SNB Holdings Limited v Slabbert
[2024] NZHC 492
•8 March 2024
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2023-419-285
[2024] NZHC 492
UNDER Part 20 of the High Court Rules 2016 IN THE MATTER
of an appeal against a judgment of the District Court
BETWEEN
SNB HOLDINGS LIMITED
Appellant
AND
DAVID SLABBERT AND VALERIE CYNTHIA SLABBERT
Respondents
Hearing: 28 February 2024 Appearances:
P V Cornegé for Appellant A G Stuart for Respondents
Judgment:
8 March 2024
JUDGMENT OF COOKE J
(Extending time to pay security for costs)
[1] In February 2022 the appellant entered an agreement to purchase the respondents’ house. In breach of the agreement the appellant did not complete the purchase and the agreement was cancelled. The plaintiffs re-marketed the property and it was subsequently sold for $248,000 less than the contracted purchase price. The respondents then sought summary judgment in the District Court. The appellant accepted it was liable but disputed quantum, including on the basis that the respondents did not act reasonably on the re-sale. By oral judgment dated 5 October 2023 Judge Hollister-Jones granted summary judgment for $263,313.79 together with interest and costs.1
1 David Slabbert v SNB Holdings Ltd [2023] NZDC 22580.
SNB HOLDINGS LIMITED v SLABBERT [2024] NZHC 492 [8 March 2024]
[2] By notice of appeal dated 1 November 2023 the appellant appealed to this Court. The parties filed a joint memorandum in advance of the first case management conference, and including the agreement that the appellant pay security for costs in the amount of $1,195 within 10 working days. Such orders were made by consent by Downs J on 20 November and appearances at the first call were excused.
[3] The appellant failed to pay the security within the time required. One of its directors, Mr Benjamin De’Ath has explained that this was simply an oversight and as soon as the appellant’s lawyers brought it to his attention he paid the required security. The respondents contend, however, that as a consequence of s 126 of the District Courts Act 2016 the appeal is deemed to be abandoned.
[4] The issue to be determined is whether this Court has any jurisdiction to extend the time for paying security retrospectively (or otherwise) to effectively enable the appeal to be pursued, and if there is jurisdiction whether that should be exercised in the present case. When the proceedings were called before me in the Judge’s Chambers List on 28 February 2024 it was agreed that I could determine that issue based on the written submissions that had been filed by the parties, and the additional oral submissions they advanced to me at that time.
Relevant provisions and case law
[5]The High Court Rules 2016 provide:
20.13 Security for appeal
(1)This rule applies to an appeal other than an appeal for which the appellant has been granted legal aid under the Legal Services Act 2011.
(2)The Judge must fix security for costs at the case management conference relating to the appeal, unless the Judge considers that in the interests of justice no security is required.
(3)The amount of security must be fixed in accordance with the following formula, unless the Judge otherwise directs:
(a ÷ 2) × b
where—
a is the daily recovery rate for the proceeding as classified by the Judge under rule 14.4; and
b is the number of half days estimated by the Judge as the time required for the hearing.
(4)Security must be paid to the Registrar at the registry of the court no later than 10 working days after the case management conference, unless the Judge otherwise directs.
(5)Except in the case of an appeal under the District Court Act 2016; and (where non-compliance with the security order results in a deemed abandonment of the appeal under section 126 of that Act), if the security is not paid within the time specified under subclause (4), the respondent may apply for an order dismissing the appeal.
(6)The Judge must defer the fixing of security until the application for legal aid has been determined if—
(a) an appellant has applied for legal aid under the Legal Services Act 2011; and
(b) at the time of the case management conference, the application has not been determined.
[6]The District Courts Act 2016 provides:
126 Security for appeal
(1)An appellant under section 124 may be required under the High Court Rules 2016 to give the Registrar of the High Court security for costs.
(2)Subsection (1) does not apply if the appellant has been granted legal aid for the proceeding under the Legal Services Act 2011.
(3)If security for costs is not given within the time required by the High Court Rules 2016, the appeal is abandoned.
[7] Apart from the power to determine when the security must be paid in r 20.13(4), the High Court Rules also provide:
1.19 Extending and shortening time
(1)The court may, in its discretion, extend or shorten the time appointed by these rules, or fixed by any order, for doing any act or taking any proceeding or any step in a proceeding, on such terms (if any) as the court thinks just.
(2)The court may order an extension of time although the application for the extension is not made until after the expiration of the time appointed or fixed.
[8] In Siemer v Heron, when determining that one of the appeals advanced by Mr Vincent Siemer had been abandoned for failure to pay security as ordered under the previous version of these provisions, the Supreme Court said:2
In argument in this Court Mr Siemer pointed to that fact that by 29 May he had sought a variation of the order. He seemed to believe that this required the Judge to treat his appeal as remaining on foot, which of course it would not do. In electing to make such an application, he took the risk that the Judge would refuse to extend the order and that the appeal might be deemed abandoned in the meantime. Indeed, it seems that once s 74(2) had operated at the end of 29 May, the Judge had no power to resurrect the appeal by a retrospective extension of time or variation or cancellation of his order. If that is so, in view of Mr Siemer’s failure to pay the security by 1 May 2009 – the time originally fixed by Venning J – the Judge’s purported extension to 29 May in his Minute of 8 May was ineffective to keep the appeal on foot after 1 May.
[9]The associated footnote, footnote 46, reads:
In Hermans v Hermans [1961] NZLR 390 (CA) at 393 the Court said that once an appeal is deemed to be abandoned there is nothing before the Court which can be amended or otherwise dealt with. See, however, the contrary view taken in Graham v Mills (2005) 18 PRNZ 157 (HC) at [21]–[26] per Heath J, that the reference in s 74(2) to “the time required by the High Court Rules” incorporates not only the rule about giving security for an appeal (now r 20.13) but also the rule which gives a general power to extend time (now r 1.19), which is exercisable “although the application for extension is not made until after the expiration of the time appointed or fixed”.
[10] In Graham v Mills Heath J had said, again of an earlier version of these provisions:3
The new provisions of the District Courts Act 1947 and the High Court Rules expressly contemplate an appeal being treated as abandoned unless security is given within the time required by the High Court Rules: s 74(2).
The reference to the “High Court Rules” in s 74(2) seems to be a reference primarily to the default position set out in r 713(4) but must also include the situation where a High Court Judge has directed that a time different from the default position apply.
Also, the reference in s 74(2) is to “the High Court Rules”; not just “Part 10” of those Rules. That reference suggests that the general provisions dealing with enlargement of time apply equally to appeals: the general provisions of r 6 not being expressly excluded by Part 10.
2 Siemer v Heron [2011] NZSC 133, [2012] 1 NZLR 309 at [39].
3 Graham v Mills (2005) 18 PRNZ 157 at [21]–[26].
If an absolute position were taken as to the consequence of abandonment of the appeal a party who, for good reason (for example, a medical emergency), did not pay security until one day after the fixed time would lose the right to appeal. Similarly, a party who deposited the security with his or her solicitor only to find that the solicitor failed to pay security to the Registrar in a timely manner would also lose the right to appeal. It is unlikely that those unjust consequences were intended. If they had been, one would have expected much more explicit language to be used to achieve a result that would affect so drastically a litigant’s access to this Court for an appeal brought as of right.
In my view, there is jurisdiction under either r 6 or r 713(4) to extend the time to pay security. The existence of an ability to extend time should not cause any particular problems in practice. A respondent, on learning that security has not been paid, is unlikely to take further steps and the appeal will be treated as abandoned unless and until an order extending the time has been made and payment effected.
Further, applicants for an extension of time must realise that very good reasons will be required to obtain an extension. And, the longer the delay in making the application to extend, the less likely the Court will be to extend time.
[11] Mr Stuart argues that the reasoning of the Supreme Court in Siemer v Heron applies, and that once the time for paying security has passed the appeal is deemed to be abandoned and there is no jurisdiction for the Court to grant an extension of time. That is because there is no longer any appeal to which such jurisdiction can be exercised. Mr Cornegé relies on the reasoning of Heath J, and to the alternative suggestion of the authors of Civil Procedure: District Courts and Tribunals that deemed abandonment would not prevent an appellant for seeking to bring a fresh appeal, and if necessary seeking leave to appeal out of time.4
Is there jurisdiction?
[12] In a recent decision Palmer J agreed with the analysis in Graham v Mills.5 Like him I find Heath J’s analysis persuasive. Whilst the observations of the Supreme Court in Siemer v Heron support Mr Stuart’s argument the Court appears to have left the issue open for subsequent argument. The Court only observed that it “seems” the appeal would be abandoned, and that “if that is so” any subsequent extension would
4 Roderick Joyce (ed) Civil Procedure: District Courts and Tribunals (online looseleaf ed, Thomson Reuters) at [DA126.02].
5 Koh v Advisory Accountants Ltd [2024] NZHC 305 at [7].
be ineffective. It then recorded the alternative analysis of Heath J without commenting on it.6
[13] Section 126(3) refers to giving security for costs within the time required by the High Court Rules and r 1.19 is part of those rules. Rule 1.19(2) explicitly provides that an extension of time can be granted after the expiration of the time earlier fixed by the Court. There is nothing in r 20.13 that says that r 1.19 does not apply to the time period contemplated by that rule. The true significance of r 20.13(5) is that the opposing party is not required to apply to the Court to obtain an order that the appeal is abandoned. On the face of these provisions r 1.19(2) can still be applied.
[14] These provisions should also be applied in light of their purpose. Rule 1.19 is one of the series of rules at the outset of the High Court Rules which identify the overall objective of the rules, and the consequences of non-compliance. Given the objective in r 1.2, and the focus on substantial justice contemplated by rr 1.5–1.7, 1.9 and 1.19 itself, the Court should not interpret the rules in a way that deprives it of jurisdiction to do justice in the particular case.
[15] That is particularly so when the apparent purpose of the requirement to provide security as required by r 20.13 is taken into account. Presumably this is to ensure that those that exercise a right to appeal from the District Court confront the cost of pursuing such a right to the opposing party. It is to prevent the proliferation of appeals without proper regard to that cost. A party that fails to lodge security as required has their appeal automatically dismissed without the need for an application by the opposing side. But the objective of the rule is not to prevent a party pursuing a genuine appeal when they have duly paid the security and they have a good explanation for failing to do so earlier as required. The amount required to be paid by way of security for costs in accordance with the formula in r 20.13 is also usually small. Here the amount involved was only $1,195. That sum is unlikely to provide much by way of actual security to the opposing party in an appeal in this type of case, which concerns judgment in the amount of over $250,000. It is essentially a notional amount.
6 Commentators have accordingly observed that Heath J’s approach is arguable – see Laura O’Gorman (ed) Sim’s Court Practice (online ed, Lexis Nexis) at [HCR 20.13.4].
[16] The relevant rules should accordingly not be applied in an overly technical way. The contemporary approach to civil procedure no longer involves the pedantic application of the rules, but the application of them in a way that best secures the just, speedy and inexpensive determination of proceedings. Moreover, the view that there is no jurisdiction is not one that ultimately arises from the wording of the rules, as on their face they permit a retrospective extension of time. Rather it is more a matter of logic — that you cannot grant leave in relation to a proceeding that no longer exists. But that logic is not inevitable, particularly when the Court is required to interpret the text of the rules in light of their purpose, and in the relevant context.7
[17] That it would be contrary to the spirit of the rules to find the Court lacked jurisdiction to grant an extension is illustrated by the alternative approach suggested by the authors of Civil Procedure: District Courts and Tribunals — that the appeal is abandoned, but a fresh appeal can be brought, if necessary by seeking leave to appeal out of time. That is an overly complex procedural workaround to ensure the rules do not operate unjustly. In my view it is best to address the issue directly.
[18] For these reasons I conclude that there is jurisdiction to extend the time for payment of security for costs under r 1.19 notwithstanding that the original time for payment has passed.
Should leave be granted?
[19] The second question is whether the Court should so extend the time in the present case.
[20] In Graham v Mills Heath J held that there must be “very good reasons” before an extension for the time required to pay the security is granted.8 That was also the approach adopted by Palmer J in Koh v Advisory Accountants Ltd, and in both cases the Court declined to grant the extension.9 Such an extension is an indulgence, and very good reason for the grant of leave will be required. In the end each case will turn on its own facts, and what the interests of justice require.
7 Legislation Act 2019, s 10.
8 Graham v Mills, above n 3, at [26].
9 Koh v Advisory Accountants Ltd, above n 5.
[21] In the present case I consider that leave ought to be granted for a series of related reasons.
[22] First, the appellant is seeking to pursue a legitimate appeal from summary judgment entered in relation to a failed residential property sale. It has admitted liability, with the issue to be determined a confined one turning on whether the respondents acted reasonably when re-selling the property. Based on the District Court judgment the appellant may have a difficult task — the respondents re-marketed the property and sold it by way of tender, and that is the best price that they managed to get. But it is a limited issue that the appellant seeks to raise, it has a legitimate argument it wants to advance, and it has acted reasonably in the conduct of the litigation by focussing in on the key issues. This is not a case where the defaulting party is a frequent litigant seeking to pursue a series of avenues open to it as of right.
[23] The second factor is the failure to pay security was simply an act of inadvertence, and once the failure to do so was brought to the appellant’s attention the required amount has duly been paid. There is no prejudice to the respondents arising from what is simply an oversight.
[24] The third factor is that the amount required to be paid by way of security was a notional amount compared to the likely costs of the appeal. The figure, and time for payment, were agreed by both parties in a joint memorandum which was approved by the Court on the papers. There is no suggestion that the appellant was aware failure to meet the requirement to pay the agreed security would result in the appeal being deemed to be abandoned.
[25] There is a further important feature. At the hearing I raised the possibility that, if there was jurisdiction to grant an extension, that security for costs could be ordered that more properly reflected the potential costs award against the appellant if the appeal was unsuccessful. I asked the parties to address that by way of further memorandum. The parties have discussed it since that time, and by joint memorandum dated 29 February they have agreed that, should leave be granted, the Court could choose to order that the appellant lodge a further $10,000 by way of security for costs. The fact that the appellant is prepared to lodge this more meaningful amount by way
of security reflects the genuine nature of the appeal that the appellant wishes to bring. This amount fully meets the purposes of security under r 20.13.
[26] In light of these factors I accept that the time for payment of security for costs should be extended under rr 1.19 and 20.13(4), and that an additional amount of
$10,000 must be paid within 10 working days of the issue of this judgment. If the further amount is not paid within that time the appeal is dismissed.
[27] If the further amount is paid the appeal should be set down for hearing in accordance with the other directions that were earlier made by Downs J. The Registrar is to liaise with counsel for the parties to establish a convenient date and time. I do not understand any other directions are required, although leave to apply is reserved.
[28] The respondents are to have the costs associated with this application, to be calculated on a 2B basis.
Cooke J
Solicitors:
Sean Mason Law, Morrinsville for Appellant Harris Tate Ltd, Tauranga for Respondents
3