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Sexton v Rice Craig and anor [2007] NZCA 200 (23 May 2007)

Last Updated: 18 June 2007

IN THE COURT OF APPEAL OF NEW ZEALAND

CA137/06
[2007] NZCA

BETWEEN BARRY DEAN SEXTON
Applicant

AND RICE CRAIG
First Respondent

AND RICE CRAIG NOMINEE COMPANY LIMITED
Second Respondent

Hearing: 19 February 2007

Court: Hammond, Chambers and Arnold JJ

Counsel: S L Abdale for Applicant
C M Meechan and S V Bonney for First and Second Respondents

Judgment: 23 May 2007

JUDGMENT OF THE COURT

Leave to appeal is refused.

REASONS OF THE COURT

(Given by Arnold J)

Introduction

[1] This is an application for special leave to appeal out of time under r 29(4) of the Court of Appeal (Civil) Rules 2005 against a decision of Winkelmann J striking out the applicant’s claims against the first and second respondents: CIV2004-404-2754 3 June 2005. The application follows the deemed abandonment under r 43 of an appeal which was brought within time.

Background

[2] The applicant filed proceedings against the first and second respondents in May 2004. The statement of claim contained three causes of action, two against the first respondent alleging negligence and a third against the first and second respondents alleging breach of fiduciary duty. In each case the damages claimed were essentially the difference between the market value of a property and the indebtedness secured or proposed to be secured against it.

First cause of action

[3] The applicant alleges that he has been a client of the first respondent, a legal firm, for 15 years. He says that he entered into an agreement to purchase a property and nominated a company, Positive Projects Limited (PPL), as the purchaser. He was a shareholder and director of PPL, which was set up by the first respondent solely for the purpose of carrying out the subdivision of the property. The second respondent, a nominee mortgage company operated by the first respondent, advanced money for the purchase, secured by a first mortgage over the property.
[4] Several years later, after some work had been done on the subdivision, the applicant realised that PPL was likely to be placed into liquidation. He sought advice from the first respondent to enable him to secure PPL’s assets, and in particular the property, prior to this occurring.
[5] The applicant alleges that the first respondent advised him that a company should be incorporated to purchase PPL’s assets. He claims that the first respondent recommended that someone in whom he had confidence hold the shares in the new company on trust for him. He also alleges that the first respondent said it would arrange finance through the second respondent to enable the new company to fund the purchase of the property.
[6] The applicant says that in reliance on this advice a further company, Miyake Developments Limited (Miyake), was incorporated. An associate of the applicant was the sole shareholder and director, holding the shares on trust for the applicant. Miyake made an offer to purchase the property from PPL, subject to finance. However, two days before PPL was liquidated the second respondent advised that the finance would not available for the purchase. Miyake was not able to obtain alternative funds in the short period before PPL was put into liquidation.
[7] The applicant alleges that the first respondent’s advice was negligent in that it represented that the second respondent would lend funds to Miyake and "accept" its offer to purchase without having secured the second respondent’s agreement.

Second cause of action

[8] The applicant alleges that after PPL’s liquidation Miyake submitted an offer to the liquidator to purchase the property. The liquidator was prepared to accept the offer but required payment of a $5,000 services fee in addition to the purchase price. The applicant alleges that the first respondent developed a proposal to bypass the liquidator and thereby avoid payment of the services fee. The first respondent is said to have recommended that the offer to purchase be withdrawn and that a Property Law Act 1952 notice which the second respondent had served on PPL be allowed to run its course. When this occurred, the second respondent would be able to exercise control over the sale of the property. The applicant alleges that the first respondent recommended that, once the second respondent was in control of the sale of the property, Miyake should re-present its offer, but this time to the second respondent.
[9] The applicant alleges that he took the recommended steps in reliance on the first respondent’s advice. However, the second respondent rejected Miyake’s offer. At the same time, the first respondent declined to continue to act for the applicant because of a conflict of interest. The second respondent then exercised its power of sale under its mortgage. The property was sold to another client of the first and second respondents, Atlas Building Removal Limited (Atlas).
[10] The applicant alleges that the first respondent was negligent because it made representations that were dependent on the second respondent’s co-operation without first ensuring that the second respondent would co-operate.

Breach of fiduciary duty

[11] There is an allegation of breach of fiduciary against the first and second respondents. It is alleged that the first respondent acted as solicitors for the applicant, the second respondent and Atlas at a time when they had competing and conflicting interests in the property. Similarly, there was a conflict of interest in respect of the second respondent.

Application to strike out

[12] The first and second respondents applied to strike out the applicant’s claims. They contended that the losses which the applicant sought to recover were the losses of Miyake and not the applicant. Miyake had been struck off the Register of Companies on 23 March 2003 prior to the filing of the statement of claim. It has not been reinstated.
[13] For his part, the applicant filed an application for the addition of a plaintiff, namely Miyake. The application was accompanied by a draft amended statement of claim which added Miyake as a plaintiff and an affidavit from the applicant in which he deposed that he is the sole director and shareholder of Miyake and consented to Miyake being joined.
[14] Both applications were dealt with by Winkelmann J.

Winkelmann J’s decision

[15] Although the applicant had applied to have Miyake restored to the Register, the first respondent had opposed the application, successfully. The Judge dismissed the application to add Miyake, on the basis that it was not possible to add a plaintiff which did not exist and so could not consent to be joined to the proceeding.
[16] On the strike out application, Ms Abdale for the applicant argued that he sued both in his personal capacity and in a representative capacity for PPL and/or Miyake. She accepted that no representative claim was pleaded, but said that she wished to amend the statement of claim to add one.
[17] The Judge struck out the applicant’s claims against the first and second respondents, on the basis that the applicant was seeking to recover losses which were the losses of Miyake. Further, the applicant could not amend to add a representative claim as Miyake did not then exist.
[18] As to the argument that the applicant sued in his personal capacity, because he had suffered personal loss, the Judge said (at [32]):

During the course of argument, Ms Abdale floated a number of ideas for alternative potential claims, but none had any degree of coherence or particularity. Certainly, none had been reduced to a draft pleading.

The Judge concluded:

[35] Accordingly, I accept the arguments advanced by Ms Meechan that as presently pleaded, no reasonable cause of action is disclosed. Further, Ms Abdale was not able to formulate a proposed amendment which would address the present plaintiff’s difficulty. If she wished to resist the application on the basis that an amendment would cure the defect then it was incumbent upon her to formulate an amendment to cure the defect: CED Distributors (1988) Ltd v Computer Logic (in receivership) (1991) 4 PRNZ 35, 46.
[36] If the plaintiff wishes to pursue a derivative action at some later time, he can of course commence new proceedings. Similarly, if he wishes to formulate a claim of the type described in Christensen v Scott [1996] NZLR 273.

The applicant appeals

[19] Winkelmann J delivered her decision on 3 June 2005. The applicant filed an appeal against Winkelmann J’s order striking out his claims against the first and second respondents on 1 July 2005, having served it on the respondents on 27 June 2005. It seems that the applicant did not appeal against the Judge’s refusal to allow Miyake to be joined as a plaintiff.
[20] A hearing date was sought and allocated. However, the case on appeal was not filed within six months, as required by r 43(1). The applicant filed an application for "special leave to appeal" on 7 April 2006 and a supporting affidavit on 10 April 2006. The respondents filed a memorandum in response arguing that, if this application was treated as an application for an extension of time under r 43(3), it was out of time. Accordingly the appeal should be treated as having been abandoned.
[21] Ms Abdale then filed a memorandum advising that the applicant no longer relied on r 43(3), and referred to this Court’s statement in Russell v Commissioner of Inland Revenue (2006) 22 NZTC 19,807 at [7]-[8] concerning the jurisdiction to grant leave under r 29(4) in deemed abandonment cases. Later, on 28 September 2006 in accordance with directions from Ellen France J, the applicant filed the present application and a supporting affidavit.
[22] We pause to observe that the course which the applicant adopted was an unusual one. Instead of appealing, he would have been well advised to have adopted the course which the Judge suggested, namely that of issuing new proceedings, properly pleaded.

Discussion

[23] There are two points for consideration:

(a) Does the Court have jurisdiction to grant the application?

(b) If so, should the discretion be exercised in the applicant’s favour?

We deal with each point in turn.

Does the Court have jurisdiction to grant the application?

[24] Ms Meechan for the respondents challenged Ms Abdale’s claim that Russell makes it clear that r 29(4) confers jurisdiction to grant leave to appeal out of time despite a deemed abandonment under r 43. She submitted that r 43 attempts to achieve finality and questioned whether r 29 should be interpreted as enabling the requirements of r 43 to be overridden.
[25] We set out the terms of r 43 in full:
(1) An appeal is to be treated as having been abandoned if the appellant does not apply for the allocation of a hearing date and file the case on appeal within 6 months after the appeal is brought.
(2) The Court, on application, may -
(a) grant an extension of the period referred to in subclause (1); and
(b) grant 1 or more further extensions of any extended period.
(3) An application for the grant of an extension may be made before the expiry of the period to which the application relates or within 3 months after that expiry; but no extension may be granted on an application that is made later than 3 months after that expiry.
(4) This rule overrides rules 5(2) and 6.
[26] Rule 29(4) provides:

A party may, after the appeal period prescribed in an enactment or the period prescribed by subclause (1) or subclause (2) has expired, apply for special leave to appeal out of time in accordance with Part 2 if it wishes to have the period extended.

[27] While Ms Meechan is correct that the issue of jurisdiction was not argued in Russell and the Court simply assumed that it had jurisdiction, we consider that there is jurisdiction under r 29(4) to grant leave in the case of a deemed abandonment under r 43. We consider, however, that there must be a compelling case before the Court will exercise its discretion under r 29(4) to extend the time for appeal in such a case.
[28] Rule 43 is intended to promote reasonable expedition in bringing appeals on for hearing. This assists the efficient operation of the Court and also promotes fairness to respondents. It sets a limit of six months for the taking of the specified steps, but provides that the Court may grant one or more extensions. An application for an extension must be made during the six month period, or within three months of the expiration of that period. An extension under r 43 is likely to be granted reasonably readily, particularly if the application is made prior to the expiration of the six month period. As we see it, then, r 43 itself provides considerable flexibility for the Court to accommodate deserving cases.
[29] Rule 43(4) provides that r 43 overrides rr 5(2) and 6. Rule 5(2) provides:

The Court may 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 any terms that the Court thinks just.

Rule 6 deals with the effect of non-compliance with the rules. The effect of r 43(4) is to limit options that might otherwise be available to the Court. This emphasises that, in terms of the rules, r 43 is largely self-contained.

[30] However, r 43 does not expressly exclude the operation of r 29(4). We consider that there will occasionally be cases where the timeframes provided for in r 43 are not complied with as a result of an unfortunate combination of circumstances. It is in the interests of justice that the Court has the ability to grant relief from the strict application of r 43 in deserving cases. Accordingly we consider that the Court’s discretion under r 29(4) remains, despite a deemed abandonment under r 43.
[31] We accept Ms Meechan’s submission that the Court’s discretion under r 29(4) should not be exercised in a way that undermines the objectives of r 43. As a consequence, it will be rare in deemed abandonment cases that the Court will exercise its r 29(4) discretion. The case for the exercise of the discretion will need to be compelling. The Court must reach an overall assessment in the light of all relevant considerations. These will include the explanation for the delay and for the failure to apply for an extension under r 43, and the merits of the proposed appeal. Other factors will also be relevant, for example, prejudice to the respondent. The hurdle is a high one.

Should the discretion be exercised in the applicant’s favour?

[32] As we have said, whether or not the discretion should be exercised in the applicant’s favour requires an overall assessment in the light of all relevant factors. In the present case there are two factors for particular consideration in the context of that overall assessment. They are:

(a) The explanation for the delay and the failure to seek an extension under r 43; and
(b) Whether the appeal raises an arguable point.

We address each in turn, before turning to the overall assessment.

Explanation for delay and for failure to seek extension under r 43

[33] The applicant says that at no point did he intend to abandon his appeal against Winkelmann J’s judgment. He says that the delay in compiling and filing the case on appeal, and the failure to apply for an extension within the timeframes set out in r 43(3), occurred as a result of difficulties which he had in securing a grant of legal aid for the appeal.
[34] Following Winkelmann J’s decision, the applicant had to apply for an extension of his aid to undertake the appeal. He says that the Legal Services Agency declined his application initially and again after a reconsideration. The matter then went to the Legal Aid Review Panel. The Panel upheld the applicant’s claim for aid. This was in December 2005. There was then a dispute with the Agency concerning the amount of the applicant’s contribution. This took several months to resolve. Ms Abdale said that the Agency had prohibited her from taking steps to prosecute the appeal until the outstanding issues were resolved, by which time the additional three month period allowed for in r 43(3) had expired.
[35] We should say at once that we do not accept that the Agency prohibited counsel from taking action in the way suggested. It may well be that the Agency said that it would not be liable for any costs incurred until it had resolved the question of the applicant’s contribution. But the Agency could not, and we are sure would not, prohibit counsel from taking steps in accordance with the requirements of this Court’s rules.
[36] As Ms Meechan submitted, although the applicant filed an affidavit summarising his dealings with the Agency, he exhibited none of the relevant correspondence. Thus we are unable to assess his affidavit evidence against the contemporaneous documentary record. While this is unsatisfactory, we accept Ms Abdale’s point that at no stage did the applicant show an intention to abandon the appeal.

Does the appeal raise a substantial point?

[37] In his application of 28 September 2006, the applicant foreshadowed three grounds of appeal:

(a) The Judge was wrong to strike out his claims as the loss suffered was capable of being suffered personally. He relied on Christensen v Scott [1996] 1 NZLR 273 (CA).
(b) Miyake was not restored to the Register of Companies as a result of the opposition of the respondents, having been advised in the course of the proceedings that the applicant intended to seek restoration.

(c) Bias on the part of the Judge.

[38] We were advised prior to the hearing that the third ground would not be pursued. We do not understand how the second point could provide a ground of appeal, and the point was not developed to any extent in argument before us. Accordingly we focus on the first point.
[39] We agree with the Judge that the present statement of claim does not disclose an arguable cause of action. This is for the reason given by the Judge, namely that the losses which the applicant has alleged are losses of Miyake and cannot be recovered in a personal action by the applicant, even if the shares in Miyake were held on trust for him.
[40] The real question is whether the Judge should have given the applicant the opportunity to amend the pleadings, along the lines of the claim in Christensen v Scott. The Judge recognised the possibility of such a claim (see [36] of her decision) and said that her decision did not prevent the applicant from bringing such a claim in the future. However, as noted at [18] above, in reliance on CED Distributors (1988) Ltd, the Judge said that, if the appellant wanted to resist the application to strike out on the basis that he wished to amend his pleadings, he ought to have submitted a draft amended statement of claim.
[41] Taking the latter point first, what this Court said in the CED Distributors (1988) Ltd case was (at 46):

As a matter of practice counsel seeking to resist an application to strike out a pleading on the ground that it can be amended to overcome the objection should attempt to formulate the proposed amendment for consideration in the course of argument. There will be occasions when the need for amendment emerges only in the course of argument, but in many cases it will be apparent much earlier that amendment will be necessary if the pleading is to be retained. The argument will then be better concentrated if a draft is available.

[42] Ms Abdale did not present a draft pleading to the Judge or, initially, to us. Nor at the hearing before us did she spell out with any particularity the precise basis on which an amended claim would be formulated. For that reason, following the argument of the application, we issued a minute requiring the applicant to submit a draft amended statement of claim and allowing the respondents an opportunity to comment on that draft: CA137/06 21 March 2007.
[43] A proposed amended statement of claim has now been filed and we have received comments on it from the respondents.
[44] There are four causes of action in the proposed draft. As in the present statement of claim, the first two causes of action are based in negligence and the third in breach of fiduciary duty. The proposed draft contains an additional cause of action, based in unjust enrichment, against a proposed third defendant, Atlas. As we understand the High Court Rules, the latter requires an interlocutory application and the leave of the Court under r 97. There may also be limitation issues. Accordingly, we are surprised to see it introduced in this way at this stage.
[45] As to the first three causes of action, they are intended to recover personal losses based on the diminution of the value of company shares. The first cause of action clearly relates to the diminution in the value of PPL’s shares. It is not clear from the wording of the relief sought and the dates on which the losses are alleged to have occurred whether the second and third causes of action relate to the diminution in the value of the shares of PPL or of Miyake. Ms Meechan says that they relate to PPL rather than Miyake and that seems to us to be correct. If it is, that is a change from what appears to have been understood by Winkelmann J and what we had understood at the argument of this application, which was that it was the diminution in the value of Miyake’s shares that would form the basis of any amended statement claim.
[46] We accept that Christensen v Scott indicates that the applicant may have a right of personal action, based on the diminution in the value of the shares in PPL which he owned or possibly in Miyake, in which he claims to have had a beneficial interest. We also consider that there is an issue as to whether that case would be followed, given the criticism of it by a majority of the House of Lords in Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1, especially per Lord Bingham at 35 E – 36 B and Lord Millett at 65 E – 66 E. To this extent, the applicant appears to have an arguable claim.

Overall assessment

[47] While we are agreed on the approach to be followed and the factors to be considered in relation to this application, we have reached different views as to whether the application should be granted.
[48] The majority (Hammond and Chambers JJ) consider that the application should be refused. They consider that Winkelmann J’s decision was correct on the basis of the pleadings before her. She was not obliged to give the applicant another chance to plead his claim. She could have done that, but was justified in taking the view that such wholesale changes were required that the better course was for the applicant to start again.
[49] Proof that the Judge was right to exercise her discretion as she did is provided by the draft amended statement of claim which we gave the applicant the opportunity to submit. That pleading remains as incoherent as the pleading already filed. It seeks to add a new defendant. The way in which the applicant alleges that he has suffered loss has changed. The applicant is now attempting to sue for the loss in value of his shares in PPL, whereas both we and Winkelmann J had understood from counsel that the loss which he was seeking to recover was the loss he suffered as a beneficial shareholder of Miyake. This is a fundamental change of direction, which unfortunately has not been thought through in the draft amended pleading.
[50] The majority consider that these difficulties, coupled with the unsatisfactory nature of the explanation given for the failure to utilise the mechanisms in r 43 to obtain further time, mean that the necessary compelling case for granting leave under r 29(4) in deemed abandonment cases has not been made out.
[51] The remaining member of the Court (Arnold J) considers that a sufficient basis for a claim of the type earlier foreshadowed has been made out, albeit not with the clarity and precision that is desirable, and, given the context in which the difficulties under r 43 have arisen, would grant leave.
[52] In accordance with the views of the majority, an extension of time will not be granted.

Decision

[53] In accordance with the view of the majority, the application for special leave to appeal out of time is refused. As the applicant is legally aided there is no order for costs. Had he not been legally aided, we would have awarded costs to the respondents.

Solicitors:
Tetley-Jones Thom Sexton, Auckland for Applicant
Bell Gully, Auckland for First and Second Respondents

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[3]	The applicant alleges that he has been a client of the first respondent, a legal firm, for 15 years. He says that he entered into an agreement to purchase a property and nominated a company, Positive Projects Limited (PPL), as the purchaser. He was a shareholder and director of PPL, which was set up by the first respondent solely for the purpose of carrying out the subdivision of the property. The second respondent, a nominee mortgage company operated by the first respondent, advanced money for the purchase, secured by a first mortgage over the property.
[4]	Several years later, after some work had been done on the subdivision, the applicant realised that PPL was likely to be placed into liquidation. He sought advice from the first respondent to enable him to secure PPL’s assets, and in particular the property, prior to this occurring.
[5]	The applicant alleges that the first respondent advised him that a company should be incorporated to purchase PPL’s assets. He claims that the first respondent recommended that someone in whom he had confidence hold the shares in the new company on trust for him. He also alleges that the first respondent said it would arrange finance through the second respondent to enable the new company to fund the purchase of the property.
[6]	The applicant says that in reliance on this advice a further company, Miyake Developments Limited (Miyake), was incorporated. An associate of the applicant was the sole shareholder and director, holding the shares on trust for the applicant. Miyake made an offer to purchase the property from PPL, subject to finance. However, two days before PPL was liquidated the second respondent advised that the finance would not available for the purchase. Miyake was not able to obtain alternative funds in the short period before PPL was put into liquidation.
[7]	The applicant alleges that the first respondent’s advice was negligent in that it represented that the second respondent would lend funds to Miyake and "accept" its offer to purchase without having secured the second respondent’s agreement.

[8]	The applicant alleges that after PPL’s liquidation Miyake submitted an offer to the liquidator to purchase the property. The liquidator was prepared to accept the offer but required payment of a $5,000 services fee in addition to the purchase price. The applicant alleges that the first respondent developed a proposal to bypass the liquidator and thereby avoid payment of the services fee. The first respondent is said to have recommended that the offer to purchase be withdrawn and that a Property Law Act 1952 notice which the second respondent had served on PPL be allowed to run its course. When this occurred, the second respondent would be able to exercise control over the sale of the property. The applicant alleges that the first respondent recommended that, once the second respondent was in control of the sale of the property, Miyake should re-present its offer, but this time to the second respondent.
[9]	The applicant alleges that he took the recommended steps in reliance on the first respondent’s advice. However, the second respondent rejected Miyake’s offer. At the same time, the first respondent declined to continue to act for the applicant because of a conflict of interest. The second respondent then exercised its power of sale under its mortgage. The property was sold to another client of the first and second respondents, Atlas Building Removal Limited (Atlas).
[10]	The applicant alleges that the first respondent was negligent because it made representations that were dependent on the second respondent’s co-operation without first ensuring that the second respondent would co-operate.

[12]	The first and second respondents applied to strike out the applicant’s claims. They contended that the losses which the applicant sought to recover were the losses of Miyake and not the applicant. Miyake had been struck off the Register of Companies on 23 March 2003 prior to the filing of the statement of claim. It has not been reinstated.
[13]	For his part, the applicant filed an application for the addition of a plaintiff, namely Miyake. The application was accompanied by a draft amended statement of claim which added Miyake as a plaintiff and an affidavit from the applicant in which he deposed that he is the sole director and shareholder of Miyake and consented to Miyake being joined.
[14]	Both applications were dealt with by Winkelmann J.

[15]	Although the applicant had applied to have Miyake restored to the Register, the first respondent had opposed the application, successfully. The Judge dismissed the application to add Miyake, on the basis that it was not possible to add a plaintiff which did not exist and so could not consent to be joined to the proceeding.
[16]	On the strike out application, Ms Abdale for the applicant argued that he sued both in his personal capacity and in a representative capacity for PPL and/or Miyake. She accepted that no representative claim was pleaded, but said that she wished to amend the statement of claim to add one.
[17]	The Judge struck out the applicant’s claims against the first and second respondents, on the basis that the applicant was seeking to recover losses which were the losses of Miyake. Further, the applicant could not amend to add a representative claim as Miyake did not then exist.
[18]	As to the argument that the applicant sued in his personal capacity, because he had suffered personal loss, the Judge said (at [32]):

[19]	Winkelmann J delivered her decision on 3 June 2005. The applicant filed an appeal against Winkelmann J’s order striking out his claims against the first and second respondents on 1 July 2005, having served it on the respondents on 27 June 2005. It seems that the applicant did not appeal against the Judge’s refusal to allow Miyake to be joined as a plaintiff.
[20]	A hearing date was sought and allocated. However, the case on appeal was not filed within six months, as required by r 43(1). The applicant filed an application for "special leave to appeal" on 7 April 2006 and a supporting affidavit on 10 April 2006. The respondents filed a memorandum in response arguing that, if this application was treated as an application for an extension of time under r 43(3), it was out of time. Accordingly the appeal should be treated as having been abandoned.
[21]	Ms Abdale then filed a memorandum advising that the applicant no longer relied on r 43(3), and referred to this Court’s statement in Russell v Commissioner of Inland Revenue (2006) 22 NZTC 19,807 at [7]-[8] concerning the jurisdiction to grant leave under r 29(4) in deemed abandonment cases. Later, on 28 September 2006 in accordance with directions from Ellen France J, the applicant filed the present application and a supporting affidavit.
[22]	We pause to observe that the course which the applicant adopted was an unusual one. Instead of appealing, he would have been well advised to have adopted the course which the Judge suggested, namely that of issuing new proceedings, properly pleaded.

[24]	Ms Meechan for the respondents challenged Ms Abdale’s claim that Russell makes it clear that r 29(4) confers jurisdiction to grant leave to appeal out of time despite a deemed abandonment under r 43. She submitted that r 43 attempts to achieve finality and questioned whether r 29 should be interpreted as enabling the requirements of r 43 to be overridden.
[25]	We set out the terms of r 43 in full:
(1)	An appeal is to be treated as having been abandoned if the appellant does not apply for the allocation of a hearing date and file the case on appeal within 6 months after the appeal is brought.
(2)	The Court, on application, may -
(a)	grant an extension of the period referred to in subclause (1); and
(b)	grant 1 or more further extensions of any extended period.
(3)	An application for the grant of an extension may be made before the expiry of the period to which the application relates or within 3 months after that expiry; but no extension may be granted on an application that is made later than 3 months after that expiry.
(4)	This rule overrides rules 5(2) and 6.
[26]	Rule 29(4) provides:

[27]	While Ms Meechan is correct that the issue of jurisdiction was not argued in Russell and the Court simply assumed that it had jurisdiction, we consider that there is jurisdiction under r 29(4) to grant leave in the case of a deemed abandonment under r 43. We consider, however, that there must be a compelling case before the Court will exercise its discretion under r 29(4) to extend the time for appeal in such a case.
[28]	Rule 43 is intended to promote reasonable expedition in bringing appeals on for hearing. This assists the efficient operation of the Court and also promotes fairness to respondents. It sets a limit of six months for the taking of the specified steps, but provides that the Court may grant one or more extensions. An application for an extension must be made during the six month period, or within three months of the expiration of that period. An extension under r 43 is likely to be granted reasonably readily, particularly if the application is made prior to the expiration of the six month period. As we see it, then, r 43 itself provides considerable flexibility for the Court to accommodate deserving cases.
[29]	Rule 43(4) provides that r 43 overrides rr 5(2) and 6. Rule 5(2) provides:

[33]	The applicant says that at no point did he intend to abandon his appeal against Winkelmann J’s judgment. He says that the delay in compiling and filing the case on appeal, and the failure to apply for an extension within the timeframes set out in r 43(3), occurred as a result of difficulties which he had in securing a grant of legal aid for the appeal.
[34]	Following Winkelmann J’s decision, the applicant had to apply for an extension of his aid to undertake the appeal. He says that the Legal Services Agency declined his application initially and again after a reconsideration. The matter then went to the Legal Aid Review Panel. The Panel upheld the applicant’s claim for aid. This was in December 2005. There was then a dispute with the Agency concerning the amount of the applicant’s contribution. This took several months to resolve. Ms Abdale said that the Agency had prohibited her from taking steps to prosecute the appeal until the outstanding issues were resolved, by which time the additional three month period allowed for in r 43(3) had expired.
[35]	We should say at once that we do not accept that the Agency prohibited counsel from taking action in the way suggested. It may well be that the Agency said that it would not be liable for any costs incurred until it had resolved the question of the applicant’s contribution. But the Agency could not, and we are sure would not, prohibit counsel from taking steps in accordance with the requirements of this Court’s rules.
[36]	As Ms Meechan submitted, although the applicant filed an affidavit summarising his dealings with the Agency, he exhibited none of the relevant correspondence. Thus we are unable to assess his affidavit evidence against the contemporaneous documentary record. While this is unsatisfactory, we accept Ms Abdale’s point that at no stage did the applicant show an intention to abandon the appeal.

[38]	We were advised prior to the hearing that the third ground would not be pursued. We do not understand how the second point could provide a ground of appeal, and the point was not developed to any extent in argument before us. Accordingly we focus on the first point.
[39]	We agree with the Judge that the present statement of claim does not disclose an arguable cause of action. This is for the reason given by the Judge, namely that the losses which the applicant has alleged are losses of Miyake and cannot be recovered in a personal action by the applicant, even if the shares in Miyake were held on trust for him.
[40]	The real question is whether the Judge should have given the applicant the opportunity to amend the pleadings, along the lines of the claim in Christensen v Scott. The Judge recognised the possibility of such a claim (see [36] of her decision) and said that her decision did not prevent the applicant from bringing such a claim in the future. However, as noted at [18] above, in reliance on CED Distributors (1988) Ltd, the Judge said that, if the appellant wanted to resist the application to strike out on the basis that he wished to amend his pleadings, he ought to have submitted a draft amended statement of claim.
[41]	Taking the latter point first, what this Court said in the CED Distributors (1988) Ltd case was (at 46):

[42]	Ms Abdale did not present a draft pleading to the Judge or, initially, to us. Nor at the hearing before us did she spell out with any particularity the precise basis on which an amended claim would be formulated. For that reason, following the argument of the application, we issued a minute requiring the applicant to submit a draft amended statement of claim and allowing the respondents an opportunity to comment on that draft: CA137/06 21 March 2007.
[43]	A proposed amended statement of claim has now been filed and we have received comments on it from the respondents.
[44]	There are four causes of action in the proposed draft. As in the present statement of claim, the first two causes of action are based in negligence and the third in breach of fiduciary duty. The proposed draft contains an additional cause of action, based in unjust enrichment, against a proposed third defendant, Atlas. As we understand the High Court Rules, the latter requires an interlocutory application and the leave of the Court under r 97. There may also be limitation issues. Accordingly, we are surprised to see it introduced in this way at this stage.
[45]	As to the first three causes of action, they are intended to recover personal losses based on the diminution of the value of company shares. The first cause of action clearly relates to the diminution in the value of PPL’s shares. It is not clear from the wording of the relief sought and the dates on which the losses are alleged to have occurred whether the second and third causes of action relate to the diminution in the value of the shares of PPL or of Miyake. Ms Meechan says that they relate to PPL rather than Miyake and that seems to us to be correct. If it is, that is a change from what appears to have been understood by Winkelmann J and what we had understood at the argument of this application, which was that it was the diminution in the value of Miyake’s shares that would form the basis of any amended statement claim.
[46]	We accept that Christensen v Scott indicates that the applicant may have a right of personal action, based on the diminution in the value of the shares in PPL which he owned or possibly in Miyake, in which he claims to have had a beneficial interest. We also consider that there is an issue as to whether that case would be followed, given the criticism of it by a majority of the House of Lords in Johnson v Gore Wood & Co (a firm) [2002] 2 AC 1, especially per Lord Bingham at 35 E – 36 B and Lord Millett at 65 E – 66 E. To this extent, the applicant appears to have an arguable claim.

[47]	While we are agreed on the approach to be followed and the factors to be considered in relation to this application, we have reached different views as to whether the application should be granted.
[48]	The majority (Hammond and Chambers JJ) consider that the application should be refused. They consider that Winkelmann J’s decision was correct on the basis of the pleadings before her. She was not obliged to give the applicant another chance to plead his claim. She could have done that, but was justified in taking the view that such wholesale changes were required that the better course was for the applicant to start again.
[49]	Proof that the Judge was right to exercise her discretion as she did is provided by the draft amended statement of claim which we gave the applicant the opportunity to submit. That pleading remains as incoherent as the pleading already filed. It seeks to add a new defendant. The way in which the applicant alleges that he has suffered loss has changed. The applicant is now attempting to sue for the loss in value of his shares in PPL, whereas both we and Winkelmann J had understood from counsel that the loss which he was seeking to recover was the loss he suffered as a beneficial shareholder of Miyake. This is a fundamental change of direction, which unfortunately has not been thought through in the draft amended pleading.
[50]	The majority consider that these difficulties, coupled with the unsatisfactory nature of the explanation given for the failure to utilise the mechanisms in r 43 to obtain further time, mean that the necessary compelling case for granting leave under r 29(4) in deemed abandonment cases has not been made out.
[51]	The remaining member of the Court (Arnold J) considers that a sufficient basis for a claim of the type earlier foreshadowed has been made out, albeit not with the clarity and precision that is desirable, and, given the context in which the difficulties under r 43 have arisen, would grant leave.
[52]	In accordance with the views of the majority, an extension of time will not be granted.