Hum Hospitality Limited v Stylo Medical Services Limited [2021] NZCA 377 (13 August 2021)

Last Updated: 17 August 2021

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

CA176/2021 [2021] NZCA 377

	BETWEEN	HUM HOSPITALITY LIMITED Appellant
	AND	STYLO MEDICAL SERVICES LIMITED Respondent

Court:	Kós P and Brown J
Counsel:	B J Burt for Appellant R O Parmenter for Respondent
Judgment: (On the papers)	13 August 2021 at 9 am

JUDGMENT OF THE COURT

1. The application for extension of time to appeal is granted, subject to the following conditions: (a) Hum is to make payment to Stylo of the arrears sum of $92,925.24 within fourteen days; and (b) Hum is to prosecute its appeal with expedition; the appeal must be instituted within fourteen days and will then be placed on the fast track.
2. We make no order for costs.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

• [1] The applicant, Hum Hospitality Ltd, leased premises in Grafton Road, Auckland, from the respondent, Stylo Medical Services Ltd. The lease commenced in February 2011 and is subject to two eight-year rights of renewal. The final expiry date is in January 2033. A three-year rent holiday was provided, but a detailed clause in the lease required Hum to renovate the premises.
• [2] The relationship has been mutually unsatisfactory. Stylo has made several attempts to evict Hum, including, most recently, an application in 2019 to cancel the lease for non-payment of rent.
• [3] On 11 November 2020, Brewer J held that Hum was liable for (a) rental of the premises on and from 1 December 2016 at the annual rate of $120,000 plus GST and reviewable in accordance with cl 47.1 of the lease; and (b) arrears of rental payments of at least $150,000.^[1]
• [4] The Judge ordered Hum to pay the arrears within one calendar month, failing which the lease would be cancelled.^[2] He also ordered that if Hum defaulted on the payment of any future rent, the lease would be cancelled unless Hum could show that the non‑payment had been remedied within 10 working days.^[3]
• [5] On 7 December 2020 Hum applied for a stay of Brewer J’s decision on the basis that it was not in a position to pay the $150,000. Edwards J declined the application.^[4]
• [6] Ultimately, Hum was able to pay the $150,000 on time. However, it did not include GST on its rental payment for January 2021.
• [7] On 2 February 2021, Stylo applied for permission to seal orders cancelling the lease. Brewer J granted the application.^[5] Hum applied successfully for a stay from Brewer J,^[6] which was however lifted on 24 February 2021.^[7] Hum continued to file documents challenging the sealed judgment. Quite properly, it was told by Brewer J that the correct process for reviewing the orders was by appeal to this Court.^[8] Hum applied for another stay on 10 March 2021, which was declined by Brewer J.^[9] It appears from submissions that Hum applied for yet another stay in March 2021. That also was declined by Edwards J.^[10]

Application for an extension of time to appeal

• [8] Hum has now lodged an appeal against the November 2020 decision four months (or 66 working days) out of time.^[11] It applies for an extension of time to appeal. This judgment deals only with that application.
• [9] Rule 29A of the Court of Appeal (Civil) Rules 2005 provides:

29A Extension of time for appealing

(1) If the appeal period prescribed by an enactment or the period prescribed by rule 29(1) or (2) has expired, a party who wishes to appeal may make an interlocutory application for an extension of time in which to appeal.

...

(3) If the Court or a Judge grants an extension of time, the party wishing to appeal must bring the appeal—

(a) within the time specified by the Court or the Judge when granting the extension; or

(b) if no time is specified by the Court or Judge, within 20 working days after the day of the decision granting the extension of time.

• [10] The application of r 29A is governed by Almond v Read.^[12] In deciding whether to grant an extension of time, the ultimate question when considering the exercise of the discretion to extend time is what the interests of justice require. Relevant factors include the length of the delay, the reasons for the delay, the conduct of the parties, particularly of the applicant, any prejudice or hardship to the respondent or to others with a legitimate interest in the outcome, the significance of the issues raised by the proposed appeal, both to the parties and more generally, and whether the appeal lacks merit or is “clearly hopeless”.^[13]

Length and reasons for delay

• [11] Hum says that it was unrepresented at the time the High Court decision was issued due to its previous counsel being appointed to the bench, and its director (a Ms Armitage) did not appreciate the significance of the timeframes for an appeal at the time the decision was issued. It was not until after the time period for bringing an appeal had passed that Hum properly appreciated the implications of the decision.
• [12] We are unpersuaded by these contentions. Hum had competent counsel when it applied for the stay in December 2020, and again for the stay on 15 March 2021. To say that counsel “were acting only on the stay”, as Ms Armitage does in her affidavit in support, evades the issue. It is inconceivable these counsel did not advise about the more regular course of appeal. It may be noted Ms Armitage does not go so far as to lay that accusation of incompetence in her affidavit. The parties have litigated in this Court previously, in 2015.^[14] This is a very long-running dispute.
• [13] Hum’s explanation is wordy, but entirely unsatisfactory. We do not accept that it failed to appreciate the need to bring any appeal very promptly. For reasons known only to Ms Armitage, it failed to do so. If that were the only obstacle lying in the way of the application, it might not be fatal, given the period of delay is neither short nor long. But there are other problems.

Conduct and prejudice

• [14] Hum having defaulted in payment of order (a),^[15] the lease was cancelled in accordance with the terms of the judgment of 11 November 2020. Stylo has since expended cost in obtaining a possession order in March 2021 and in attempting without success to enforce it. That prejudice can however be met by orders for costs should the appeal be dismissed in due course.
• [15] Stylo submits that arrears, interest and costs now outstanding amount to some $92,925.24, based on Hum’s own calculations. It may be noted that there is no undertaking, effective or otherwise, to make such amounts good as a condition of extension of time. That is a fundamental obstacle lying in the way of the present application.
• [16] We note however that the tenant has expended substantial sums in repairs and maintenance of the property, in accordance with the renovation obligation referred to at [1] above. Ms Armitage says, with no great precision, that Hum has spent “approximately $650,000 in restoring the villa to its former self”. Stylo says the evidence of a court-appointed expert puts the actual expenditure at less than $300,000.
• [17] There is no relevant disentitling conduct on the respondent’s part evident to us.

Issues and merits

• [18] Hum’s proposed grounds of appeal are, first, that the Judge was not referred to an earlier version of the lease, which was relevant to the interpretation of the rent review provisions of the lease at issue in the proceeding. Secondly, that the Judge did not have jurisdiction to order that the lease be automatically cancelled if Hum failed to meet any future payment. Thirdly, that the Judge erred in finding that GST was payable on the rent under the lease.
• [19] The probative force of the first point, even if admissible at this juncture, is obscure. We think Mr Parmenter is right on the second point: Brewer J’s orders granted relief against cancellation conditionally under s 256 of the Property Law Act 2007. The condition failing, the cancellation was confirmed. No further hearing was required. The GST point was not taken before Brewer J, as it should have been: a tenant must muster its whole argument in defending default; it cannot make its contest by degrees. The terms of the Judge’s order (a) above at [3] are clear: GST is payable in addition to the $120,000 rent. These grounds, individually and collectively, are not strong. However, we do not assess them as being clearly hopeless.

Conclusion

• [20] But for delay, Hum would be entitled as of right to mount this appeal, provided it paid the requisite security for costs. The interests of justice favour grant of extension in such a case unless there is substantial prejudice or the appeal is clearly hopeless. Neither is really the case here.
• [21] In this case stays have been sought and (except for a brief period) denied. Stylo holds an unstayed judgment entitling cancellation. Hum cannot use an indulgence by this Court to allow it to institute its appeal out of time as a basis for a de facto stay. We will grant the present application, but on terms to ensure that does not occur.

Result

• [22] The application for extension of time to appeal is granted, subject to the following conditions: (a) Hum is to make payment to Stylo of the arrears sum of $92,925.24 within fourteen days; and (b) Hum is to prosecute its appeal with expedition; the appeal must be instituted within fourteen days and will then be placed on the fast track.
• [23] We make no order for costs.

Solicitors:
Winston Wang & Associates, Auckland for Respondent

---

^[1] Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 at [43]–[44].

^[2] At [44]–[45].

^[3] At [48].

^[4] Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 December 2020.

^[5] Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 February 2021.

^[6] Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 12 February 2021.

^[7] Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 24 February 2021.

^[8] Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 9 March 2021.

^[9] Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 11 March 2021.

^[10] Stylo Medical Services Ltd v Hum Hospitality Ltd HC Auckland CIV-2019-404-365, 15 March 2021.

^[11] Filed on 6 April 2021.

^[12] Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801.

^[13] At [38]–[39]. See also Sharma v Wati [2021] NZCA 220; and Kleine v Il Forno Ltd [2021] NZCA 207.

^[14] Stylo Medical Services Ltd v Hum Hospitality Ltd [2015] NZCA 405.

^[15] See [3] above.