Baker v Seven Seas Limited [2021] NZCA 150 (3 May 2021)

Last Updated: 11 May 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA655/2020 [2021] NZCA 150

	BETWEEN	TREVOR BAKER and MARY ANNA SMITH as trustees of the TREVOR BAKER and MARY ANNA SMITH FAMILY TRUST Applicants
	AND	SEVEN SEAS LIMITED Respondent

Court:	Clifford and Courtney JJ
Counsel:	D J G Cox for Applicants S J Tee for Respondent
Judgment: (On the papers)	3 May 2021 at 2.00 pm

JUDGMENT OF THE COURT

The application for extension of time to appeal is declined.
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REASONS OF THE COURT

(Given by Clifford J)

Introduction

• [1] This is an opposed application for an extension of time^[1] in which to file an “as‑of right” appeal against a decision of Associate Judge Sargisson at the High Court in Auckland setting aside in part a statutory demand issued against the respondent, Seven Seas Ltd.^[2]

Background

• [2] The applicants Trevor Baker and Mary Smith are trustees of their family trust (the Trust). The Trust leases part (one-half) of a commercial property to the respondent, Seven Seas Limited. Seven Seas operates a franchise “pack and send” business from those premises.
• [3] On 19 July 2019 the Trust invoiced Seven Seas for rent and outgoings totalling $16,635.89 (GST inclusive). Of that amount $5,865.02 comprised Auckland City Council rates for the full year 1 July to 31 June 2020. That amount reflected a discount available to the Trust if those rates were paid in advance, rather than by the permitted monthly instalments.
• [4] Seven Seas paid part of the invoiced sum, $7,344.96, on 29 July 2019. Seven Seas said it was not liable to reimburse rates payments other than, in arrears, on a monthly basis.
• [5] The Trust subsequently served a statutory demand on Seven Seas for the balance of $9,290.93, and a further $402.50 for the cost of issue and service of the statutory demand, a total of $9,693.43. On receipt of that demand Seven Seas paid the full amount demanded to its solicitors’ trust account, raised its dispute and invited the Trust to withdraw its demand.
• [6] Some time later, Seven Seas paid a further $2,546.16, leaving $7,147.27 owing under the statutory demand of which all but the $402.50 related to Council rates.
• [7] Seven Seas then applied for the statutory demand to be set aside. The Judge found there was a genuine dispute as to the rates component of that amount because, at the time of its issue, the Trust’s obligation to pay those rates had not accrued.^[3] On that basis, the only amount undisputed and outstanding under the statutory demand was the $402.50 for the incidental costs of the issue and service of the statutory demand.
• [8] The Judge upheld the demand for that amount, set it aside from the balance and noted that, in default of the payment of the $402.50, the Trust could apply to put Seven Seas into liquidation.^[4] As to costs, the Judge said that as the parties were each in effect successful in part, costs should lie where they fell.^[5]
• [9] That judgment was dated 24 March 2020. On 31 March Seven Seas paid the $402.50 into the Trust’s bank account. In giving judgment the Judge also noted that the technicality on which she had recognised a dispute, non-accrual, had by the time of her judgment fallen away: the rates had by then become due and payable. On that basis the Judge indicated that Seven Seas would be well advised to pay the outstanding amount of the original invoice.^[6] Counsel for Seven Seas advises that amount was subsequently paid in full.
• [10] It is common ground the judgment was not received at that time by the applicants’ solicitors. An email error (typo) was responsible but was not detected, principally due to Covid implications it would appear. The applicant’s solicitors finally received the judgment on 12 October 2020.
• [11] The Trust’s solicitors, having finally received the judgment, prepared their application for leave to appeal, their notice of appeal and the affidavit in support by 6 November 2020.
• [12] As a result of an administrative oversight those documents were not served on the respondents, nor dispatched to this Court, until 10 November 2020. They were accepted for filing on 12 November 2020 — two working days outside the recalculated cut-off date,^[7] based on delivery/actual receipt on 12 October 2020, of 10 November. Hence this application.

Analysis

• [13] The Trust has — subject to the grant of an extension of time — the right to appeal the Associate Judge’s decision.^[8] In terms of the Supreme Court authority in Almond v Reed, the delay (two days) is minimal and itself causes no prejudice to the respondent.^[9] At this point, the merits are rarely relevant, much less determinative. Accordingly, such an extension would normally be granted, with an award of costs to the Trust.
• [14] However, this is an unusual situation and we are satisfied that this is one of those unusual circumstances in which, notwithstanding the short period of delay and the absence of prejudice to the respondent, leave to commence this appeal out of time should be declined.
• [15] At the time of the Trust’s original statutory demand, the respondent paid the amount then disputed into its solicitors’ trust account. That went a considerable way to demonstrating its solvency, even though it was not a complete answer to the statutory demand. Moreover, in our view it is significant that, following Associate Judge Sargisson’s judgment Seven Seas paid that part of the invoice relating to the Auckland City Council’s rates, having earlier also paid the $402.50 incidental costs confirmed by the Associate Judge as owing under the notice of demand.
• [16] There is, therefore, no point in the appeal other than, as the applicants acknowledge, if it is shown the Judge was wrong to have found a genuine dispute over the respondent’s liability at the time of the statutory demand for the payment of those rates. Then, rather than costs lying where they fall on that application, the applicants will argue costs should have been awarded in their favour.
• [17] But, in our view, there is little if any prospect of the applicant’s challenge to the Associate Judge’s decision setting aside the statutory demand succeeding. As the Judge noted, the terms of the lease held to apply required Seven Seas to pay outgoings “properly and reasonably incurred in respect of the property”.^[10] The Judge’s conclusion that, in effect, whilst the Trust had an option to pay rates in advance those rates had not been incurred at the relevant time appears orthodox.
• [18] Furthermore, this relatively minor dispute has already involved not only the High Court, but also the Disputes Tribunal, to a surprising extent. Whilst neither party is without fault, we accept on the basis of the affidavit evidence before us that aspects of the Trust’s behaviour — including writing to Seven Seas’ master franchisee, franchisee support, accountant and business affiliates — demanding unusual forms of undertaking from Seven Seas, indicates a lack of objectivity as to the significance of the matters involved. Pursuing an appeal against the Associate Judge’s decision, given all that has now transpired, does likewise. That too counts against the grant of this extension.

Result

• [19] The application for extension of time to appeal is declined.

Costs

• [20] The applicant sought costs. The respondent did not. It is unusual for an application for a short extension of time, such as involved here, to be declined. In the circumstances, we make no order as to costs.

Solicitors:
Rennie Cox, Auckland for Applicants
Morton Tee Limited, Takapuna for Respondent

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^[1] Court of Appeal (Civil) Rules 2005, r 29A.

^[2] Seven Seas Ltd v Baker [2020] NZHC 616 [High Court judgment].

^[3] At [20].

^[4] At [37].

^[5] At [38].

^[6] At [39].

^[7] The usual time to appeal is 20 working days from the date of the judgment: Court of Appeal (Civil) Rules 2005, r 29(1)(a).

^[8] Senior Courts Act 2016, s 56(1)(a).

^[9] Almond v Reed [2017] NZSC 80 at [39(b)].

^[10] High Court judgment, above n 2, at [16].