Latumbo v Pacific Auto Carrier (NZ) Limited
[2019] NZHC 1257
•5 June 2019
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV 2018-419-000045
CIV 2018-419-000113
[2019] NZHC 1257
BETWEEN MELANIE ELEANOR LATUMBO
Applicant
AND
PACIFIC AUTO CARRIER (NZ) LIMITED
First Respondent
AND
RENATA IMMANUEL KAHUROA
Second Respondent
AND
HIHUA WARREN HEMI
Third Respondent
Hearing: On the papers Counsel:
M D Branch for Applicant
J Gurnick for the First Respondent
J A MacGillivray & S Jass for the Second & Third RespondentsJudgment:
5 June 2019
JUDGMENT OF VAN BOHEMEN J
(on application for leave to appeal out of time)
This judgment was delivered by me on 05 June 2019 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors:
Harkness Henry, Hamilton
Guernell Harrison Law Ltd, Hamilton Tompkins Wake, Hamilton
LATUMBO v PACIFIC AUTO CARRIER (NZ) LIMITED [2019] NZHC 1257 [5 June 2019]
Introduction
[1] The applicant, Melanie Latumbo, seeks leave to appeal out of time my judgment dated 25 October 2018 in which I:
(a)Dismissed applications for:
(i)A declaration by way of summary judgment that Ms Latumbo is a director of the first respondent, Pacific Auto Carrier (NZ) Ltd (PAC);
(ii)Leave to bring a derivative action on behalf of PAC against the third and fourth respondents, Renata Kahuroa and Hohua Hemi.1
(b)Awarded costs on a 2B basis in favour of Mr Kahuroa and Mr Hemi.
[2] On the summary judgment application, I held that Ms Latumbo had not discharged the onus of satisfying the Court that there was no defence to her assertion that she remained a director of PAC. The evidence of Mr Kahuroa and Mr Hemi, as well as the evidence of Ms Latumbo herself, raised a real question as to whether Ms Latumbo had, by her conduct, evinced an intention not to continue as a director and had effectively resigned, even though Ms Latumbo had not submitted a notice of resignation in accordance with s 157 of the Companies Act 1993.2 In reaching that decision, I followed Little v Jull where Williams J held that it was unlikely that s 157 was intended to prevent a director from resigning by evincing a clear intention to do so (short of written notice to the company) if that communication was also clearly accepted by the company.3
[3] On the application for leave to bring a derivative action, I held that Ms Latumbo had not satisfied the Court on the balance of probabilities that she had been improperly removed as a director of PAC, so she did not have standing to bring
1 Latumbo v Pacific Auto Carrier (NZ) Ltd [2018] NZHC 2773.
2 At [55]-[57].
3 Little v Jull [2013] NZHC 3123 at [48]-[49].
the application.4 I also held that even if Ms Latumbo was still a director of PAC, I would not have granted leave to bring a derivative action because I considered that:
(a)A prudent business person would be unlikely to bring the claims in Ms Latumbo’s application in the conduct of his or her own affairs given the poor prospects of success and the costs of bringing the claims; and
(b)It was likely that the application was being pursued for collateral purposes, namely to advance the interests of Robert Stone, Mr Hemi’s business partner with whom Mr Stone has a long-standing dispute, and for purposes fundamentally at odds with the interests of PAC.5
[4] On 20 November 2018, Ms Latumbo filed a notice of appeal in the Court of Appeal against my decision on both applications as well as my order for costs;
[5] As set out in Ms Latumbo’s application and in an affidavit sworn by Rosemary Mannington on 17 May 2019:
(a)The Court of Appeal and the respondents accepted filing and service of the appeal;
(b)The Court of Appeal set down the appeal to be heard on 1 July 2019;
(c)On 8 May 2019, counsel for Ms Latumbo realised that Ms Latumbo required leave to appeal my decision;
(d)On 13 May 2019, counsel for Ms Latumbo notified counsel for the respondents that, because leave was required, the appeal to the Court of Appeal would be discontinued and an application made for leave to appeal out of time;
(e)On 17 May 2019, Ms Latumbo filed a notice of discontinuance of her appeal to the Court of Appeal.
4 Latumbo v Pacific Auto Carrier (NZ) Ltd [2018] NZHC 2773 at [73]-[77].
5 At [96]-[99].
[6] On 20 May 2019, Ms Latumbo filed the present application seeking leave to bring her appeal out of time.
Grounds for application
The grounds on which Ms Latumbo seeks leave to appeal out of time are:
(a)The failure to seek leave within time was caused by counsel error;
(b)The Court of Appeal and the respondents accepted filing and service of the appeal;
(c)Counsel for Ms Latumbo took steps to address the error as quickly as possible once it had been discovered;
(d)My judgment of 25 October 2018 contains an arguable error on a point of law on which there is no Court of Appeal authority;
(e)The point of law is of significance to Ms Latumbo and is of general public importance;
(f)The circumstances warrant incurring further delay on a final determination;
(g)The declining of the application was either not interlocutory or was final in nature and therefore should be appealable;
(h)There was an error of approach in the award of costs which was made without submissions on costs and it is not normal or appropriate in the circumstances of the case to award costs against Ms Latumbo.
Positions of respondents
[8] The respondents have not filed notices of opposition to Ms Latumbo’s application. PAC took no active part in the hearing before me and indicated it would abide the Court’s decisions on Ms Latumbo’s applications for summary judgment and
for leave to bring a derivative action. Counsel for Mr Kahuroa and Mr Hemi have advised the Registrar that the second and third respondents agree to abide the Court’s decision on Ms Latumbo’s application for leave to appeal out of time.
Discussion
[9] Section 56(3) of the Senior Courts Act 2016 provides that, except in the circumstances provided for in s 56(4), there is no appeal to the Court of Appeal from a decision of the High Court on an interlocutory application unless the High Court grants leave on an application made within 20 working days after the date of the High Court decision or within any further time that the High Court allows. Section 56(4) provides that leave is not required. By necessary inference, therefore, leave is required to appeal a decision refusing summary judgment.
[10] The application for leave is well out of time; the 20 working day period expired on 22 November 2018.
[11] In My Noodle Ltd v Queenstown-Lakes District Council, the Court of Appeal held that a number of factors are relevant to whether an extension of time should be granted, including the reasons for the delay, the length of the delay, the conduct of the parties and the extent of any prejudice caused by the delay. The Court also held that the overall test is whether granting an extension would meet the overall interests of justice.6
[12] In the present situation, as was also the case in My Noodle, the cause of the delay was a genuine mistake on the part of Ms Latumbo’s counsel who took the appropriate steps to seek an extension of time as soon as the error was discovered. As the Court of Appeal reiterated in My Noodle, the Court is normally sympathetic to an extension of time in such circumstances.7 I consider I should take the same approach to an application for an extension of time under s 56 of the Senior Court’s Act.
6 My Noodle Ltd v Queenstown-Lakes District Council [2009] NZCA 224, (2009) 19 PRNZ 518 at [19].
7 At [20].
[13] Although the delay is significant, Ms Latumbo’s conduct cannot be faulted. The cause of the delay was the error of her counsel on whose advice she can justifiably rely for the conduct of the litigation. The respondents have not asserted any prejudice. They have been aware since November 2018 that Ms Latumbo wishes to appeal my decision and had been expecting the appeal to have been heard in July 2019.
[14] With regard to the overall interests of justice, I accept that Ms Latumbo has an arguable case that s 157 of the Companies Act prescribes the methods by which a company director may resign, even if I have some doubts about the prospects of Ms Latumbo succeeding with that argument. I have more substantial doubts about the appeal of the award of costs given the principle reflected in r 14.2(1)(a) of the High Court Rules 2016 that the party who fails with respect to an interlocutory application should pay costs to the party who succeeds. However, I see no reason to deny extending time to that appeal point.
[15] As to whether leave to appeal should be granted, when considering whether to grant leave under s 56(3) of the Senior Courts Act, the Court in A v Minister of Internal Affairs and in Finewood Upholstery Ltd v Vaughan had regard to and elaborated upon various considerations advanced by counsel in those cases.8 These included:
(a)There should be a high threshold for the granting of leave; an error of law or fact of itself would generally be insufficient;
(b)The alleged error should be of general or public importance that requires further determination or otherwise be of sufficient importance to the applicant to outweigh the lack of any general or precedential importance;
(c)The circumstances warrant incurring further delay; and
(d)The overall interests of justice.
8 A v Minister of Internal Affairs [2017] NZHC 887; Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679.
[16] When an application for summary judgment is refused, if an applicant wishes to pursue its claim the usual course is to proceed with a full hearing on the merits of the claim. Leave to appeal would not be sought. In the present case, however, Ms Latumbo seeks to challenge how Williams J in Little v Jull and I applied s 157 of the Companies Act. I accept that question of statutory interpretation is not likely to be resolved by a further High Court hearing on the merits of Ms Latumbo’s application. I also accept that it is a question of general importance and of importance to Ms Latumbo’s claim to be a director of PAC and to her application for leave to bring a derivative action.
[17] For these reasons as well as for the reasons for granting an extension of time, I consider Ms Latumbo’s application for leave should be granted.
Result
[18] Ms Latumbo’s application for leave to appeal my judgment of 25 October 2018 is granted.
G J van Bohemen J
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