De Meyer v Insight Legal Limited
[2023] NZCA 82
•28 March 2023 at 11.00 am
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA358/2022 [2023] NZCA 82 |
| BETWEEN | KIRSTY ALICE DE MEYER AND JOHN KENNETH SLAVICH |
| AND | INSIGHT LEGAL LIMITED |
| Court: | Cooper P and Brown J |
Counsel: | K A de Meyer and J K Slavich in Person |
Judgment: | 28 March 2023 at 11.00 am |
JUDGMENT OF THE COURT
AThe application seeking an extension of time in which to appeal from the High Court judgment is declined.
BThe applicants must pay one set of costs to the third, fifth, sixth and seventh respondents calculated for an interlocutory application in band A, together with usual disbursements.
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REASONS OF THE COURT
(Given by Cooper P)
This is an application for an extension of time in which to appeal a decision of the High Court.[1] The application is opposed by the third, fifth, sixth and seventh respondents. These parties were conveniently referred to as the “participating defendants” in the High Court, to distinguish them from other defendants who did not participate in the proceeding but reserved their rights.
Background
[1]Insight Legal Ltd v Slavich [2022] NZHC 1050 [High Court judgment].
The facts are drawn from the High Court judgment. In 2016, Nic Slavich Ltd (the second respondent) sold a farm. The proceeds of sale were held in a trust account operated by Insight Legal Ltd (Insight), the first respondent. The applicants, Ms Kirsty de Meyer and Mr John Slavich, together with the third to eighth respondents have a beneficial interest in the proceeds of sale.
However, issues have arisen about Nic Slavich Ltd’s accounts. The third, fifth, sixth and seventh respondents (the participating defendants) were concerned about the treatment of related party loans. In response to a request they made, Mr Graham O’Brien, a principal in Insight, gave an undertaking on 12 May 2017 to hold the funds on trust and not to disburse them except by agreement or pursuant to a court order.
Mr O’Brien’s undertaking was a solicitor’s undertaking, initially in the following terms:
As requested and acting on instructions, I undertake that the net funds from the two transactions will be held undisbursed in this firm’s trust account pending resolution of the issues between the shareholders whether by Court order or agreement.
Following correspondence between the solicitors for the parties, Mr O’Brien gave a further undertaking as follows:
I personally undertake that I will hold funds on [sic] the amount of $2,162,000 in my trust account until our respective clients (or the parties to interparty issues) agree to its disbursement or a Court directs me to release those funds.
Of that amount, $1,515,614.09 was subsequently distributed to the parties by agreement. Mr O’Brien swore an affidavit for the hearing in the High Court in which he said that the current balance held in the Insight trust account was $716,505.83.[2]
[2]High Court judgment, above n 1, at [8].
The High Court proceeding was commenced by Insight and Nic Slavich Ltd. The statement of claim asserted that the undertaking given on 12 May 2017 included an implied term that the parties would use their best endeavours to resolve the issues in dispute in a timely manner. It was said that the participating defendants had not complied with the implied term. The relief sought included an order that Insight be released from its undertaking, and an order that the parties be required to engage in alternative dispute resolution.
The participating defendants served a brief of evidence of a Mr Thoms, directed towards refuting the allegation that the participating defendants had not used their best endeavours to resolve the issues in dispute in a timely manner. Upon receipt of this brief, Insight and Nic Slavich Ltd gave notice that they no longer relied on the pleading that the participating defendants had not used their best endeavours to resolve the disputes in a timely manner. At the outset of the hearing, Edwards J granted leave to delete that allegation in the statement of claim.[3] Insight also elected not to pursue its claim that the parties be required to engage in alternative dispute resolution.
[3]At [12].
The only issue arising out of the pleadings that remained alive before the Judge was whether Insight should be released from its undertaking so it did not have to continue to hold the funds.[4]
[4]At [20].
The Judge considered that the operative undertaking was the second undertaking, which she found had superseded the first.[5] She found that there was nothing in the wording of the undertaking to suggest that it was subject to an implied term, and this was not a case where the undertaking lacked a “timeframe for performance”.[6] This, because the undertaking was to hold the sums pending agreement between the parties, or a court direction as to their release. There was no reason to add a further gloss on the plain meaning of the words of the undertaking.[7]
[5]At [27].
[6]At [28]–[29].
[7]At [29].
Another argument pursued by Insight was that it should be released from its undertaking because it was unnecessary for it to retain the funds, so long as they were retained on the same terms as currently applied: another stakeholder could hold the funds. However, nothing had been done to identify or seek the consent of another stakeholder, nor had anything been produced in support of a proposition that the Court could order the funds to be paid into Court. The Judge held open the possibility that a different stakeholder might be appointed in the future, if there was agreement as to who that should be and on what terms the funds should be held. But for the present, there was no reason to disturb the status quo.[8]
[8]At [35].
For these reasons and others we need not discuss, the Judge was not satisfied that Insight should be released from its undertaking and dismissed the proceeding in a judgment dated 17 May 2022.
Recall application
The applicants applied to recall the High Court judgment. They did so on the basis that the Judge had referred to the possibility of liquidation of the seventh defendant (Slavich Properties Ltd) if the alleged debt owed to it by Nic Slavich Ltd was not paid. It was said that the reference to Slavich Properties Ltd was an error.
In a judgment given on 27 June 2022, Edwards J did not accept there was any basis for recall. She evidently accepted that the reference to Slavich Properties Ltd was incorrect, but she did not consider this gave rise to a “very special reason” requiring the judgment to be recalled.[9] She said:[10]
As I made clear at [20] of the judgment, the only issue rising out of the pleadings was whether Insight Legal Ltd should be released from its undertaking so that it (as opposed to any other party) did not have to hold the funds any longer. That issue was not the same as an order directing that the funds be repaid to [Nic Slavich Ltd]. In addition, an order requiring the parties to attend arbitration was not an order seeking to enforce an agreement to arbitrate and that relief was not pursued at the hearing.
If Ms de Meyer and Mr John Slavich disagree with my characterisation of the issues in the proceeding, then their remedy is an appeal. The application falls short of the threshold required for recall and accordingly the application must be declined.
Appeal
[9]Insight Legal Ltd v Slavich [2022] NZHC 1491 [High Court recall judgment] at [3]–[5], referring to the third category of cases where recall maybe allowed as explained in Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) at 633.
[10]High Court recall judgment, above n 9, at [6]–[7].
On 15 July 2022 the applicants filed an application under r 29A of the Court of Appeal (Civil) Rules 2005 for an extension of time to appeal against the High Court judgment. In that setting Mr John Slavich applied for a waiver of the filing fee and, when that was declined by the Registrar, applied for a review of the Registrar’s decision.
In a judgment delivered on 18 October 2022, Brown J declined the application for review.[11]
[11]De Meyer v Insight Legal Ltd [2022] NZCA 486.
One of the arguments raised in support of the application for review was that Edwards J had failed to comply with procedural directions made at an earlier stage by Katz J (then in the High Court). Mr John Slavich claimed that Katz J had effectively directed that Ms de Meyer and himself be given an opportunity to file evidence to address matters which were relevant to arbitration. He complained that Edwards J had failed “to follow directions given by Katz J”.
In dealing with this issue on the application for review of the Registrar’s decision, Brown J wrote:[12]
Mr Slavich’s complaint is misconceived. The issues for determination at a hearing are governed by the pleadings. Insight, apparently for sound reasons, abandoned its request for relief of a reference to arbitration. As the passages quoted above record, Edwards J appropriately did not address that issue further. In doing so the Judge was not constrained by any interlocutory directions given by another Judge prior to the hearing.
Evaluation
[12]At [14].
The application now before the Court is for an extension of time in which to appeal the High Court judgment.[13] The question whether it is appropriate to extend the time for appealing must be approached on the basis set out by the Supreme Court in Almond v Read.[14]
[13]An application has also been made to extend the time for filing an appeal against the recall judgment.
[14]Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].
In accordance with that judgment, the Court considers:
(a)the length of the delay;
(b)the reasons for the delay;
(c)the conduct of the parties, particularly of the applicant;
(d)any prejudice or hardship to the respondent; and
(e)the significance of the issues raised by the proposed appeal, both to the parties and more generally.
The Supreme Court held that the merits of the proposed appeal will not “generally” be relevant in a case where there has been an insignificant delay attributable to a legal advisor’s error and the respondents have suffered no prejudice beyond the fact of an appeal.[15] However, the Supreme Court did contemplate that an extension of time might be refused based on a lack of merit in cases where it can be said that the appeal is clearly hopeless. The Court referred to cases where, on facts which are unchallenged, the appeal could not possibly succeed, and where the lack of merit is readily apparent.[16]
[15]At [39(b)].
[16]At [39(c)].
In the present case the applicants explain the delay on the basis that they were waiting to hear the result of their application for recall of the High Court judgment. Ostensibly, the application for recall was based upon the Judge’s reference to the wrong company as facing liquidation. The Judge declined the application, holding that the issue raised did not justify recall and emphasising that the only issue arising out of the pleadings by the time of the hearing was whether Insight should be released from its undertaking so that it did not have to hold the funds any longer. In the circumstances, relying on the application for recall to justify the delay is tenuous. But the delay of 21 working days is not significant and there does not appear to be any prejudice other than the fact of an appeal.
However, we consider the present case is one of those in which the proposed appeal’s lack of merit is so clear that an extension of time to file the appeal should not be granted. The Judge dealt with the only issue that remained live on the pleadings at the substantive hearing. She decided, contrary to the contention of Insight, that the time had not yet arrived when it was appropriate for that party to be released from the undertaking given by Mr O’Brien.
The applicants apparently wish to pursue on appeal the argument that, in accordance with the interlocutory minute of Katz J, they should have been allowed to pursue the issue of an order requiring arbitration. But Insight abandoned that contention at the hearing and no other party (including the present applicants) had raised it in a pleading.
In circumstances where the Judge has dealt with the only live issue arising on the pleadings, and in doing so has dismissed the claim to which the present applicants were defendants, there is demonstrably no merit in the proposed appeal.
Result
The application seeking an extension of time in which to appeal from the High Court judgment is declined.
The applicants must pay one set of costs to the third, fifth, sixth and seventh respondents calculated for an interlocutory application in band A, together with usual disbursements.
Solicitors:
Insight Legal, Warkworth for First Respondent
Braun Bond & Lomas Ltd, Hamilton for Third, Fifth, Sixth and Seventh Respondents
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