Lesa Systems Limited v Canzac Limited

[2007] NZCA 375

IN THE COURT OF APPEAL OF NEW ZEALAND

CA240/06
[2007] NZCA 375

BETWEENLESA SYSTEMS LIMITED

Appellant

ANDCANZAC LIMITED

Respondent

Hearing:20 August 2007

Court:Hammond, Robertson and Ellen France JJ

Counsel:No appearance for Appellant

D L Marriott and M Scally for Respondent (applicant)

Judgment:30 August 2007 at 2.30 pm

JUDGMENT OF THE COURT

AThe application for an extension of time in which to apply for the allocation of a hearing date and in which to file the case on appeal is dismissed with the consequence that the appeal is to be treated as having been abandoned.

B        There is no order for costs.

REASONS OF THE COURT

(Given by Ellen France J)

Introduction

[1]       This is an application under r 43(2) of the Court of Appeal (Civil) Rules 2005 for leave to extend the period of time to apply for the allocation of a hearing and for filing a case on appeal.  The application is made by Canzac Limited, the respondent and cross-appellant.

Background

[2]       Lesa Systems Limited, the appellant, brought copyright proceedings against Canzac.  In the course of the proceedings, Lesa unsuccessfully sought an interim injunction.  Immediately after the interim injunction hearing, Canzac wrote to Lesa on a without prejudice basis save as to costs.  Canzac referred to difficulties with the case identified by the Judge in the interim injunction decision and in terms of authority from this Court.  The matter went to trial but Lesa discontinued the proceedings after closing submissions.  Canzac sought indemnity costs against Lesa in relation to the discontinued proceedings.

[3]       In a judgment delivered on 4 October 2006, John Hansen J awarded costs to Canzac on a 2C basis with an allowance for second counsel: HC CHCH CIV 2006‑409-624.  Lesa appealed on the grounds that costs on a 2B basis were appropriate.  Canzac cross-appealed on the basis that indemnity costs should have been awarded.

[4]       After the appeal and cross appeal were filed, the parties entered into settlement discussions.  These discussions got to the point where there was an oral agreement to settle but Lesa’s counsel then advised that he no longer had instructions from Lesa and Lesa did not sign the settlement agreement.

[5]       By that time, 23 May 2007, the deadline for filing the case on appeal for the cross appeal (6 May 2007) had expired.

[6]       There was no appearance for Lesa at the hearing of the present application, counsel having been instructed to take no steps on this application although reserving its position depending on the outcome.

Discussion

[7]       Rule 43(2) provides for the court to grant an extension of time for filing the case on appeal.  In Airwork (NZ) Ltd v Vertical Flight Management Ltd [1999] 1 NZLR 29 (CA) this Court said at 31 that if there was a “sound reason” for allowing further time and the appeal is “not devoid of merit” the Court “will grant the indulgence of an extension of time as a matter of normal practice”.

[8]       The lapse of time for filing the case on appeal is explicable given what appears to have been Lesa’s change of heart in relation to settlement.  The issue is whether there is any merit in Canzac’s cross-appeal against the refusal to award indemnity costs.

[9]       In dealing with costs, John Hansen J accepted at [6] that Lesa was on notice that as the case was pleaded there were “significant difficulties” with it. The Judge concluded that an increased award was appropriate but he decided against an award of indemnity costs because the matter “properly warranted a 2B basis initially” (at [7]).

[10]     Mr Marriott argued that an award of indemnity costs should have been made given that the case was flawed and that Lesa had continued with the proceedings despite being on notice of the difficulties.

[11]     We agree that the combination of factors relied on by Canzac may well have been sufficient to justify an award of indemnity costs.  However, on appeal Canzac would have to show that the Judge in declining to make such an award erred in principle or was plainly wrong.  In this case the Judge has considered the relevant factors although not referring expressly to r 48C(4)(a).  The case was not completely hopeless in that the Judge concluded there was a serious question to be tried in the context of the injunction application.  As John Hansen J also noted, it was accepted that if the case had been run differently, there could have been a plausible argument.

[12]     Mr Marriott relied on this Court’s decision in Peters v Television New Zealand (2005) 18 PRNZ 149.  There the Court made the point that while indemnity costs can extend to unreasonable conduct in relation to litigation such unreasonableness must “be of a high order – not just something which is wrong or misguided in hindsight” (at [20]).  Given that high threshold and the matters taken into account by the Judge, we are satisfied leave should be declined because the cross appeal is without merit.

Costs

[13]     Given the history of the matter and Lesa’s position on the application for leave, costs on this application should lie where they fall and we make no order for costs.

Solicitors:

Jackson Russell, Auckland for Appellant
James & Wells, Auckland for Respondent