; (b) The applicant had been responsible for a delay in making disclosure of relevant documentation and this delay added to pre-trial costs and limited the ability of counsel to refine issues before trial; (c) The applicant abandoned a counterclaim against the respondent (alleging conversion) prior to the trial, but the nature of the dispute between the parties about the respondent's entitlement to commission on the sale of paintings meant that detailed evidence was required and the hearing took three days plus a further half day for submissions; (d) The respondent made a Calderbank offer after an unsuccessful mediation. She offered to settle for $16,000. The offer was rejected by theapplicant. A further offer to settle for the same amount was also rejected. The Judge said that the judgment sum of $16,475.95 (calculated on a gross basis) only marginally exceeded the amount of the Calderbank offer. She rejected the applicant's contention that the judgment sum should be assessed on a net basis; (e) The Judge accepted that the very high legal costs incurred by the respondent were properly incurred. She noted that the respondent had faced allegations of serious wrongdoing until the defendant's second counterclaim was withdrawn: she said that this counterclaim should have been resolved following a mediation some months before the trial. She also found that the case was prolonged by the applicant's late introduction of fresh allegations and made more expensive by the late disclosure of relevant documentation.Application for extension of time[7] The application for extension of time to file and serve the notice of appeal was said to be made under r 6(3), but it is clear to us that that rule applies only in cases where an applicant has a right of appeal given by statute. It has no application to cases where the applicant's appeal right has arisen only as a result of leave having been granted under r 5. Counsel for the applicant, Mr Toogood QC, wisely did not press the argument to the contrary: the repeated references in r 6 to "right of appeal" and "the enactment that confers the right of appeal" makes it clear that r 6 has no application in cases where a party is entitled to appeal to this Court only because leave has been granted. [8] As an alternative, Mr Toogood QC suggested that the Court apply r 27, which says that non-compliance with a rule does not render the proceedings void, but those proceedings may be set aside wholly or in part or amended or otherwise dealt with as the Court decides. Counsel for the respondent, Mr Churchman, argued that r 27 could not apply where an appeal had not been commenced, because there were no proceedings before the Court to which r 27 could be applied. We accept Mr Churchman's submission in that regard.[9] Rule 5 itself does not provide for the extension of the time prescribed for appealing. It deals with a situation where the application for leave is out of time, and provides that the Court can extend the time for the application to be brought: r 5(4). But it does not deal with a situation where leave is granted but the appeal itself is not commenced within the specified time period. [10] It is notable that under the proposed new rules currently being considered by the Rules Committee, a successful applicant for leave to appeal to this Court would not be required to file an appeal at all. The new rules provide that, where an application for leave is made and is granted, then the making of the application for leave is treated as the bringing of the appeal. The applicant's solicitor has unwittingly anticipated the proposed new regime. [11] The Court has previously determined that the applicant is entitled to appeal on a question of law. The respondent accepted that the question of law was one which justified the granting of leave. So we are reluctant to allow the applicant's right of appeal to be lost by the inadvertence of its solicitor, in circumstances where we are satisfied that the respondent can point to no substantial prejudice to her position. [12] In our view, the present situation has some similarities to the position of an appellant who has a right of appeal, brings the appeal within the necessary deadline, but then fails to apply for a fixture and file the case on appeal within the six month time limit specified in r 10. Under r 10, an appeal is deemed to be abandoned if that situation arises. However, this Court noted in Airwork (NZ) Limited v Vertical Flight Management [1999] 1 NZLR 29 at 31 that it is theoretically possible for an appellant to begin again by bringing another appeal by special leave, even though the first appeal is deemed to have been abandoned. The Court noted that the Court would be unlikely to exercise its power to grant special leave to commence an appeal again "save in exceptional circumstances". [13] In B Bullock & Co Limited v Matthews (1998) 13 PRNZ 501, the Court was satisfied that the exceptional circumstances threshold was met in circumstances where the appellant failed to meet the time limit for seeking a fixture through agenuine slip, and no hardship had been caused to the respondent. The Court said that the ultimate question was the interests of justice overall, but noted that an applicant for special leave who had previously fallen foul of r 10 must be regarded as "well on the back foot". [14] The Court took a similar approach in State Insurance Limited v Brooker(2001) 15 PRNZ 493 and Board of Governors of Wesley College v Richardson(2000) 15 PRNZ 490. [15] In our view, it is appropriate to adopt a similar approach in situations where an applicant has obtained leave to appeal but has failed to bring the appeal in time. We are satisfied that it is open to the Court to grant a fresh leave to appeal under r 5 in this situation if the interests of justice justify that course. While the power to grant leave to appeal has already been exercised, s 16(1) of the Interpretation Act 1999 provides that a power conferred by an enactment may be exercised "from time to time". In Zaoui v Attorney-General CA166/04 17 September 2004 McGrath J noted at [53] that s 16 is unlikely to authorise a Court to exercise a power afresh in the absence of "some material change in circumstances". [16] We are satisfied that the mistake made by the applicant's solicitor in failing to bring the appeal within the time limit amounts to such a change of circumstances, and that the Court does have the power in this case to grant a fresh leave to appeal. [17] We propose, therefore, to treat the applicant's application as an application for extension of the time for the bringing of an application for leave to appeal and as a fresh application for leave to appeal, and to grant both of those applications. Accordingly the applicant again has leave to appeal against the substantive judgment of the Employment Court on the question of law for which leave was granted on 5 July 2004. For the purposes of r 5(3) we direct that the appeal must be brought within 14 days of the date of this judgment. [18] In the Bullock case, the Court reserved costs to await the determination of the appeal. However, in State Insurance, the Court granted special leave to bring a fresh appeal on terms that, whatever the result, the appellant was to bear its own costs andthe question of the respondent's costs would be determined in the light of the outcome of the appeal. In the Board of Governors of Wesley College case, the Court noted that the appellant may carry a heavier burden of costs that might otherwise be the case should its appeal prove meritless. [19] In the Board of Governors of Wesley College case, the respondent was awarded costs, notwithstanding the granting of leave, because an indulgence had been allowed to the appellant. [20] In the present case we are satisfied that costs should be awarded to the respondent in respect of this application, notwithstanding that we have accommodated the applicant's position: this is clearly an indulgence granted to the applicant and the respondent acted reasonably in opposing the application. The respondent should therefore have an award of costs as a result of the applicant seeking the indulgence. We will deal with the amount of costs later in this judgment.Application for leave to appeal against costs judgment[21] Mr Toogood QC submitted that Judge Shaw had erred in three respects in making the costs award in favour of the respondent, namely: (a) In failing to undertake a proper assessment of the reasonableness of the costs actually incurred by the respondent; (b) In holding, unfairly, that the applicant was responsible for extending the length of the hearing; (c) In penalising the applicant, unfairly, for not accepting a Calderbank offer of $16,000 made by the respondent. [22] Despite Mr Toogood's efforts to persuade us to the contrary, we see all of these points as challenges to the merits of the Judge's decision, rather than as questions of law. We accept Mr Churchman's submission that all three matters were addressed in the interim Court judgment and Mr Toogood's arguments in respect ofeach of them is no more than a criticism of the way the Judge applied the relevant principle, rather than an argument that an error of principle has been made. Accordingly, there is no basis for allowing an appeal in this case because a question of law of general public importance has been raised. [23] Mr Toogood suggested that the Court should grant leave so that costs issues can be dealt with at the same time as the appeal on the merits, given the significance of the costs award in the context of this litigation. He said that this could be done on the basis that s 214(3) of the Employment Relations Act provides for an appeal on a question of law that "for any other reason" ought to be submitted to this Court for decision. We do not accept that submission. First, there is no question of law arising. Second, the fact that there is an appeal before this Court on the merits does not provide an adequate reason for allowing an appeal against the costs judgment which would otherwise not be permitted under s 214(3) of the Employment Relations Act. [24] Accordingly, leave to appeal against the costs judgment is declined.Costs[25] As the respondent has been successful in resisting the application for leave to appeal against the costs judgment, and is entitled to costs in relation to the first application (because the Court has granted an indulgence to the applicant), we award her costs of $5,000, plus disbursements (including the travel and accommodation costs of counsel where appropriate) to be agreed by counsel or failing agreement to be fixed by the Registrar.Solicitors: Richard Harrison, Auckland for Applicant Kensington Swan, Auckland for Respondent