Churchill Group Holdings Limited v Aral Property Holdings Limited

[2011] NZCA 34

IN THE COURT OF APPEAL OF NEW ZEALAND

CA80/2010
[2011] NZCA 34

BETWEEN  CHURCHILL GROUP HOLDINGS LIMITED
First Applicant

AND  CACHINAL INVESTMENTS LIMITED
Second Applicant

AND  MATAM INVESTMENTS LIMITED
Third Applicant

AND  CLEVELAND INVESTMENTS LIMITED
Fourth Applicant

AND  PHILIP JOSEPH FAVA
Fifth Applicant

AND  ARAL PROPERTY HOLDINGS LIMITED
First Respondent

AND  DAVID LEUNG
Second Respondent

Hearing:         15 February 2011

Court:             Glazebrook, Arnold and Harrison JJ

Counsel:         P J Fava in person
J G Miles QC and J D McBride for Respondents

Judgment:      28 February 2011 at 10 am

JUDGMENT OF THE COURT

AThe application for an extension of time to file a case on appeal is declined and the appeal is struck out.

BThe fifth applicant must pay the respondents costs for a standard application on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Glazebrook J)

1. Mr Fava is the sole director of the four applicant companies. They were plaintiffs in a claim against the respondent companies.  The hearing of the proceeding was terminated when Mr Fava was adjudicated bankrupt. The judgment that the applicants propose to appeal is the costs judgment arising out of that collapsed litigation delivered by Hugh Williams J on 22 December 2009.[1]  In that judgment Hugh Williams J awarded increased and indemnity costs amounting to $2 million in favour of the defendants.

   [1]Churchill Group Holdings Ltd v Aral Property Holdings Ltd HC Auckland CIV-2001-404-2302, 22 December 2009.

2. Mr Fava filed a notice of appeal dated 8 February 2010. He requested the allocation of a fixture date.  Mr Fava, however, failed to file the case on appeal within the requisite six months.[2]  In a minute of 17 November 2010, Hammond J ordered that the fixture be vacated, and that the application for an extension of time be heard on 15 February 2011.  Submissions from Mr Fava were due on 21 December 2010.  None were filed.

   [2]       Court of Appeal (Civil) Rules 2005, r 43(1).

3. On 25 January 2011 the respondents filed a memorandum saying that, as Mr Fava had filed no submissions, his application should be declined.  In any event, as Mr Fava is bankrupt, they submitted that he has no standing to bring his appeal.[3]

   [3]See the authorities reviewed in De Alwis v Luvit Foods International Ltd HC Auckland CIV-2002-404-1944, 24 March 2010 and Billie Little (ed) Insolvency Law and Practice (online looseleaf ed, Brookers) at [IN101.01].

4. Mr Fava advised on 4 February 2011 that he accepted that he needed to persuade the Official Assignee (OA) to continue the appeal.  He informed this Court that he was to have a meeting with the OA’s solicitor on 7 February 2011.

5. On 8 February 2011 Mr Fava advised that the OA did not intend to revisit his decision not to continue the appeal.  Mr Fava said that he would challenge that decision under s 226 of the Insolvency Act 2006 (but had not done so by the time of the hearing before us).  Mr Fava then sought an adjournment of this application until his s 226 challenge is determined.

6. The adjournment was opposed by the respondents.  They say that:

   (a)The s 226 application will almost certainly fail.  The OA has declined to bring the appeal for Mr Fava for predictable and legitimate reasons, the appeal has no merit, and Mr Fava has no ability to fund it.

   (b)The OA advised this Court of his decision by memorandum dated 13 August 2010.  Mr Fava took no steps at that time to challenge the decision.

   (c)Given Mr Fava’s concession that he has no standing without the OA’s consent, it follows that he never had standing to bring the appeal in the first place.  Coupled with Mr Fava’s significant delays and the respondents’ entitlement to a resolution of this long standing proceeding (commenced in 2001), the respondents say that the appropriate course is to strike the appeal out now.  Its filing was never sanctioned by the OA and Mr Fava concedes that he requires that consent to advance it. 

   (d)There is only minimal prejudice to Mr Fava if the appeal is struck out now.  If Mr Fava succeeds with his challenge to the OA’s decision, then the OA can apply for leave to commence the appeal out of time, pursuant to r 29A of the Court of Appeal (Civil) Rules 2005.

7. We accept the respondents’ submissions as set out at [6](b)–(d).  We make no comment on the submission set out at [6](a).

Result and costs

1. The adjournment request is declined.

2. The application for an extension of time to file a case on appeal is declined and the appeal is struck out.

3. The fifth applicant (given he has been the one pursuing the appeal) must pay the respondents costs for a standard application on a band A basis and usual disbursements.

Solicitors:
Bell Gully, Auckland for Respondents