Baker v Seven Seas Limited - [2021] NZCA 150

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA655/2020
[2021] NZCA 150

BETWEEN	TREVOR BAKER and MARY ANNA SMITH as trustees of the TREVOR BAKER and MARY ANNA SMITH FAMILY TRUST Applicants
AND	SEVEN SEAS LIMITED Respondent

Court:	Clifford and Courtney JJ
Counsel:	D J G Cox for Applicants S J Tee for Respondent
Judgment: (On the papers)	3 May 2021 at 2.00 pm

JUDGMENT OF THE COURT

The application for extension of time to appeal is declined.

____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)

Introduction

This is an opposed application for an extension of time[1] in which to file an “as‑of right” appeal against a decision of Associate Judge Sargisson at the High Court in Auckland setting aside in part a statutory demand issued against the respondent, Seven Seas Ltd.[2]

Background

[1]Court of Appeal (Civil) Rules 2005, r 29A.

[2]Seven Seas Ltd v Baker [2020] NZHC 616 [High Court judgment].

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 the respondent, Seven Seas Limited. Seven Seas operates a franchise “pack and send” business from those premises.
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 City Council rates for the full year 1 July to 31 June 2020. That amount reflected a discount available to the Trust if those rates were paid in advance, rather than by the permitted monthly instalments.
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, on a monthly basis.
The Trust subsequently served a statutory demand on Seven Seas for the balance of $9,290.93, and a further $402.50 for the cost of issue and service of the statutory demand, a total of $9,693.43. On receipt of that demand Seven Seas paid the full amount demanded to its solicitors’ trust account, raised its dispute and invited the Trust to withdraw its demand.
Some time later, Seven Seas paid a further $2,546.16, leaving $7,147.27 owing under the statutory demand of which all but the $402.50 related to Council rates.
Seven Seas then applied for the statutory demand to be set aside. The Judge found 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.[3] On that basis, the only amount undisputed and outstanding under the statutory demand was the $402.50 for the incidental costs of the issue and service of the statutory demand.
[3]At [20].
The Judge upheld the demand for that amount, set it aside from the balance and noted that, in default of the payment of the $402.50, the Trust could apply to put Seven Seas into liquidation.[4] As to costs, the Judge said that as…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZCA 150
Decision Date: 3 May 2021 at 2.00 pm

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, Trevor Baker and Mary Anna Smith, as trustees of the Trevor Baker and Mary Anna Smith Family Trust, applied for an extension of time to appeal against a decision of the High Court in Auckland which had set aside in part a statutory demand issued against Seven Seas Limited. The Trust had leased part of a commercial property to Seven Seas, which operated a franchise business from the premises. The Trust had invoiced Seven Seas for rent and outgoings, including a discount available if those rates were paid in advance. Seven Seas paid part of the invoiced sum, but disputed the liability for rates payments other than on a monthly basis. The Trust subsequently served a statutory demand on Seven Seas for the balance of $9,290.93, and a further $402.50 for the cost of issue and service of the statutory demand. Seven Seas paid the full amount demanded to its solicitors’ trust account, raised its dispute and invited the Trust to withdraw its demand. Seven Seas then applied for the statutory demand to be set aside, which the Judge granted, finding there was a genuine dispute as to the rates component of that amount because the Trust’s obligation to pay those rates had not accrued. The Judge upheld the demand for the $402.50 for the incidental costs of the issue and service of the statutory demand. The Trust’s solicitors received the judgment on 12 October 2020 and prepared their application for leave to appeal by 6 November 2020. As a result of an administrative oversight those documents were not served on the respondents, nor dispatched to this Court, until 10 November 2020. They were accepted for filing on 12 November 2020, two working days outside the recalculated cut-off date, based on delivery/actual receipt on 12 October 2020, of 10 November. The Trust sought an extension of time to appeal, which the Court declined. The Court found the delay was minimal and itself caused no prejudice to the respondent, but was satisfied that this was one of those unusual circumstances in which, notwithstanding the short period of delay and the absence of prejudice to the respondent, leave to commence this appeal out of time should be declined. The Court found there was little if any prospect of the applicants’ challenge to the Associate Judge’s decision setting aside the statutory demand succeeding, and that the Trust’s behaviour, including writing to Seven Seas’ master franchisee, franchisee support, accountant and business affiliates, demanding unusual forms of undertaking from Seven Seas, indicated a lack of objectivity as to the significance of the matters involved. The Court declined to make an order as to costs.

Orders