Hum Hospitality Limited v Stylo Medical Services Limited [2022] NZCA 269 (28 June 2022)

Last Updated: 7 July 2022

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

CA11/2022 [2022] NZCA 269

	BETWEEN	HUM HOSPITALITY LIMITED Appellant
	AND	STYLO MEDICAL SERVICES LIMITED Respondent

Counsel:	R Armitage for Appellant R O Parmenter for Respondent
Judgment: (On the papers)	28 June 2022 at 11.00 am

JUDGMENT OF BROWN J
(Review of Deputy Registrar’s decision)

1. The application to review the Deputy Registrar’s decision declining to dispense with security for costs is declined.
2. Security for costs of $7,060.00 is payable by 26 July 2022.

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REASONS

Introduction

• [1] On 20 December 2021 Brewer J delivered a judgment, confined to the quantum of the respondent’s (Stylo) claim against the appellant (Hum), for rental payments, operating expenses and interest in the amount of $106,184.82 (the quantum judgment).^[1] On 17 January 2022 Hum filed a notice of appeal against the quantum judgment but also purportedly against other earlier judgments.
• [2] Security for costs was set at $7,060.00. Hum’s application for dispensation from the requirement to pay security was dismissed in a decision of the Deputy Registrar dated 10 May 2022. Hum now applies for review of that decision.

Relevant principles

• [3] The principles applicable to dispensation from security for costs were reviewed by the Supreme Court in Reekie v Attorney‑General.^[2] The Court stated that the Registrar should dispense with security if of the view that it is right to require the respondent to defend the judgment under challenge without the usual protection as to costs provided by security.^[3] The Court explained:

[35] ... we consider that the discretion to dispense with security should be exercised so as to:

(a) preserve access to the Court of Appeal by an impecunious appellant in the case of an appeal which a solvent appellant would reasonably wish to prosecute; and

(b) prevent the use of impecuniosity to secure the advantage of being able to prosecute an appeal which would not be sensibly pursued by a solvent litigant.

A reasonable and solvent litigant would not proceed with an appeal which is hopeless. Nor would a reasonable and solvent litigant proceed with an appeal where the benefits (economic or otherwise) to be obtained are outweighed by the costs (economic and otherwise) of the exercise (including the potential liability to contribute to the respondent’s costs if unsuccessful). As should be apparent from what we have just said, analysis of costs and benefits should not be confined to those which can be measured in money.

• [4] The Court also ruled that the review function of the judge in relation to security for costs is to be exercised de novo.^[4]

Relevant background

• [5] The quantum judgment was the final step in protracted litigation in the High Court concerning Stylo’s lease of premises to Hum. In a judgment dated 11 November 2020, Brewer J made orders including that Hum was liable to Stylo for rental of the leased premises at the annual rate of $120,000 plus GST and made directions for the procedure for the determination of quantum of outstanding arrears if the parties could not agree (the liability judgment).^[5] On 11 February 2021 Brewer J granted Stylo’s application for permission to seal orders cancelling the lease.
• [6] Some four months out of time, Hum applied in CA176/2021 for an extension of time to appeal against the liability judgment. This Court granted an extension of time subject to conditions that:

(a) Hum was to pay Stylo arrears in the amount of $92,925.24 within 14 days; and

(b) Hum was to prosecute its appeal with expedition.^[6]

Hum failed to comply with the first condition. Consequently its attempt to bring an appeal against the liability judgment lapsed.

• [7] The context to the quantum judgment was recorded by Brewer J in this way:

[5] Ms Armitage [the sole director and shareholder of Hum], who is not a lawyer, has applied to represent Hum for this purpose. Stylo does not object to that so long as the issue is one of quantum and not, as Ms Armitage would dearly like it to be, one of liability. Since Ms Armitage also guaranteed the lease and is entitled to be heard on her own behalf anyway, I grant her application to represent Hum. That means I will accept the plethora of documents she has filed in the Court which attempt to deal with how much Hum now owes Stylo.

The Judge accepted Mr Parmenter’s submission for Stylo that the only issue was quantum and he recorded that the parties agreed he should decide the issue on the papers. He was satisfied that Stylo was entitled to judgment in the sum of $106,184.82.^[7]

• [8] Hum’s notice of appeal purports to give notice of an appeal against not only the quantum judgment, but also the liability of judgment and the order granting permission to seal orders cancelling the lease of 11 February 2021. Hum cannot revisit the liability judgment given the outcome of CA176/2021.^[8] Nor without leave can it seek to file an appeal long out of time in relation to the 11 February 2021 decision. Hence its current appeal is confined to a challenge to the quantum judgment.

Deputy Registrar’s decision

• [9] Hum’s application for dispensation from security was advanced on the ground of impecuniosity. While noting that the respondent appeared to accept that the appellant was impecunious, the Deputy Registrar stated that before she could be satisfied of Hum’s impecuniosity, she would require full details of its financial circumstances, copies of recent bank statements and information about whether a related person or company could assist with funding and/or whether funds could be borrowed. However the Deputy Registrar put to one side the issue of impecuniosity and turned to consider other relevant factors, noting that if an assessment of those factors led her to conclude that security should not be dispensed with, then there would be no point requesting further financial information.
• [10] Addressing the merits of Hum’s appeal, the Deputy Registrar commenced by observing:

[19] Many of the grounds of appeal relate to decisions that are not under appeal. The only decision currently under challenge is Brewer J’s quantum decision of 20 December 2021. Hum cannot challenge issues of liability, which were previously determined in the substantive decision of 11 November 2020 and given effect to in Brewer J’s minute of 11 February 2021. This was confirmed by Goddard J in minutes dated 24 February 2022 and 17 March 2022 in this proceeding.

• [11] The Deputy Registrar saw no merit in the ground of appeal which challenged the correctness of the quantum judgment, in particular the alleged incorrect inclusion of amounts for GST, insurance and rates. She rejected Hum’s contentions that the quantum decision was not reasoned and that Hum did not have an opportunity to be heard. She saw no realistic prospect of success on the appeal. She concluded:

[29] Even if Hum had established its impecuniosity, I would not dispense with security for costs. I do not consider this appeal would be pursued by a reasonable and solvent litigant because it lacks merit. The appeal is not of public interest, and may involve an element of vexatiousness. In all the circumstances, I am satisfied that Stylo should not be required to defend the quantum decision under appeal without the usual amount of security for its costs.

Discussion

• [12] The submissions of Ms Armitage in support of the review focused on the Deputy Registrar’s conclusion that Hum’s appeal lacked merit. However, unfortunately her submissions were directed not to the quantum judgment but to other complaints about the course of the litigation, despite it having been made clear on several occasions that the current appeal does not relate to those matters.
• [13] In particular she was critical of the Court for failing to address in the quantum judgment what she described as “corrective steps requesting the Court’s attention” undertaken by Hum. She described those steps in this way:

The steps evoked by Hum were a correction of the GST slip made on 11th November 2020 decision under Rule 11.10 (slip), a Rescind request under Rule 7.23(4) (Stylo’s failure to put full and proper evidence before the Court) and a Recall/Rehear Rule 11.9 (missing evidence critical to the liability matter). Hum evoked these steps both by reference to the correct rules in some instances, by case law in others and in words evoking this intent by way of memorandum and in affidavit evidence, received by the Court.

She contended that, the High Court having failed to address those steps, then this Court was empowered to do so.

• [14] Hum has not attempted on the review to identify the manner in which the quantification by Brewer J of the amount which Hum owes to Stylo is erroneous. On the contrary, Hum’s complaints appear to extend back to earlier stages of the litigation which are not live on its current appeal.
• [15] I am not satisfied that there is any merit in Hum’s appeal against the quantum judgment. Consequently, like the Deputy Registrar, I do not consider that the appeal would be pursued by a reasonable and solvent litigant. In my view Stylo should not be required to expend time and funds on resisting this appeal without having available to it the protection against costs which security from an appellant is intended to provide.

Result

• [16] The application to review the Deputy Registrar’s decision declining to dispense with security for costs is declined.
• [17] Security for costs of $7,060.00 is payable by 26 July 2022.

Solicitors:
Winston Wang & Associates, Auckland for Respondent

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^[1] Stylo Medical Services Ltd v Hum Hospitality Ltd [2021] NZHC 3552 (Quantum judgment).

^[2] Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.

^[3] At [31].

^[4] At [23].

^[5] Stylo Medical Services Ltd v Hum Hospitality Ltd [2020] NZHC 2969 at [43]–[50].

^[6] Hum Hospitality Ltd v Stylo Medical Services Ltd [2021] NZCA 377 (Extension judgment) at [22].

^[7] Quantum judgment, above n 1, at [6]–[7] and [9]–[10].

^[8] Extension judgment, above n 7.