Weatherston v Waltus Property Investments Ltd

IN THE COURT OF APPEAL OF NEW ZEALAND

CA251/00

BETWEEN	MURRAY DAVID WEATHERSTON & ORS
Appellant

AND	WALTUS PROPERTY INVESTMENTS LIMITED
Respondent

Hearing:	13 June 2001
Coram:	Richardson P Blanchard J Tipping J
Appearances:	H McIntosh and K Rankin for Appellants C R Carruthers QC and N MacFarlane for Respondent
Judgment:	13 June 2001

JUDGMENT OF THE COURT DELIVERED BY BLANCHARD J

The appellants’ appeal to this Court was dismissed on 4 December 2000. Reasons for the judgment of the Court were delivered on 14 December. By consent conditional leave was granted on 1 February 2001 on the standard conditions, namely that within three months the appellants should provide security in the amount of $2000 for the due prosecution of the appeal (which condition has been duly satisfied) and that within the same period of three months (and therefore expiring on 1 May 2001) the necessary steps were to be taken for the purpose of procuring the preparation of the record and the despatch thereof to England.
The condition concerning the preparation of the record was not complied with. Instead, on 24 April the appellants made the present application for an extension of time until 30 June 2001 in which to prepare the record and apply for final leave.
The case concerns a scheme of arrangement under which pursuant to s236 of the Companies Act 1993 an order was made for the reconstruction of 30 applicant companies. The object of the reconstruction was to bring 29 property syndicates, each respectively undertaken by a separate applicant company, into the ownership of a single holding company whose shareholders would be the former shareholders in the 29 syndicate-owing companies. The appellants are a dissentient minority who in this Court sought an order that the new amalgamated company acquire their interests at the conversion value stipulated in the scheme.
In its judgment, which is reported at [2001] 2 NZLR 103, this Court concluded that it would be unfair to the majority who had supported the proposal to order that the interests of the dissenting minority be purchased. By the time the matter was considered by this Court the amalgamation had taken place and there had been some trading of shares in the amalgamated company on the market.
The question of this Court’s jurisdiction to extend the time for compliance with the conditions of conditional leave was recently considered in Mobil Oil New Zealand Ltd v Bagnall (CA290/99, 7 February 2001). We concluded that the Court has jurisdiction to extend time for taking the necessary steps in relation to the record but made it clear that an extension will not be granted unless the Court is satisfied that in all the circumstances there is sufficient excuse for the delay to justify doing so. It is for the appellants to satisfy us accordingly.
It is apparent from the affidavits filed in support of the application that although the appellants are hopeful of taking the matter to the Privy Council, they have done relatively little work on the preparation of the record. Indeed it now emerges that even when they were obtaining conditional leave, upon strict conditions, they did not intend taking steps in compliance with the condition about the record until they had clarification that from the costs which they anticipated being awarded in the High Court, they would have enough to fund the further appeal. No such indication was given to the Court nor, until quite recently were the respondents seemingly aware of this.
It might have been expected that the appellants would move quickly on the question of costs – at least to obtain an interim award sufficient to fund preparation of the record. (In fact it seems they have not yet even put their minds to what that might cost. Mr McIntosh put it as anywhere between $2000 and $10,000.) Indeed we see no reason why the whole costs award could not have been settled by the High Court if the Master had been told of the position and asked to deal with the question on an urgent basis so that the appellants could know where they stood.
However, the appellants seem to have rested upon their understanding that they had been assured of a reasonable award of costs, whatever that might be, from a fund they understood was held by the respondents and now say they are surprised to learn that the respondents dispute this position. Only recently has a fixture been sought for a costs hearing in the High Court. It will take place on 20 June. The appellants say that once they know what costs are available to them and decide the sum is sufficient to proceed, the record can be completed and lodged within a further two weeks.
The appellants seek to cast some of the blame for the present situation on the respondents. They say the respondents have been slow in replying to requests for information or agreement on the costs issue and that they accordingly realised only latterly that costs might still have to be fixed by the Court. They also say that the respondents failed to respond to them concerning the draft index which they submitted for comment. They further submit that the respondents will not suffer any prejudice from the granting of an extension because, they say, the business of the amalgamated company has not been affected by the conditional leave grant or the present application.
We are not persuaded that it would be proper to grant an extension of time. Plainly there is non-compliance. Plainly also there has been little effort directed to compliance. This case differs markedly from Mobil Oil v Bagnall where, on the evidence, most of the work on the record had been done within the stipulated period and the applicants were ready, willing and able to proceed immediately when the matter came before this Court for final leave.
It is not in our view appropriate to grant an indulgence by way of an extension of time to applicants who have not, even now, made up their minds even about doing further work on the record, let alone whether the further appeal will proceed.
The appellants’ attempt to place the blame on the respondents is not convincing. In the circumstances they ought to have taken steps to finalise the costs position, which could certainly have been done in time for the record to be prepared before 1 May, or they should have been prepared to fund the relatively modest cost of that exercise by another means so as to ensure compliance with the condition. Their default was not brought about by the respondent’s failure to comment on the draft index which was not even submitted to the respondent until four days prior to the deadline. Once that time had passed the respondents were entitled to wait and see how the present application fared.
Nor have we been satisfied that the respondents will not be prejudiced by the proposed extension of time. A director of Waltus has deposed that he believes that its share price is being affected by the uncertainty caused by the outstanding appeal. He says also that the company’s financiers remain concerned about the possibility of a minority buy-out being ordered (if the further appeal were to be successful), which is having an impact on the company’s operational functions. The affidavits from the appellants contest the first of these points. They say that shares in property companies have been trading at a discount to their net asset backing for some time. The low share price therefore has nothing to do with the litigation. That may be so. However, the appellants have not effectively gainsaid what the respondents say about the adverse effect of the extant appeal upon the attitude currently being taken by their financiers.
For these reasons we refuse the application for extension. Consequently, the condition of leave having not been fulfilled, final leave to appeal to the Privy Council is refused.
The respondents are entitled to costs on the application in the sum of $2,500 together with reasonable disbursements, to be fixed if necessary by the Registrar.

Solicitors:

Russell McVeagh, Wellington for Appellant

Chapman Tripp Sheffield Young, Wellington for Respondent

[2001] NZCA 180

13 June 2001