Westpac New Zealand Limited v New Dawn Holdings Limited
[2022] NZHC 3476
•16 December 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-001011
[2022] NZHC 3476
BETWEEN WESTPAC NEW ZEALAND LIMITED
Plaintiff
AND
NEW DAWN HOLDINGS LIMITED
First Defendant
COLIN KWAK YAN CHU
Second DefendantJESSE SEANG TY NGUY
Third Defendant
Hearing: On the papers Appearances:
B J Upton and S L Hawksworth for the Plaintiff R M Dillon for the Defendants
Judgment:
16 December 2022
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 16 December 2022 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Simpson Grierson, Auckland Queen City Law, Auckland
D P H Johns KC, Auckland
WESTPAC NEW ZEALAND LTD v NEW DAWN HOLDINGS LTD [2022] NZHC 3476 [16 December 2022]
[1] Westpac New Zealand Limited (Westpac) seeks leave to appeal my judgment dismissing its application for summary judgment against the first and second respondents, New Dawn Holdings Limited (NDHL) and Colin Chu.1 Westpac also seeks leave to apply for leave to appeal out of time.
[2] NDHL and Mr Chu consent to Westpac being given leave to appeal and leave to apply for leave to appeal out of time.
[3] In the decision in question, I granted summary judgment against the third respondent, Jesse Nguy. Mr Nguy does not seek to appeal my decision.
Leave to apply out of time
[4] Westpac has filed an affidavit from Sophie Hawksworth, solicitor at Simpson Grierson, who explains that counsel wrongly assumed that Westpac could appeal the summary judgment decision as of right. An appeal was lodged in time and accepted for filing by the Court of Appeal, and both counsel for Westpac and the respondents proceeded on the assumption that the appeal would proceed. It was not until 11 November 2022 that they were made aware that Westpac required leave to appeal a judgment declining summary judgment under s 56(3) of the Senior Courts Act 2016.
[5] The Court has an unfettered discretion to extend time even if the time appointed or fixed has passed.2 The general considerations are:3
(a)Has the applicant been guilty of inordinate delay in seeking leave?
(b)Is the delay inexcusable?
(c)Are the respondents seriously prejudiced?
1 Westpac New Zealand Ltd v New Dawn Holdings Ltd [2022] NZHC 1118.
2 High Court Rules 2016, r 1.19.
3 Gillespie v McKay (1999) 13 PRNZ 90 (HC).
[6] I am satisfied that the answer to each of the above questions is “no”. Westpac applied for leave promptly after becoming aware that leave was required.4 The delay occurred because of an error of counsel, not Westpac. The error was corrected as soon as it was identified. NDHL and Mr Chu have not been seriously prejudiced, and consent to Westpac being given leave.
[7]Accordingly, I grant Westpac leave to apply for leave to appeal out of time.
Leave to appeal
[8] In Greendrake v District Court of New Zealand,5 the Court of Appeal agreed with Fitzgerald J in Finewood Upholstery Ltd v Vaughan6 that the requirement for leave to appeal should serve as a “filtering mechanism” to ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders are made. The Court of Appeal noted that Fitzgerald J recognised the following considerations as relevant to an application for leave to appeal:
(a)a high threshold exists;
(b)the applicant must identify an arguable error of law or fact;
(c)the alleged error should be of general or public importance warranting determination, or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;
(d)the circumstances must warrant incurring further delays; and
(e)the ultimate question is whether the interests of justice are served by granting leave.
4 Interlocutory application for leave to appeal and leave to apply for leave to appeal out of time filed on 15 November 2022.
5 Greendrake v District Court of New Zealand [2020] NZCA 122 at [6].
6 Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].
[9] In its application, Westpac contends that I erred in fact and law in dismissing its application for summary judgment against NDHL and Mr Chu in concluding that:
(a)there was a serious question to be tried concerning the status of the loan money in the interim period between the loan advance and the funds being dispensed from the solicitor’s trust account for the property purchase;
(b)that Westpac’s claim against NDHL and Mr Chu for default of the loan and the guarantee must go to trial.
[10]Westpac contends that I made the following specific errors of fact and law:
(a)I erred in concluding at [76] of my judgment that because the loan funds had not been applied to the property purchase, NDHL and Mr Chu had not had the benefit of the loan funds.
(b)I erred in concluding at [67] and [68] that Mr Nguy’s obligations to the applicant under the retainer meant that it was arguable that the beneficial ownership of the loan funds had not passed to the first respondent.
(c)I erred in my application of Haira v Burbery Mortgage Finance & Savings Ltd (in receivership).7
(d)I did not give sufficient weight to the law relating to trust accounts under the Lawyers and Conveyancers Act 2006 and the Lawyers and Conveyancers Act (Trust Account) Regulations 2008, which makes clear that all trust account monies are those of the client.
(e)I did not give sufficient weight to important undisputed facts, including that NDHL and Mr Chu failed to advise Westpac of Mr Nguy’s
7 Haira v Burbery Mortgage Finance & Savings Ltd (in receivership) [1995] 3 NZLR 396 (CA).
75 per cent interest in the loan funds and that the property purchase was cancelled.
[11]I am satisfied that Westpac has identified arguable errors of fact and law.
[12] As to the importance of the alleged error, I accept that the appeal concerns a significant issue to Westpac and in general, being the status of loan funds in a borrower’s solicitor’s trust account where the solicitor has also been engaged by the bank on a limited retainer.
[13] Against that, the decision turned on the case pleaded by Westpac including, critically, that Mr Nguy breached his retainer to the bank by not returning and misapplying the loan funds, and that this breach caused Westpac loss of the loan funds. The decision may not therefore have the broad application contended by Westpac. Furthermore, it is a decision on a summary judgment application, so all that is required for summary judgment to be declined is that the respondents have an arguable case. The decision does not conclude that the respondents’ position is legally correct.
[14] In terms of delay, if the appeal is resolved in favour of Westpac, it will determine the summary judgment application and resolve the proceeding. On the other hand, if the appeal is unsuccessful, it will have prolonged the proceeding unnecessarily.
[15] Balancing these considerations, and taking into account the fact that the respondents consent to leave being given, I grant Westpac leave to appeal the decision.
Result
[16]Westpac has leave to apply for leave to appeal out of time.
[17]Westpac has leave to appeal the decision to the Court of Appeal.
Associate Judge Gardiner
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