Wilfred v Lexington Legal Limited

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA31/2017
[2019] NZCA 594

BETWEEN	HARMON LYNN WILFRED Appellant
AND	LEXINGTON LEGAL LIMITED Respondent

Court:	Kós P, Brown and Clifford JJ
Counsel:	Appellant in person No appearance for Respondent
Judgment: (On the papers)	28 November 2019 at 11 am

JUDGMENT OF THE COURT

AThe appeal is struck out.
BThere is no order as to costs.

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REASONS OF THE COURT

(Given by Clifford J)

On 15 December 2016, Harmon Lynn Wilfred was adjudicated bankrupt by Associate Judge Matthews on the application of Lexington Legal Ltd.[1] On 26 January 2017, Mr Wilfred appealed that adjudication to this Court on the basis that the Judge erred in failing to exercise his discretion to halt the application for adjudication.[2]
[1]Wilfred v Lexington Legal Ltd HC Christchurch CIV-2016-409-335, 15 December 2016.
[2]Insolvency Act 2006, s 38. We note that Mr Wilfred did not apply for a suspension of the adjudication and his bankruptcy is therefore unaffected by this appeal.
Mr Wilfred applied for security for costs to be dispensed with. The Deputy Registrar declined that application, a decision upheld on review by Harrison J.[3] Mr Wilfred was ordered to pay security by 17 May 2017. He did not do so.
[3]Wilfred v Lexington Legal Ltd [2017] NZCA 158.
An appeal is deemed abandoned under r 43 of the Court of Appeal (Civil) Rules 2005 if an appellant does not file a case on appeal and apply for a hearing date within three months of bringing the appeal. Mr Wilfred filed his case on appeal in April 2017 and was granted a waiver of the fee to schedule the hearing date at that time. Unfortunately, on a closer inspection of the file, it is not clear that Mr Wilfred then went on to formally apply for the allocation of a hearing date in terms of r 38. It would therefore seem that the appeal ought to have been deemed abandoned by the Registrar at some point in 2017. For the purposes of this judgment, however, we are prepared to assume Mr Wilfred’s appeal remains on foot.
Following Harrison J’s judgment on security for costs, the appeal essentially lay dormant for two years until, on 9 August 2019, Clifford J issued a minute warning Mr Wilfred that the Court intended to consider whether to strike out his appeal pursuant to r 44A for failing to prosecute it with due diligence and dispatch. The parties were invited to file submissions. In a memorandum, Mr Wilfred noted that the respondent entered liquidation in May 2017 and was removed from the Companies Register approximately one year later. He raised the possibility that security for costs might no longer be required and sought to continue the appeal. No submissions were filed for Lexington Legal.
We are satisfied that Mr Wilfred has not prosecuted the appeal with due diligence and dispatch.[4] The issue of security for costs was fully litigated in 2017 and we do not think events in the years since challenge the substantive correctness of Harrison J’s determination, made at that point, that security for costs ought to be paid. Appellants required to pay security are not entitled to sit on their hands in the hope that the position will eventually change. In any event, if the liquidation or deregistration of the respondent did in fact alter the position, Mr Wilfred should have taken steps when those events occurred. Well over a year has passed without him doing so and we are not prepared to reopen the issue.
[4]Court of Appeal (Civil) Rules 2005, r 44A(1)(b).
The appeal is struck out.
There is no order as to costs.

The Court of Appeal of New Zealand heard an appeal from Harmon Lynn Wilfred against Lexington Legal Limited. The dispute involved an adjudication of bankruptcy made by Associate Judge Matthews on 15 December 2016, which Wilfred sought to appeal on the grounds that the judge failed to exercise his discretion to halt the application for adjudication. This appeal was made on 26 January 2017. The case was complicated by Wilfred's failure to pay security for costs, a matter that was adjudicated upon by Harrison J in 2017. Despite the respondent entering liquidation in May 2017, the appeal lay dormant until Clifford J issued a warning in August 2019 that the court intended to strike it out for lack of due diligence and dispatch.

The key legal issue before the Court of Appeal was whether Wilfred had prosecuted his appeal with due diligence and dispatch. The court found that Wilfred had not done so, as he had not taken any steps to address the issue of security for costs after the respondent's liquidation. The court considered that appellants are not entitled to delay their appeals in the hope that circumstances will change, and that if liquidation or deregistration of the respondent had altered the position, Wilfred should have acted promptly. The court concluded that the appeal had been dormant for too long and that it ought to be struck out.

The Court of Appeal struck out the appeal, finding that Wilfred had not prosecuted it with due diligence and dispatch. The court noted that while the respondent had entered liquidation and was deregistered, Wilfred had not taken any action in response to these events. The court held that appellants are not permitted to delay their appeals in anticipation of a change in circumstances, and that if liquidation or deregistration had altered the position, Wilfred should have acted promptly. The court found that over a year had passed without any action from Wilfred, and it was not prepared to reopen the issue. There was no order as to costs.

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