Merj Holdings Ltd v Sipka Holdings Ltd
[2016] NZHC 931
•6 May 2016
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2015-404-000199 [2016] NZHC 931
BETWEEN MERJ HOLDINGS LTD
Applicant
AND
SIPKA HOLDINGS LTD FIRST RESPONDENT
ANG PROPERTY INVESTMENT LTD Second Respondent
Hearing: 6 May 2016 Counsel:
S R G Judd for Applicant
T J Rainey for RespondentsJudgment:
6 May 2016
ORAL JUDGMENT OF WYLIE J
Solicitors/counsel: Rainey Law, Auckland S R G Judd, Auckland
MERJ HOLDINGS LTD v SIPKA HOLDINGS LTD [2016] NZHC 931 [6 May 2016]
Introduction
[1] The applicant, Merj Holdings Ltd, seeks leave to appeal to the Court of Appeal against a judgment issued by me on 26 February 2016.1 In that judgment I relied on the jurisdiction conferred on this Court, when it is hearing an appeal from the District Court, by s 76 of the District Courts Act 1947. I remitted the issue of damages following on from a misrepresentation made, and deceptive conduct indulged in, by the applicant to the District Court for rehearing.
[2] The questions which the applicant seeks to raise before the Court of Appeal, as detailed in its notice of application, are as follows:
(a) Are there any limits on the High Court’s power under s 76 of the District
Courts Act 1947 to remit a case to the District Court?
(b) If so, should the High Court’s power to remit be limited to circumstances
where:
(i) the judgment was obtained by fraud; or
(ii) new evidence has come to light, which could not reasonably have been found at the time of the trial; or
(iii) there has been some other breach in the principles of nature justice or other flaw in the process of the first trial, which renders the first trial unfair?
(c) Was it a proper exercise of the s 76 power to remit this matter to the District Court for re-hearing to determine damages when there was no evidence of loss called in the District Court at the first trial and there was no miscarriage of justice in the District Court and no basis to allow further evidence to be called on appeal and no other flaw in the process of the first trial?
[3] In his submissions filed in support of the application, Mr Judd simplified these questions. He submitted that the issue for the Court of Appeal should be
whether it was a proper exercise of the power under s 76 of the District Courts Act to direct the District Court to rehear this matter to determine damages.
[4] The application was opposed by the respondents, Sipka Holdings Ltd and
Ang Property Investment Limited.
Factual Background
[5] This increasingly protracted litigation arises out of the sale of a commercial property in Matamata by the applicant to the respondents. In the course of negotiations leading up to the sale, a director of the applicant represented that the property was not earthquake prone because its structure was rated at 43 per cent of the then current building standard. The director made that representation notwithstanding that he was aware that the applicant had an engineering report which concluded that the building was rated at or below 33 per cent of the then current building standard, that it required strengthening, and that it was accordingly earthquake prone.
[6] The District Court found that the applicant had misrepresented the condition of the building in breach of the Contractual Remedies Act 1979 and/or engaged in misleading and deceptive conduct in trade, thereby breaching the Fair Trading Act
1986.2 The District Court Judge awarded $37,000 in damages to the respondents.
The Judge considered that that sum represented the cost of increasing the building from below 33 per cent of the building standard to 43 per cent of the building standard.
[7] The respondents appealed against the damages award, arguing that the minimum work required to get over the 33 per cent threshold took the building to
100 per cent of the relevant building code standards. The applicant cross-appealed
against the Judge’s finding as to liability. In the alternative, the applicant sought that the award of damages should be vacated.
2 Sipka Holdings Ltd v Merj Holdings Ltd DC Papakura CIV-2003-055-000557, 19 December
2014.
[8] On appeal, I upheld the District Court Judge’s findings as to liability. In relation to damages I concluded that the Judge had erred in his approach.3 I found that the respondents had to upgrade the building to 100 per cent of the building code requirements because they elected to change its use. I considered that s 115 of the Building Act 2004 was engaged. The District Court did not refer to this section. I held that it was determinative and that the actual costs incurred by the respondents in
strengthening the building would have been incurred regardless of the misrepresentation/deceptive conduct. I recorded that a representative of the respondents had filed a “will say” statement asserting that the building was less valuable than was represented, and that that will say statement had been read into the evidence. I noted in my judgment that the respondents had not however called evidence quantifying that loss. I also noted that there was no evidence that the cost of upgrading the building to 100 per cent of the new building standard had been increased as a result of the misrepresentation/deceptive conduct. I considered that there was no material available on which the District Court Judge could properly assess damages flowing from the breach, and recorded that I was not prepared to “pluck a figure out of the air”. In paragraphs [83] and [84] of my judgment, I remitted the issue of damages back to the District Court and directed it to re-hear the matter insofar as it needed to do so, so that it could consider and determine what damages should properly flow from the applicant’s breach of the Contractual Remedies Act and the Fair Trading Act.
[9] On 9 September 2015, the applicant filed an interlocutory application, seeking that I should recall my judgment, or alternatively, that it should be granted leave to appeal to the Court of Appeal against paragraphs [83] and [84] of my judgment.
[10] This application was opposed by the respondents.
[11] I heard from the parties on 4 December 2015, and issued an oral judgment on the same day.4 I accepted that there was a very special reason that required that
paragraphs [83] and [84] of my judgment be recalled, and I afforded the parties the
3 Sipka Holdings Ltd v Merj Holdings Ltd [2015] NZHC 1980.
opportunity to present submissions in relation to the issue of whether or not the questions of damages should be remitted to the District Court. I put in place a timetable for the exchange of submissions in relation to this issue.
[12] Submissions were filed and served, and, with the consent of the parties, I issued my judgment of 26 February 2016 on the papers. As I have noted, I again remitted the issue of damages back to the District Court. I did not deal with the applicant’s alternative application – namely that I should grant it leave to appeal to the Court of Appeal.
[13] It is my decision to again remit the damages issue to the District Court that the applicant now seeks to challenge in the Court of Appeal.
Leave to Appeal – Relevant Law
[14] Relevantly s 67 of the Judicature Act 1908 provides as follows:
67 Appeals against decisions of High Court on appeal
(1) The decision of the High Court on appeal from an inferior court is final, unless a party, on application, obtains leave to appeal against that decision—
(a) to the Court of Appeal;
…
(2) An application under subsection (1) for leave to appeal to the Court of Appeal must be made to the High Court or, if the High Court refuses leave, to the Court of Appeal.
[15] Any application for leave to appeal must be made within 20 working days of the date after the decision is given. It must be made by way of interlocutory application.5
[16] As has been noted by the commentators, the requirements to obtain leave are governed by the statute conferring the right to a second appeal.6 Here there is nothing in s 67 of the Judicature Act restricting the basis on which leave to appeal
can be sought. It is however trite law that in order to justify a second appeal, the proposed appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal. Upon a second appeal the Court of Appeal is not engaged in the general correction of error. Its primary function is to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally, or to the parties, as to justify a further pursuit of
litigation which has already been twice considered and ruled upon by a Court.7
[17] It is noteworthy that the Court of Appeal has recently opined that it may be appropriate to reconsider these criteria, with a view to restricting second appeals even further.8
Submissions
[18] Mr Judd submitted that the question(s) of law that the applicant wishes to raise in the Court of Appeal is capable of bona fide and serious argument. He argued that the proper scope of s 76, and in particular of s 76(1)(b), of the District Courts Act is an important matter of general or public importance, and that the Court of Appeal should be given the opportunity to clarify the law in relation to it. He focussed on paragraph [24] of my decision where I addressed the interests of justice in the present case, and argued that the power to direct a re-hearing under s 76(1)(b) is not broad, but rather is confined to situations where there is some procedural unfairness or miscarriage of justice in the processes that have occurred in the District Court.
[19] Mr Judd argued that the Court of Appeal could well reach a more restrictive view than that taken by me, and that there is an issue of general and public importance in determining the extent of the discretion conferred by s 76 which outweighs the cost and delay inherent in the proposed appeal. He submitted that, in
any event, the proposed appeal should not involve the parties in significant cost, and
7 Waller v Hider [1998] 1 NZLR 412 (CA) at 413; Snee v Snee (1999) 13 PRNZ 609 (CA) at [13]- [22]; Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2008] 2 NZLR
591 (CA) at [30]-[34].
8 Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd, above n 7, at [36]-[37].
that it should be able to be dealt with on limited materials and within a short timeframe.
[20] Mr Rainey for the respondents argued that the applicant has already attempted to avoid liability for its egregious actions on three separate occasions, and that it now seeks to have a fourth attempt in the Court of Appeal. He initially argued that the applicant’s application for leave to appeal to the Court of Appeal is a second interlocutory application for leave to appeal in respect of the same appeal, that the Court is functus officio, and that the application is barred by r 7.52. In the course of discussions, however, he properly abandoned this point. He went on to argue that the proposed appeal is in respect of the exercise of the discretion conferred by s 76 of the District Courts Act, and that there can be no bona fide or serious argument that the power conferred by the section is limited and can only be exercised in the circumstances suggested by the applicant. He argued that in remitting the matter, I was simply exercising a discretion which was open to me, and by reference to the facts of this case. He submitted that the proposed appeal raises no issue of law of general or public importance, and that the interests of justice do not support leave being granted.
Analysis
[21] I consider first whether the issues which the applicant wishes to raise are capable of bona fide and serious argument.
[22] Section 76 is not expressly hedged with any of the restrictions suggested by the applicant and noted in paragraph [2] of this judgment. Rather the statutory provision is broad and open textured. It is clearly intended to confer wide powers on this Court when it is considering an appeal under s 72 of the District Courts Act. The discretion conferred by s 76 has been in existence for very many years. It is routinely used by the Courts. Mr Judd could not refer me to any case where there has been any confusion or debate about the ambit of the section. It would be surprising if it were belatedly found to be subject to the limitations the applicant suggests constrain its application. The meaning of the section is a straightforward exercise in statutory interpretation. I do not consider that questions (a) and (b)
detailed in the applicant’s notice of application are capable of serious or bona fide
argument.
[23] The question posed in paragraph (c) of the application presumes various factual assumptions which I do not consider are altogether correct, but that issue aside, it does get closer to what, it seems to me, the proposed appeal is actually about. In essence the question which the applicant wishes to argue is simply whether or not I erred in exercising the discretion conferred on me, in the circumstances of this particular case.
[24] This leads into the second consideration – is there any interest in that question, either public or private, of sufficient importance to outweigh the cost and delay of a further appeal to the Court of Appeal?
[25] Dealing first with the parties’ private interests, I note that initially the respondents were seeking damages of $191,300. When the matter ultimately got to the District Court they were seeking $156,000. Damages of $37,000 were awarded by the District Court. When I heard the appeal, the respondents were seeking
$143,000. As I noted in the decision the applicant wishes to appeal, if the applicant is correct and its misrepresentation/deceptive conduct had no impact on the value of the building and caused no loss to the respondents, then the respondents will receive no damages. If the respondents can prove loss, they will recover no more and no less than the loss they can prove resulted from the applicant’s misleading and deceptive conduct. Relatively little, or perhaps nothing, is at stake.
[26] Turning to the public interest, the applicant seeks to challenge my exercise of the discretion conferred by s 76.
[27] The hurdle which any appellant faces in persuading an appellate Court to intervene with the exercise of a discretion by a court lower in the curial hierarchy is high. An appellant has to persuade the appellate Court that the lower court failed to take into account relevant considerations, took into account irrelevant considerations,
erred in principle or reached a decision which was plainly wrong.9
9 Kacim v Bashir [2010] NZSC 112, [2011] 2 NZLR 1 at [32].
[28] The applicant did not, in its written submissions, suggest that I erred in any of the first three respects. Broadly its submission amounted to an assertion that I was plainly wrong in the way in which I exercised the s 76 discretion in the circumstances of this case. In his oral submissions, Mr Judd went rather further. He submitted that the principles of finality in litigation and res judicata limit the discretion conferred by s 76. He argued that I erred in principle by not giving those principles the weight they deserve and/or that I failed to take them into account. Indeed he went so far as to make the surprising submission that justice between the parties is an irrelevant, or in his words, “impermissible”, consideration when exercising the discretion conferred by s 76.
[29] Even if I did err in the exercise of the discretion conferred by s 76, that does not compel the conclusion that the applicant should be granted leave to appeal. The Court of Appeal in such cases is not involved in the general correction of error. Its primary function is to clarify the law and determine whether it has been properly considered and applied. It is not every error of law that, if made out, is of sufficient importance to justify another appeal.
[30] I agree with Mr Rainey that the issues sought to be raised relating to the Court’s powers under s 76 of the District Courts Act are in effect a ruse, intended to import notions of public importance, where what is in issue is simply a private dispute, of relatively small moment.
[31] I note the observations of the Court of Appeal in Waller v Hider. It there observed as follows:10
Notwithstanding frequent reminders of the test, applications continue to be made which have little or no prospect of success. Counsel are of course to be commended for making all reasonable efforts to advance the cause of their clients but after a first appeal they must draw back and appraise the state of the case dispassionately, asking whether in truth the disputed matter contains the requisite element of sufficient importance. The scarce time and resources of the High Court and of this Court are not to be wasted, nor additional expense for an unsuccessful client incurred without realistic hope of benefit.
10 Waller v Hider, above n 7, at 413. And see Snee v Snee, above n 7, at [20], citing Engineering
Dynamics Ltd v Norgren Martonair (NZ) Ltd (1996) 7 TCLR 369 (CA).
[32] This is a case where the applicant should draw back and appraise the case dispassionately. There is in my judgment no question of law, or fact, capable of bona fide and serious argument, and there is no interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal to the Court of Appeal.
[33] The application is declined.
Costs
[34] I award the respondents costs on a 2B basis. The respondents are also entitled to their reasonable disbursements. In the event there is a dispute as to the
same, that dispute is to be referred to the Registrar.
Wylie J
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