Blackmore v Browne; Kara Kar Holdings Pty Ltd v Blackmore
[2011] NSWCA 114
•02 May 2011
Court of Appeal
New South Wales
Case Title: Blackmore v Browne; Kara Kar Holdings Pty Ltd v Blackmore Medium Neutral Citation: [2011] NSWCA 114 Hearing Date(s): 2 May 2011 Decision Date: 02 May 2011 Jurisdiction: Before: Campbell JA
Decision: 1. On notice of motion filed 11 April 2011, grant extension of time for filing of Notice of Appeal. Applicants to pay costs of notice of motion.
2. On notice of motion filed 21 March 2011, dismiss notice of motion seeking to have appeal dismissed as incompetent. Applicants to pay costs of notice of motion.
[Note: The Uniform Civil Procedure Rules 2005 provide (Rule 36.11) that unless the Court otherwise orders, a judgment or order is taken to be entered when it is recorded in the Court's computerised court record system. Setting aside and variation of judgments or orders is dealt with by Rules 36.15, 36.16, 36.17 and 36.18. Parties should in particular note the time limit of fourteen days in Rule 36.16.]Catchwords: PROCEDURE - extension of time to appeal - principles - order in which application to strike out appeal as incompetent because filed out of time, and application for extension of time, should be dealt with - whether "fairly arguable case" always a requirement - extra risk of late filing of documents not been promptly noticed the cause of change in Registry practice.
APPEAL - extension of time to appeal - principles - order in which application to strike out appeal as incompetent because filed out of time, and application for extension of time, should be dealt with - whether "fairly arguable case" always a requirement - extra risk of late filing of documents not been promptly noticed the cause of change in Registry practice.
APPEAL - leave to appeal - "appeal that involves a matter at issue amounting to or of the value of $100,000 or more" - difference between tests for leave under s 101(2) (r) Supreme Court Act 1970 and tests for appeal as of right to High Court under pre-1984 versions of s 35 Judiciary Act 1903 (Cth) - whether s 101(2) (r) satisfied when an appellant seeks to appeal against two related judgments each for less than $100,000 but together for more than $100,000.
Legislation Cited: Civil Procedure Act 2005
Judiciary Act 1903 (Cth)
Supreme Court Act 1970
UCPRCases Cited: Carson v John Fairfax & Sons Ltd (1991) 173 CLR 194
Dunn v Ross Lamb Motors [1978] 1 NSWLR 26
Gillard v Hunter Wire Products Pty Ltd t/as Hunter Screen Products (No 2) [2001] NSWCA 450
Grygiel v Baine [2004] NSWCA 377
Nanschild v Pratt [2011] NSWCA 85
Sorrell v Kara Kar Holdings Pty Ltd [2010] NSWSC 1315
Tomko v Palasty (No 2) [2007] NSWCA 369
Woollahra Municipal Council v Sved (NSWCA, 24 July 1998 unreported)Texts Cited: Ritchie's Supreme Court Practice
Category: Interlocutory applications Parties: Kara Kar Holdings (First Appellant)
William John Yardy (Second Appellant)
Jennifer Margaret Yardy (Third Appellant)
Christopher William Sorrell (First Respondent)
Tracey Blackmore (Second Respondent)Representation - Counsel: Counsel:
CP Taylor (Appellants)
P O'Loughlin (Respondents)- Solicitors: Solicitors:
Carter Green Lawyers (Appellants)
MBT Lawyers (Respondents)File number(s): 2007/256914 Decision Under Appeal - Court / Tribunal: - Before: Nicholas J - Date of Decision: 16 November 2010 - Citation: Sorrell v Kara Kar Holdings Pty Ltd [2010] NSWSC 1315 - Court File Number(s) 2007/256914 Publication Restriction:
Judgment
HIS HONOUR : There are two notices of motion listed before the Court today. The first in time is a notice of motion that the Respondents filed on 21 March 2011 seeking an order that a Notice of Appeal filed on 22 February 2011 be dismissed pursuant to UCPR 51.41 as incompetent. The second is a notice of motion by the Appellants which was filed on 11 April 2011 seeking an extension of time under UCPR 50.3 (i)(a) for the filing of the notice of appeal to 22 February 2011. The parties have sensibly (and correctly: Woollahra Municipal Council v Sved (NSWCA, 24 July 1998 unreported, final paragraph); Grygiel v Baine [2004] NSWCA 377 at [35]) agreed that the notice of motion filed second in time should be the first that I deal with today.
The Judgments Appealed From
The appeal concerns a judgment of Nicholas J in Sorrell v Kara Kar Holdings Pty Ltd [2010] NSWSC 1315, that his Honour delivered on 16 November 2010. That dispute related to the working through of a proposal for the Respondents to acquire shares that the Second and Third Appellants held in the First Appellant. The Second and Third Appellants had entered into a contract to sell 50% of the shares in the First Appellant to the Respondents in the present appeal. The Respondents were the Plaintiffs in the court below.
The Respondents were New Zealanders who had been agents for sale in New Zealand of products manufactured by the First Appellant. The Respondents came to be employed by the First Appellant while the negotiations for sale were continuing. A contract for the sale of the shares was entered into on 20 September 2006 on the basis that the purchase price was $1.5 million. The first instalment of $400,000 was payable immediately and was in fact paid. The balance was payable at the expiration of 12 months or on completion of the sale by the Respondents of certain other real estate which they held, whichever of those dates arrived sooner. After six months from the date of the agreement the remaining balance was to be subject to interest at commercial bank rates and after 12 months from the date of agreement any unpaid balance was required to be refinanced.
The shares were to be transferred to the Respondents upon payment of the first $400,000. The Respondents were provided with share transfers, but those transfers were not registered.
A letter from the Appellants' solicitors dated 23 April 2007 contended that the Respondents had repudiated the agreement and that they should remove themselves from the business the next day. Before that letter was written the Respondents had been provided with certain financial accounts of the first Appellant which showed that the business had not achieved the sort of results which they had expected it would achieve. The Respondents had entered into some discussions with the Second and Third Appellants about a renegotiation of the contract for sale.
The judge held that the Respondents had not, prior to 23 April 2007, engaged in any repudiatory conduct and that the letter of 23 April 2007 and the Second and Third Appellants subsequently discontinuing the Respondents' access to the company's bank account and premises was itself a repudiation by the Second and Third Appellants.
The judge also upheld an alternative claim of the Respondents that the Second and Third Appellants were not, as at 23 April 2007, entitled to treat the Plaintiffs' failure to pay interest as repudiatory when the agreement did not make time of the essence so far as payment of interest was concerned and no notice had been served making time of the essence in that respect. He allowed damages to the Respondents for breach of contract for sale of shares in the sum of $400,000 plus interest. He also said that that amount was payable on a total failure of consideration.
The Respondents also sued the First Appellant for breach of their respective contracts of employment. The judge held that the First Appellant had repudiated each contract of employment, that the appropriate rate of remuneration under each contract of employment was $75,000, and that the damages should be assessed by reference to what would have been a reasonable period of notice to terminate the contract. He held that the period of notice was, in each case, six months and thus he awarded to each of the Respondents damages of $37,500 plus interest against the First Appellant.
When the judge delivered his reasons for judgment on 16 November 2010 he decided all of the principal matters at issue and, at [96] of his reasons, proposed orders concerning those matters, but did not actually make orders. He left it to the parties to calculate the amount of interest and costs. It was to give effect to their calculations and to decide some other interlocutory questions, that his Honour gave a supplementary judgment on 1 December 2010. Following that judgment his Honour made orders on 1 December 2010. Those orders were entered on 2 December 2010. The " material date ", within the meaning of UCPR 51.2, from which time limits connected with the appeal are measured, was thus the date of making of the orders, 1 December 2010.
In particular, those orders quantified the interest payable by the First Appellant at $12,818.83 for each of the Respondents. Thus the total amount of the judgment in favour of each Respondent against the First Appellant, including the pre-judgment interest, was $50,318.83.
Circumstances of late Filing of Notice of Appeal
On 2 December 2010 the solicitor for the Appellants, Mr Green, held instructions to obtain advice on the prospects of appeal. On 3 December 2010 he forwarded a brief to advise on prospects to counsel. That advice was received from senior counsel on 14 December 2010. On 20 December 2010 Mr Green says that he sought clarification from senior counsel of certain aspects of his advice. He does not give the Court any indication of what clarification was sought.
29 December 2010 was the last day for lodging either an appeal or a Notice of Intention to Appeal in the matter, pursuant to UCPR 51. No Notice of Intention to Appeal has been filed at any time.
On 10 December 2010 Mr Green was advised by his junior counsel that senior counsel was not due back in chambers until 17 January 2011. On 20 January 2011 Mr Green received supplementary advice from senior counsel. On 25 January 2011 that he received instructions from his clients to proceed with an appeal to this Court. It was also on 25 January 2011 that he requested funds from the Appellants for payment into his trust account to cover legal costs of the appeal and Court filing fees. The Appellants paid those amounts to Mr Green on 11 February 2011.
On 11 February 2011 Mr Green also faxed the solicitors for the Respondents foreshadowing an application for leave to appeal. The solicitors for the Respondents replied on 16 February 2011, pointing out that the time for appeal had expired.
Notwithstanding that response, on 18 February 2011 Mr Green sent a Notice of Appeal to the Court for filing. That Notice of Appeal purported to be an appeal as of right. It was filed on 22 February 2011, which was some 55 days out of time. The appeal documents were served fairly promptly after that together with a letter seeking a stay. No stay has in fact been granted or applied for.
On 21 March 2011 the Respondents filed a notice of motion for dismissal of the appeal as incompetent. It was only on 11 April 2011 that the Appellants filed the notice of motion with which I am presently dealing, seeking that the time for appeal be extended until 22 February 2011.
Extension of Time - Principles
The principles concerning extension of time for leave to appeal have recently been considered by McColl JA, with whom I agreed, in Nanschild v Pratt [2011] NSWCA 85 where her Honour said, at [38] - [39]:
"38 The discretion to extend time is given for the sole purpose of enabling the court to do justice between the parties. This means that the discretion can only be exercised upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: Gallo v Dawson [1990] HCA 30; (1990) 64 ALJR 458 (at 459) per McHugh J.
39 The underlying premise to these propositions in Gallo (as is made apparent in Jackamarra v Krakouer [1998] HCA 27; (1998) 195 CLR 516 (at [7]) per Brennan CJ and McHugh J) is that the Court's approach to an application to extend the time for filing an appeal from a judgment determining substantive rights (or here to seek leave to appeal) 'at any time' recognises that 'the respondent to the application has a vested right to retain the judgment' proposed to be the subject of appeal: Jackamarra v Krakouer (at [4]); Tomko v Palasty (No 2) [2007] NSWCA 369 (at [55]) per Basten JA (Hodgson and Ipp JJA agreeing)."
In Tomko v Palasty (No 2) at [55] Basten JA identified four relevant factors in deciding whether to grant an extension of time as being:
·the length of delay;
·the reasons for the delay;
·whether the applicant has a fairly arguable case and;
·the extent of any prejudice suffered by the respondent.
It is also relevant that in Tomko v Palasty (No 2) at [14], Hodgson JA said:
"... there may be circumstances where it is appropriate to go further into the merits of the case of a person seeking an indulgence such as this, than to ask whether or not the case is fairly arguable. If such a person has a reasonable explanation of delay and the opponent does not have a strong case of prejudice, then a fairly arguable case is sufficient. However, if the explanation for the delay is less than satisfactory, or if the opponent has a substantial case of prejudice, then it may be relevant that the person seeking the indulgence shows that his or her case has more substantial merit than merely being fairly arguable."
Ipp JA agreed with the additional remarks of Hodgson JA, so those remarks have the authority of the majority of the Court, and the statement of Basten JA at [55] of Tomko should be read with them in mind.
Extension of Time - Decision
In the present case, the length of delay of some 55 days is, while not trivial, not gross or inordinate. It is also of some significance that the time during which it occurred included the court vacation when it is often difficult for people to obtain advice from the bar. Tending somewhat against the granting of the extension is the fact that even though the material date was 1 December 2010, the reasons for his Honour's decision were known in full detail a fortnight earlier, when the reasons for judgment were delivered on 16 November 2010. Tending somewhat in favour of the extension is that the Respondents have been aware since 11 February 2011 that the Appellants wanted to appeal, and the Notice of Appeal was filed within the 3 months from the material date that would have been allowable if a Notice of Intention to Appeal had been filed. However a Notice of Intention to Appeal was not filed, and no particular explanation is offered as to why the fairly obvious step of filing one was not taken. Nor does Mr Green offer the reason for non-compliance with a time limit that one sometimes see in this sort of case, that the solicitor with responsibility for the matter was not aware of or forgot the relevant rules. The reasons for delay are not particularly powerful ones but, nonetheless, some reasons have been provided.
One other matter should be mentioned. There was a time when the Registry staff in this court would check documents lodged for filing and, if they did not comply with the Rules, would reject them. Now, through what I take to be cost-cutting pressures, the Registry staff will in many cases accept a document without examining or considering it. That change in practice has the effect that a procedural deficiency will in many cases not be drawn to the attention of a lodging party as soon as it would have been in earlier days, and that consequently steps to remedy it will not be taken as soon as they might have been in earlier days. That in turn creates a risk that the longer period of delay in seeking to remedy the breach will make it more difficult for the party who has not complied with the rules to obtain a favourable exercise of the court's discretion to excuse or remedy the breach.
It is not clear whether this factor has contributed to the period of delay in the present case. However, this change in the practice of the Registry makes it even more important than it previously was for legal practitioners who seek to practice in this court to be very familiar with the rules governing the times at which particular types of documents should be filed, and the contents of documents filed.
The question of whether the applicants have a fairly arguable case is one which depends in almost its entirety on whether the trial judge was right in his conclusion that immediately prior to the letter of 23 April 2007 the Respondents had not engaged in any repudiation. That is a question of characterisation of a complex factual situation by reference to a legal standard. It is the sort of matter concerning which it does seem to me that there is a fairly arguable case, and indeed the nature of the enquiry is such that it seems to me that it falls somewhat higher than being merely fairly arguable. In saying this I am not expressing any views about whether that argument ought to succeed.
So far as the extent of any prejudice suffered by the Respondents is concerned, they do not claim that they have suffered any prejudice other than the prejudice involved in being out of their money.
In all these circumstances, it seems to me that the overall justice of the case is met by allowing the extension of time.
Costs of Motion for Extension
The application for extension of time is one in which the Appellants seek an indulgence from the Court. The application for extension of time came into being only after the Respondents' notice of motion for dismissal of the appeal as incompetent had been filed. The notice of motion for dismissal as incompetent is one that, in my view, would have been bound to succeed, as indeed the application had been filed out of time and it was only by filing an application for extension of time that the Appellants have been able to circumvent that deficiency.
In my view, as the Appellants are seeking an indulgence from the Court, the appropriate order is that they pay the costs of the notice of motion seeking extension.
Motion to Strike Out Appeal as Incompetent
I have earlier mentioned that the Respondents had filed a notice of motion seeking to have the appeal dismissed as incompetent. The alleged incompetence of the appeal was based in part on the Notice of Appeal being filed out of time. Now that the extension of time has been granted it is unnecessary to deal with that basis of incompetence.
However the Respondents also contended that one particular aspect of the appeal was incompetent for a separate reason. It was the appeal that was brought by the First Appellant against the judgments that were given against it for breach of the respective employment contracts did not involve enough money to entitle the First Appellant to an appeal as of right.
The statutory provision that the Respondents sought to invoke in this respect was s 101(2)(r) Supreme Court Act1970 . It provides:
"101 Appeal in proceedings before the Court
(2) An appeal shall not lie to the Court of Appeal, except by leave of the Court of Appeal, from:(r) a final judgment or order in proceedings of the Court, other than an appeal:
(i) that involves a matter at issue amounting to or of the value of $100,000 or more, or
(ii) that involves (directly or indirectly) any claim, demand or question to or respecting any property or civil right amounting to or of the value of $100,000 or more."Section 101(2)(r) is, as has often been pointed out, based upon the provisions of s 35 of the Judiciary Act1903 (Cth) as it was before the 1984 amendment that enabled appeals to be brought to the High Court only by special leave. So far as is now relevant, s 35 immediately before the amendment provided that an appeal lay to the High Court from a judgment of a Supreme Court in a civil matter which is given or pronounced for or in respect of a sum or matter at issue amounting to or of the value of $20,000. Other lesser sums had appeared in s 35 at even earlier times: Carson v John Fairfax & Sons Ltd (1991) 173 CLR 194 at 205-206.
There is, however, an important difference between s 101(2)(r) Supreme Court Act and s 35 Judiciary Act . The part of s 35 now relevant depended on whether the judgment appealed from was for or in respect of an amount over the monetary threshold. However, s 101(2)(r)(i) and (ii) requires the Court to characterise what is involved in the appeal for the purpose of valuing it: Dunn v Ross Lamb Motors [1978] 1 NSWLR 26 at 28. Characterisation of the judgment appealed from enters into the application of s 101(2)(r) only insofar as the judgment appealed from must be a " final judgment or order" and must be "in proceedings in the Court" .
In the present case, there were two separate judgments, each for less than $100,000, that the First Appellant wishes to appeal against. However, the appeal of the First Appellant is one that involves a matter at issue amounting to or of the value of $100,000 or more, because the combined value of those two judgments exceeds $100,000.
For the purpose of deciding what is " an appeal " that involves a matter at issue amounting to or of the value of $100,000 or more, one needs to decide whether there is a single appeal that has been brought by the First Appellant, to which there are two Respondents, or whether there is a separate appeal by the First Appellant against each Respondent.
An appeal is a single proceeding in the court that is instituted by the filing of a Notice of Appeal. UCPR 51.4 provides that each person who is directly affected by the relief sought or is interested in maintaining the decision of the Court below must be joined as a respondent. UCPR 51.16 (1) requires that " A notice of appeal must be filed an served on each necessary party " within certain stipulated times. What is relevant for present purposes is that there is just one Notice of Appeal that is filed, even though it is then served on more than one respondent. Though I doubt that this factor is critical, I also observe that the outcome, so far as both Respondents are concerned, depends on a single question, namely whether the letter of 23 April 2007 was repudiatory.
In my view, the proper characterisation is that in the present case there is a single appeal by the First Appellant, to which there are two Respondents. The extent of the disadvantage to itself concerning which the First Appellant seeks relief in the appeal exceeds $100,000. As Priestley JA said in Gillard v Hunter Wire Products Pty Ltd t/as Hunter Screen Products (No 2) [2001] NSWCA 450 at [12], " an appellant ... has an appeal as of right if there is a realistic prospect of changing the result by $100,000 or more." The appeal that has been brought by the First Appellant thus involves a matter at issue of the value of $100,000 or more, even though the matter at issue is made up of two separate amounts that have been awarded against the two Respondents.
For that reason, the basis of incompetence submitted to lie in s 101(2)(r) of the Supreme Court Act has not been made out.
Costs of Motion to Strike Out Appeal
So far as the costs of the application for striking out of the appeal as incompetent are concerned, Mr Taylor, counsel for the Appellants, correctly submits that even though the Notice of Appeal was filed out of time it, nonetheless, validly commenced proceedings: s 63 Civil Procedure Act2005 , Ritchie's Supreme Court Practice [51.16.30].
However, even though it was not a nullity, the institution of the appeal out of time was an irregularity. It is the sort of irregularity that justified the Respondents in taking out the notice of motion to have the appeal struck out and, in my view, had the Respondents not filed the notice of motion seeking extension of time the notice of motion would have succeeded on the basis of the Notice of Appeal being filed out of time.
By far the largest part of the submissions, and of the argument in Court today, were occupied by questions other than whether the appeal by the First Appellant was incompetent pursuant to s 101(2)(r).
In all these circumstances, in my view, the appropriate order is that the Appellants should pay the costs of the notice of motion seeking to have the appeal dismissed as incompetent. I so order.
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