Oraka Technologies Ltd v Geostel Vision Ltd [2009] NZCA 411; (2009) 20 PRNZ 1 (15 September 2009)

Last Updated: 9 January 2012

IN THE COURT OF APPEAL OF NEW ZEALAND

CA145/2009

[2009] NZCA 411

BETWEEN ORAKA TECHNOLOGIES LIMITED
First Appellant

AND ORAKA GRADERS LIMITED
Second Appellant

AND MICHAEL WILLIAM SCHWARZ
Third Appellant

AND GEOSTEL VISION LIMITED
First Respondent

AND PAUL DAYNES AND GORDON ROBERTSON
Second Respondents

AND NAPIER TOOL & DIE CO LIMITED
Third Respondent

Hearing: 15 September 2009

Court: William Young P, O'Regan and Arnold JJ

Counsel: B P Henry for Appellants
K J Crossland for Respondents

Judgment: 15 September 2009

ORAL JUDGMENT OF THE COURT

A The strike out application is dismissed.

2. The respondents are to pay costs on a standard band A basis along with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by William Young P)

[1] This is an application to strike out an appeal on the ground that security for costs was not provided in a timely way.
[2] The appeal is against a judgment delivered on 18 February this year in which Allan J dismissed proceedings brought by the current appellants, Oraka Technologies Ltd, Oraka Graders Ltd and Mr M W Schwarz (the “Oraka parties”) against Geostal Vision Ltd and others alleging infringement of copyright and breach of fiduciary duty.
[3] Under r 35 of the Court of Appeal (Civil) Rules 2005, an appellant must provide security for costs within 20 working days after the notice of appeal has been filed. It is open to the Registrar to dispense with security providing an application to that effect is made within the same time period, that is 20 working days (see r 35(6) and (7)). In this case, that period expired on 15 April. By reason of a miscalculation of dates, the Oraka parties applied one day late, on 16 April, for an order dispensing with security. In the end, the Registrar declined the application, both by reason of the time point and on the merits and the appellants then provided security for costs and, a few days later, paid the setting down fee. After security for costs had been paid, the respondents applied for an order striking out the appeal, a course which is provided for under r 37(1).
[4] To put this in perspective, the dispensation was applied for one day late, the dispensation was refused on 18 May and security was provided on 11 June, some 43 days late.
[5] In the ordinary course of events, a one day default in seeking a dispensation from the requirement to meet security followed by reasonably prompt payment once dispensation was declined would not justify striking out an appeal. This is despite the reality, much stressed by Mr Crossland, that the rules do not stipulate that time for providing security stops running while a dispensation application is under consideration.
[6] There are grounds for concern as to the ability of the appellants to meet costs over and above the security which has been provided. The respondents are particularly troubled by the apparent contradiction between payment of security and the setting down fee on the one hand and, on the other, what has been said on behalf of the Oraka parties as to their impecuniosity (both when seeking the dispensation and in support of a stay application in the High Court). These concerns have been enhanced by the unwillingness of the Oraka parties to give a straight-forward and open explanation as to their funding. But we do not regard this as being of controlling significance given that the primary obligation (that is the provision of security for costs) has now been met and that, at this stage in proceedings, the respondents are not entitled to require the Oraka parties to disclose the basis upon which the appeal is being funded. We see this as particularly significant given that Mr Crossland did not seek to argue that there was likely to be a shortfall between the costs awarded if the appeal is unsuccessful and the security which has now been slightly belatedly provided. The present application is thus plainly not driven by concern as to the likelihood of such a shortfall.
[7] The respondents also rely on what they say is the lack of substance in the arguments to be advanced by the Oraka parties. In cases where an extension of time for appealing is in issue, this Court will look at the merits of the appeal and in particular will not grant an extension where it considers that the appeal is hopeless, see for instance Havanaco Ltd v Stewart CA67/05 17 June 2005. It is right to say that the “arguable case” threshold is not particularly difficult to cross, see Aotearoa Kiwifruit Export Ltd v McNaughton and others CA42/06 23 August 2006. And assuming (without holding) that the principle underpinning those cases is applicable in the present context (where the Oraka parties are not seeking an extension but rather resisting a strike out application), we are not persuaded that the appeal is hopeless.
[8] Accordingly the strike out application is dismissed. The respondents are to pay costs on a standard band A basis along with usual disbursements.

Solicitors:
Tim Kinder, Putaruru for Appellants
Stace Hammond, Hamilton for Third Respondent