Kumar v Lucina Investments Limited CA160/05

[2005] NZCA 390

IN THE COURT OF APPEAL OF NEW ZEALAND

CA160/05

BETWEEN  RICHARD KUMAR Appellant

ANDLUCINA INVESTMENTS LIMITED First Respondent

ANDGARY JOHN PROHM AND OTHERS Second Respondent

ANDGARY PROHM MOTOR SERVICES LIMITED

Third Respondent

Hearing:         14 November 2005

Court:            Hammond, William Young and Panckhurst JJ Counsel:         D Singh for Appellant

D J Chisholm for First Respondent
N W Woods for Second and Third Respondents

Judgment:      17 November 2005

JUDGMENT OF THE COURT

A        The application for leave to appeal is dismissed.

BThe  appellant  is  to  pay  a  total  of  $3,000  costs,  $1,500  to  the  first respondent and $1,500 to the second and third respondents, together

with usual disbursements.

KUMAR V LUCINA INVESTMENTS LTD & ORS CA CA160/05 17 November 2005

REASONS

(Given by William Young J)

Introduction

[1]      This is an application by Mr Richard Kumar for leave to appeal out of time against a judgment of the High Court dismissing his claims against the first respondent,  Lucina  Investments  Ltd  (“Lucina”)  and  the  second  respondents, Gary and Gayle Prohm and Professional Trustee Services Ltd (“the Prohms”).

Underlying dispute

[2]      The case concerns premises at 681 Mt Albert Road, Auckland.

[3]      On 28 May 2001 Lucina agreed to purchase these premises.  At the time the front portion of the premises was occupied by Mr Kumar pursuant to an informal lease or licence arrangement.

[4]      Lucina proposed to develop a service station and convenience shop at the front of the property.   Such development became possible through the combined effect of a resource consent and a certificate of compliance which Lucina sought and obtained.   If this development proceeded Mr Kumar would have been required to vacate the front portion of the premises.  This led to a proposal that Mr Kumar take a lease of the rear of the property.  This proposal was implemented in the form of an agreement to lease between Lucina and Mr Kumar of 6 March 2002.

[5]      The lease was to be for six years with the appellant having three rights of renewal of three years each.  The date of commencement was defined as being upon the issue of a certificate of practical completion of the proposed service station. Clause 11 of the agreement provided:

BUILDING CONSENT  The lessor has been granted Resource Consent to the development of the Service station and convenience shop on the front of the property and the overall parking for both businesses is provided for,

which may require each lessee to liase [sic] with each other in that regard which cooperation shall be provided for in the lease of each lessee.  Should the ACC refuse to grant a building permit because of the intended use of the premises by the lessee then the lessor may determine this agreement.

This clause recognised that the use by Mr Kumar of the rear of the premises for his business would or might affect the ability of Lucina to give effect to its resource consent   (and   the   associated   certificate   of   compliance)   in   relation   to   the service station development proposed for the front of the property.

[6]      Lucina settled the purchase of 681 Mt Albert Road on 2 April 2002.

[7]      The Auckland City Council confirmed on 8 October 2002 that it would not grant an untagged building consent for the proposed service station development if Mr Kumar were to use the rear of the premises as contemplated in the agreement to lease.   Lucina took the view that the issue of a tagged building consent would be tantamount to refusal to grant a building permit for the purposes of cl 11.  Acting on this basis, it purported to cancel the agreement to lease by letter of 17 October 2002. Mr Kumar was eventually evicted on 12 November 2002.

[8]      A complicating feature of the case is that by the time the agreement to lease was cancelled, Lucina was no longer interested in pursuing the service station development.   It was common ground before us that the parties, by implication at least, had agreed that the lease would nonetheless continue.  However something of a stalemate had developed as to whether and on what basis Mr Kumar should move to the back to the premises.   A further and associated problem was that Mr Kumar required, but did not have, a resource consent for the business he proposed to carry on from there.   Obtaining a resource consent might have taken up to two or three years and Mr Kumar took no steps to seek such a resource consent.

High Court proceedings

[9]      In the High Court the appellant sought relief against Lucina in which he challenged the cancellation of the lease and relied on the Fair Trading Act 1986.  He also sued the Prohms who acquired the property from Lucina, alleging that they had

induced Lucina to act in breach of contract and that they were guilty of fraud under the Land Transfer Act 1952.

[10]     These proceedings were heard over five days in November 2004 and, in a judgment delivered on 9 March 2005, the appellant’s claims were dismissed by Williams J.  Essentially he found that Lucina was entitled to cancel the agreement to lease under cl 11 and that the claims made by the appellant under the Fair Trading Act against Lucina were misconceived.  The claims against the Prohms necessarily failed.  The Judge made it clear, however, that the claim against the Prohms would have failed even if he had found against Lucina on the contractual issue.  The Judge was not therefore required to determine the quantification of the damages claimed by Mr Kumar but he reviewed and was very critical of the evidence which was adduced on behalf of Mr Kumar.

Procedural infelicities

[11]     The time for filing an appeal expired on 7 April this year.   The notice of appeal was filed in this Court on that day.  Copies of the notice of appeal, however, were not filed in the Auckland High Court and served in a timely way.  Further there was a failure to provide, or obtain a waiver in relation to, security for costs as required.

[12]     The appellant then sought leave to appeal from the High Court out of time. But that Court does not have jurisdiction to make the order sought and accordingly the application was dismissed by Williams J.   An application for special leave to appeal to this Court was not filed until 25 July 2005, in excess of three months after the period before an appeal as of right had expired.

Evaluation

[13]     The procedural infelicities to which we have just referred are of two fold significance:

(a)      They mean that the appellant’s right to proceed with his proposed appeal is subject to an exercise of discretion by this Court which necessarily involves a preliminary assessment of the merits or otherwise of the proposed appeal; a scrutiny which Mr Kumar could have avoided had he filed his appeal and completed associated procedural steps in a timely way.

(b)They  nonetheless  show  that  the  appellant  signalled  reasonably promptly an intention to challenge the judgment.

[14]     We will address briefly our view on the various issues likely to be raised by the proposed appeal.

[15]     We see as untenable the proposed challenges to the Judge’s conclusions as to the Fair Trading Act claim against Lucina and all claims against the Prohms.  We simply cannot see a credible basis upon which the Fair Trading Act claim could be argued.  We note as well that in the High Court the only relief sought in relation to this claim was a declaration whereas now Mr Kumar seeks damages in excess of

$300,000.   In respect of the Prohms, there are strong factual findings against Mr Kumar and we are not persuaded that there is any significant prospect of these findings being over-turned on appeal.

[16]     The position as to the lawfulness of the cancellation to the agreement to lease is a little different as we think it possible that this Court would hold that Lucina was not entitled to rely on cl 11 to cancel agreement the lease, particularly as, at the relevant time, it was not seeking (and had no immediate intention of seeking) a building consent.   In that context, the ground given by Lucina for cancelling the agreement to lease looks a little contrived.

[17]     But it is difficult to see where success on the cancellation issue would take Mr Kumar.  He had no entitlement to remain in the front of the premises.  He could not operate from the rear of the premises without a resource consent and he had not sought such a consent.   In those circumstances he could hardly expect to receive substantial damages in relation to the cancellation.   Further, as the judgment of

Williams J shows, the evidence adduced on behalf of Mr Kumar as to damages was highly unsatisfactory.  In that context, we cannot discern any principled basis upon which an award of compensation of any substance could be made in favour of the appellant even if his appeal as to liability in relation to Lucina were allowed.

[18]     In those circumstances we are not persuaded that the merits of the proposed appeal are such as to warrant the granting of leave to appeal.

Disposition

[19]     The application for leave to appeal is dismissed.  The appellant is to pay a total of $3,000 costs, $1,500 to the first respondent and $1,500 to the second and third respondents, together with usual disbursements.

Solicitors:

Shean Singh, Auckland for Appellant

Kensington Swan, Auckland for First Respondent

Rice Craig, Papakura for Second and Third Respondents