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Aotearoa Kiwifruit Export Limited and ors v Southlink Limited and anor [2006] NZCA 225 (3 August 2006)

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Aotearoa Kiwifruit Export Limited and ors v Southlink Limited and anor [2006] NZCA 225 (3 August 2006)

Last Updated: 29 August 2006

IN THE COURT OF APPEAL OF NEW ZEALAND

CA42/06

BETWEEN AOTEAROA KIWIFRUIT EXPORT LIMITED
First Applicant

AND IAN MCNAUGHTON & ORS
Second Applicant

AND MANUAL MORGAN, HAAKA MORGAN AND RITA MORGAN AS TRUSTEES OF TE HAUAURU LANDS TRUST
Third Applicant

AND KAIWAI KIWIFRUIT CORPORATION LIMITED
Fourth Applicant

AND MAPU KIWIFRUIT CORPORATION LIMITED
Fifth Applicant

AND SOUTHLINK LIMITED
First Respondent

AND ZESPRI GROUP LIMITED
Second Respondent

Hearing: 7 August 2006

Court: William Young P, Robertson and Arnold JJ

Counsel: G J Christie for Applicants
B D Gray QC for Respondents

Judgment: 23 August 2006 at 11am

JUDGMENT OF THE COURT

A Leave to appeal is granted.

B The time for lodging the appeal is 13 October 2006.
____________________________________________________________________

REASONS OF THE COURT

(Given by Robertson J)

Introduction

[1] The applicants seek special leave to appeal out of time under r 29(4) of the Court of Appeal (Civil) Rules 2005.

Facts

[2] Zespri, the second respondent, is a statutory body that was created to be a single-desk purchaser and marketer of New Zealand Kiwifruit. It is the only entity permitted to export kiwifruit to overseas markets, except Australia.
[3] The second to fifth applicants are kiwifruit growers who supplied kiwifruit to the first applicant, Aotearoa Kiwifruit Export Ltd (AKE). AKE organised the sale of the growers’ kiwifruit for export. AKE could sell to Australia, but had to sell fruit to Zespri if they wanted the fruit to go to other export markets. Sales by AKE to Zespri were effected through Southlink (the first respondent), a logistics company. AKE contracted with Southlink and Southlink contracted with Zespri.
[4] In 2001, Zespri discovered that fruit initially exported to Australia from New Zealand was being on-shipped to the lucrative Asian markets. Some of this fruit was AKE fruit. In July 2002 Zespri instructed Southlink to stop collecting kiwifruit from AKE. This lock-down occurred at the height of the export season. Much of the fruit not picked up spoiled. The applicants brought proceedings in the High Court for damages arising from this loss.
[5] On 3 February 2006, Winkelmann J found that Zespri breached r 9 of the Kiwifruit Export Regulations 1999 by unjustifiably discriminating against the growers for punitive and disciplinary reasons. However, the Judge found that the applicants were not entitled to recover damages for this breach of the statutory duty. She also held that the growers were not entitled to damages for breach of contract as AKE had a contract with Southlink not Zespri.
[6] The applicants filed an appeal within the required 20 working days, however, because of an oversight, they failed to serve notice on the respondents within that period. Under r 31 of the Court of Appeal (Civil) Rules, an appeal is not "brought" until the notice of appeal has been filed and served.
[7] Accordingly, special leave is required before the applicants can appeal Winkelmann J’s decision.

Contentions of the parties

[8] The applicants submit that special leave to appeal should be granted because:

(a) Notice was not served on the respondents because of an oversight by the serving solicitor;
(b) The notice of appeal was served only six working days after the expiry of the twenty working day period. The respondents did not suffer any significant prejudice as a result of the delay; and,

[9] The respondents submit that leave should not be granted as the substantive grounds of appeal are hopeless.

Discussion

[10] The test for an application for special leave to appeal out of time is whether granting leave would meet the overall interests of justice: Havanaco Ltd v Stewart [2005] NZCA 158; (2005) 17 PRNZ 622 at [5] (CA).
[11] In RPNZ Ltd v Real Estate Institute of New Zealand Inc CA227/05 19 December 2005 at [7], this Court held that where an appeal has not been brought within time as a consequence of a mistake or oversight on the part of an intending appellant’s solicitors this Court is likely, in the absence of significant prejudice to the other party, to exercise its discretion under r 29(4) in favour of granting leave. Leave will not be granted if the appeal appears to be hopeless.

Are the substantive grounds of appeal hopeless?

[12] The applicants, in their substantive appeal, assert that the Judge was erroneous in fact and in law in determining that:

(a) there was no private right of action for the breach of statutory duty;

(b) the contract between Zespri and Southlink was not enforceable by the applicants; and,
(c) the applicants had not established quantum for their fruit loss claim.

[13] The respondents argue that even if the applicants do have an arguable case in relation to damages for the breach of statutory duty and breach of contract claims, their appeal will inevitably fail in relation to causation and quantum.
[14] Winkelmann J, despite not finding any actionable breach, made a specific finding that the applicants had failed adequately to prove any loss arising from the breaches. The respondents argue that this substantive ground of appeal would require the Court to go behind a finding of fact and that there are not adequate reasons for the Court to do so.
[15] The applicants argue that the Judge made an error capable of appeal in determining that they failed to establish causation and quantum. They assert that the Judge misinterpreted documentation regarding the fruit loss.
[16] Establishing an "arguable case" is not a high threshold to cross. The applicants need to establish that the appeal is not hopeless.
[17] We have concluded that the applicants have an arguable case and that the merits of the case ought to be assessed in an appeal.
[18] We are persuaded that there is an argument that the Judge may have misunderstood some of the accounting evidence, overlooked the effect of the audits conducted and misunderstood the loss claimed. Even on her assessment, she appears to acknowledge justification for at least a modest amount of damages.

Result

[19] We cannot conclude that the matter is hopeless, even on the question of causation and loss. Leave to appeal should therefore be granted.
[20] The time for lodging the case on appeal is 13 October 2006.
[21] There will be no order as to costs.

Solicitors:
Simpson Grierson, Auckland, for Applicants
Bell Gully, Auckland, for Respondents

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[2]	Zespri, the second respondent, is a statutory body that was created to be a single-desk purchaser and marketer of New Zealand Kiwifruit. It is the only entity permitted to export kiwifruit to overseas markets, except Australia.
[3]	The second to fifth applicants are kiwifruit growers who supplied kiwifruit to the first applicant, Aotearoa Kiwifruit Export Ltd (AKE). AKE organised the sale of the growers’ kiwifruit for export. AKE could sell to Australia, but had to sell fruit to Zespri if they wanted the fruit to go to other export markets. Sales by AKE to Zespri were effected through Southlink (the first respondent), a logistics company. AKE contracted with Southlink and Southlink contracted with Zespri.
[4]	In 2001, Zespri discovered that fruit initially exported to Australia from New Zealand was being on-shipped to the lucrative Asian markets. Some of this fruit was AKE fruit. In July 2002 Zespri instructed Southlink to stop collecting kiwifruit from AKE. This lock-down occurred at the height of the export season. Much of the fruit not picked up spoiled. The applicants brought proceedings in the High Court for damages arising from this loss.
[5]	On 3 February 2006, Winkelmann J found that Zespri breached r 9 of the Kiwifruit Export Regulations 1999 by unjustifiably discriminating against the growers for punitive and disciplinary reasons. However, the Judge found that the applicants were not entitled to recover damages for this breach of the statutory duty. She also held that the growers were not entitled to damages for breach of contract as AKE had a contract with Southlink not Zespri.
[6]	The applicants filed an appeal within the required 20 working days, however, because of an oversight, they failed to serve notice on the respondents within that period. Under r 31 of the Court of Appeal (Civil) Rules, an appeal is not "brought" until the notice of appeal has been filed and served.
[7]	Accordingly, special leave is required before the applicants can appeal Winkelmann J’s decision.

[13]	The respondents argue that even if the applicants do have an arguable case in relation to damages for the breach of statutory duty and breach of contract claims, their appeal will inevitably fail in relation to causation and quantum.
[14]	Winkelmann J, despite not finding any actionable breach, made a specific finding that the applicants had failed adequately to prove any loss arising from the breaches. The respondents argue that this substantive ground of appeal would require the Court to go behind a finding of fact and that there are not adequate reasons for the Court to do so.
[15]	The applicants argue that the Judge made an error capable of appeal in determining that they failed to establish causation and quantum. They assert that the Judge misinterpreted documentation regarding the fruit loss.
[16]	Establishing an "arguable case" is not a high threshold to cross. The applicants need to establish that the appeal is not hopeless.
[17]	We have concluded that the applicants have an arguable case and that the merits of the case ought to be assessed in an appeal.
[18]	We are persuaded that there is an argument that the Judge may have misunderstood some of the accounting evidence, overlooked the effect of the audits conducted and misunderstood the loss claimed. Even on her assessment, she appears to acknowledge justification for at least a modest amount of damages.

[19]	We cannot conclude that the matter is hopeless, even on the question of causation and loss. Leave to appeal should therefore be granted.
[20]	The time for lodging the case on appeal is 13 October 2006.
[21]	There will be no order as to costs.