Barker v Brocker Technology Group (NZ) Ltd HC Auckland M60-Im02
[2002] NZHC 1403
•26 April 2002
IN THE HIGH COURT OF NEW ZEALAND M.60-1M02AUCKLAND REGISTRY
BETWEEN JONATHAN HUGH BARKER Plaintiff/Applicant
ANDBROCKER TECHNOLOGY GROUP (NZ) LIMITED Defendant/Respondent
Hearing: 26 April 2002
Counsel: CR Pidgeon QC for the Plaintiff
JE Murphy for the Defendant
Judgment: 26 April 2002
ORAL JUDGMENT OF RODNEY HANSEN J
Solicitors: Stainton & Chellew, P 0 Box 989, Downtown, Auckland, for Plaintiff
Lowndes Jordan, P 0 Box 5966, Wellesley Street, Auckland for Defendant
[1] The plaintiff (“Mr Barker”) applies for leave to enlarge the time for filing submissions under r 892 of the High Court Rules. He applied for leave to appeal against an arbitrator’s award but failed to file submissions within the time specified in r 892.
Background
[2] The arbitrator was asked to adjudicate on a dispute arising out of the purchase by the defendant (“Brocker”) of Mr Barker’s shares in a company called Easy PC Computer Rentals Limited. Differences arose as to the adjustments required to determine the final purchase price. Brocker claimed that it had overpaid and sought a refund. Mr Barker claimed that he had underpaid. The differences between the parties arose largely as a result of conflicting interpretations of a clause of the sale and purchase agreement. The arbitrator determined the issue of interpretation in favour of Brocker in an interim award delivered on 11 October
2001.
[3] Mr Barker sought an additional award to deal with claims which he said the arbitrator had failed to deal with. The arbitrator declined to deal with these but issued a second and final award dealing with interest and costs on 21 December
2001. That award was received by the parties on about 4 February 2002.
[4] On 29 January 2002 Mr Barker applied for leave to appeal the first interim award under ci 5(1)(c) of the Second Schedule to the Arbitration Act 1996 (“the Act”). Part 17 of the High Court Rules, which were added with effect from 1 August
2000 by r 20 of the High Court Amendment Rules (SR 2000/109), applies to such an application: r878. Rules 891-894 in Part 17 apply to applications for leave.
[5] A notice of opposition to the application was filed on 13 February, within the fourteen day period required by r 883 which, by virtue of r 89 1(6), applies to applications for leave to appeal. By r 892 within fourteen days of either the date on which notice of opposition is filed or the date by which a notice of opposition should
have been filed, the plaintiff must file submissions as to why leave should be granted and copies of any authorities relied on.
[6] Mr Barker’s counsel failed to file submissions within that time. On
20 March Brocker’s counsel filed a memorandum asking for the application to be struck out. That resulted in the filing of the application to enlarge time for filing submissions dated 10 April and filed the following day. The application is supported by an affidavit from Mr Barker’s solicitor. He deposes that he overlooked the requirements of r 892, not having had previous experience of the procedure in Part 17. He said he thought the next step would be the convening of a directions conference. He became aware of the requirements of r 892 only after receiving a minute from the Court which alerted him to the move to strike out the application. Thereafter he filed the application promptly.
Issues
[7] Two principal issues arise for consideration:
[a]The extent of the Court’s jurisdiction to extend the time for filing submissions under r 892.
[b] If there is jurisdiction, whether time should be extended.
Jurisdiction
[8] The application for an extension of time is made in reliance on rr 5 and 6 of the High Court Rules. Rule 5 gives the Court a general power to cure non compliance with the Rules. Rule 5(1) provides that any failure to comply with the requirements of the rules, whether in respect of time, place, manner, form, or content or in any other respect, shall be treated as an irregularity and shall not nullify the proceeding or any step taken in the proceeding or any document, judgment or order in the proceeding (r 5(1)).
Rule 6 provides:
“(1)The Court may, in its discretion, enlarge or abridge the time appointed by these rules, or fixed by any order, for doing any act or taking any proceeding or any step in a proceeding, on such terms (if any) as the Court thinks just.
(2)The Court may order an enlargement of time although the application for the enlargement is not made until after the expiration of the time appointed or fixed.”
[9] Rule 5 has been invoked to deal with a failure to comply with time limits (see, for example, Manchester United Friendly Society (1995) 9 PRNZ 494). But r 6 is the appropriate source of any jurisdiction to remedy a failure to observe time limits laid down in the Rules. It is expressed in broad terms. It confers an unfettered discretion to extend or abridge time: Caltex Oil (NZ) Limited v Hughes (1986)
1 PRNZ 235. On its face it confers jurisdiction to extend time for filing submissions underr 892.
[101 Ms Murphy submitted, however, that r 6 was not available for the purpose of extending time under r 892. She put forward three arguments. First, she submitted that the exercise of the Court’s jurisdiction is confined by the scheme and purpose of the Act and the rules contained in Part 17. She said the rules were intended to provide a clear and speedy mechanism for the disposal of applications for leave to appeal and to limit judicial supervision and review in the arbitration process. She relied on the dicta of Gault J in Opotiki Packing & Coolstorage Limited v Opotiki Fruitgrowers Co-operative Limited (In Receivership) (CA.3 17/98) who said at para
19:
“The whole scheme of the rules is to restrict court review of arbitration awards both with respect to grounds and time.”
She referred also to s 5 of the Act which identified one of its purposes as:
“To redefme and clarify the limits of judicial review of the arbitral process and of arbitral awards.”
She also referred to the general restraint imposed by Article 5 of the First Schedule to the Act which provides:
“Extent of Court Intervention - In matters governed by this Schedule, no court shall intervene except where so provided in this Schedule.”
[11] Ms Murphy that the scheme of the Act contemplated limited judicial involvement and the procedural requirements of rr 89 1-894 should be interpreted in a manner consistent with this. She argued that the procedures and time limits prescribed in r 892 were not intended to be determined according to “conventional legal principles and procedures”, borrowing a phrase from Inglis Enterprises Limited v Race Relations Conciliator (1994) 7 PRNZ 404 in which the limited nature of an appeal from a decision of the Equal Opportunities Tribunal was discussed.
[12] Secondly, Ms Murphy submitted that the ordinary grammatical meaning of r 892(1) is inconsistent with the exercise of the discretion under r 6. She pointed out that its requirements were mandatory and the absence of any provision in the rule to extend time. She contrasted this with r 892(3) which confers an express power on a Judge to extend the time permitted for the hearing of an application for leave. She relied by analogy on Spicers Paper (NZ) v BPK & GA Buckley Limited (1993) 6
PRNZ 16 where Master Williams suggested (at p 20) that having regard to the
“strong terms” of r 700X(4), r 6 is arguably modified by or inconsistent with Part
IXA.
[13] Finally, Ms Murphy submitted that the exclusion from r 705 of an express power to extend the time for appeal against arbitral awards confirms that the policy of the Act is against judicial intervention for the purpose of relaxing the requirements of Part 17 of the Rules.
[14] I am not persuaded that the jurisdiction of the Court is limited or its discretion fettered by the factors relied on by Ms Murphy. I accept that the intent of the Act and the rules made under it is to limit review and to provide for the speedy and efficient disposal of challenges to arbitral awards. But I am unable to see why those considerations should constrain the exercise of the jurisdiction available to the Court under r 6 where the interests ofjustice so require.
[15] Although Part 17 maybe seen as a code which lays down a special procedure for appeals against arbitral awards, there can be no suggestion that it operates independently of, and to the exclusion of the rest of the Rules. On the contrary, other rules are expressly invoked. For example, rr 879 and 891 (the latter applying
to applications for leave to appeal) refer to rr 107, 109 and 44. It is notable that r 891(4) specifically excludes Part IV of the Rules as well as r 106. If the intention was to exclude rules such as rr 5 and 6 from the operation of Part 17, I would have expected express provision to have been made. In my view, the High Court Rules should apply except to the extent that they are excluded, expressly or by necessary implication, or are inconsistent with Part 17.
[16] I see no reason why the exercise of the jurisdiction under rr 5 and 6 should operate to frustrate the scheme and purpose of the Act. I accept that in exercising its discretion under those rules, the Court should have regard to the spirit and intent of the Act and the rules made under it. That may result in applications for relief from the requirements of Part 17 being subjected to more rigorous scrutiny than would otherwise be the case. But it should not been seen as limiting the power of the Court to grant relief in appropriate cases.
Exercise of discretion
[17] The onus is on the appellant to satisfy the Court that the interests of justice require the granting of an indulgence. A proper foundation must be laid by the applicant to justify the exercise of the discretion: Day v Ost (No 2) [1974] 1 NZLR
714. There is no automatic right to relief for failure to comply with the Rules.
[18] In cases concerning an extension of time to appeal or review a decision, the key considerations which bear on the exercise of the discretion are the explanation for the failure to comply with the time limit, the time that has elapsed and the merits of the proposed appeal or review: Sutton v New Zealand Guardian Trust Co Limited (1989) 2 PRNZ 111. The existence or absence of prejudice or hardship to the parties should also be considered: Prudential Building and Investment Society of Canterbury (In Liquidation) v Hankins (1991) 5 PRN 160. The overriding consideration is, however, the interest of justice: Heatherington Limited v Carpenter (1995) 9 PRNZ l(CA).
[19] Ms Murphy questioned the adequacy of the explanation for the delay. She pointed out that the application having been properly filed under r 891, it should
have been obvious to Mr Barker’s solicitor that r 892 would apply to require the filing of submissions within the specified time. That submission is not without merit but I would hesitate to be overly critical of the solicitor who was dealing with these relatively new rules for the first time. There is, furthermore, no suggestion that his was not a genuine error. Generally, solicitor’s error, however egregious, should not count decisively against a client. The Courts are reluctant to deprive litigants of their
rights (solely) because of error on the part of their advisers: Sutton (supra) at p 117.
[20] The time that has elapsed is not, on the face of it, excessive. It has been largely determined by the time taken for the defendant to alert the plaintiff to his adviser’s oversight. Mr Barker’s solicitor moved promptly as soon as he became aware of his default. I do not see the time that has elapsed as a factor that should count against the applicant.
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[21] Ms Murphy has submitted that Brocker will be prejudiced by the delay. As Mr Barker is resident overseas, her client is prevented from enforcing the award against him and is unable to obtain interim orders which would preserve his assets and so secure the benefit of the award. Brocker has, of course, faced those difficulties from the outset. They have not been created by the delay in proceeding with the application. At most, they have been exacerbated by it. As Mr Pidgeon submitted, Brocker has been aware of Mr Barker’s intention to apply for leave and cannot be said to have suffered any prejudice beyond the delay itself as a result of his failure to take the required consequential procedural steps. On the other hand, if an extension of time is not granted, Mr Barker will lose the opportunity, conferred by statute, to seek leave to challenge the award.
[22] The application is brought for the purpose of allowing the applicant to file submissions and authorities for the Court to consider in determining whether or not to grant leave to appeal. A pre-condition of the grant of appeal is cl 5(2) of the Second Schedule to the Act which provides:
“Unless it considers that having regard to all the circumstances, the determination of the question of law concerned could substantially affect the rights of more than one of the parties.”
There remains a residual discretion. Many of the factors which will govern the exercise of that discretion were identified by the Court of Appeal in Golden Resource Developments (NZ) Limited v Doug Hood Limited [2000] 3 NZLR 318.
[23] Mr Pidgeon tendered a draft of the submissions which he proposes to file if this application is successful. The errors of law which will be urged in support of the application for leave are, in short, that:
[a]The arbitrator failed to have any or sufficient regard to other relevant portions of the contract in interpreting the disputed clause.
[b]The arbitrator wrongly relied on extrinsic evidence when there was no ambiguity in the clause.
[c]The arbitrator relied on the evidence of an expert as to the meaning of the clause.
[24] The requirements of cl 5(2) appear to be satisfied. The issue of interpretation is at the heart of the dispute. If Mr Barker is successful, the substantial sum he has been ordered to pay Brocker will become a substantial sum payable by Brocker to him. Among the factors which Mr Pidgeon argues in favour of the exercise of the discretion in favour of his client are that the arbitrator was not legally qualified, the importance of the dispute to the parties, the substantial amount of money involved and the absence of any real need for an urgent resolution of the dispute.
[25] Ms Murphy doubted whether the issues raised in the proposed appeal were all questions of law. She disputed the contention that the arbitrator had relied on the opinion of an expert in reaching his decision and said that, in any event, the expert’s opinion was consistent with that of the arbitrator. She submitted that there were several factors which, in terms of the Golden Resource Developments decision would weigh against the grant of leave. They include the fact that no important question of law is involved, the arbitration concerned a one-off contract and the parties had agreed that the award would be final and binding.
[26] On the basis of the information available to me and on a necessarily cursory consideration of the issues, I am satisfied that the plaintiff has shown an arguable case for leave to be granted. The central issue of interpretation is undoubtedly one of law and it clearly has a substantial effect on the rights of the parties. A consideration of discretionary factors does not point clearly in either direction. At this stage, all that can be said with certainty is that there is sufficient material to warrant full consideration being given to the arguments advanced in support of the application.
[27] All of the relevant consideration s lead me to the conclusion that it is in the interests ofjustice that Mr Barker should be given additional time to file submissions and supporting authorities under r 892. They must be filed and served by 3 May.
[28] As the plaintiff is seeking an indulgence, the defendant is entitled to costs which I award on a Category 2, Band B basis.
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