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High Court of New Zealand Decisions |
IN THE HIGH COURT OF NEW ZEALAND
WHANGAREI REGISTRY
CIV 2004-488-519
BETWEEN ARTHUR EMILE HANSEN AND
JUDITH ANN HANSEN
Appellants
AND RUSSELL JAMES BIRD AND GINA
RAE CHERRY
Respondents
CIV 2006-488-347
AND BETWEEN ARTHUR EMILE HANSEN AND
JUDITH ANN HANSEN
Appellants
AND
RUSSELL JAMES BIRD AND GINA
RAE CHERRY
Respondents
Hearing: 7 December 2006
Appearances: W Peters for appellants
J W Watson for respondents
Judgment: 15 February 2007
JUDGMENT OF ALLAN J
Solicitors:
Thomson Wilson, PO Box 1042, Whangarei
wwp@thomsonwilson.co.nz
J Watson, PO Box 502, Whangarei
HANSEN V BIRD AND CHERRY HC WHA CIV 2004-488-519 15 February 2007
[1]
The appellants were at all material times the owners of a property in Kerikeri.
It comprised residential accommodation and a cafeteria,
and was attached to an
orchard from which the appellants derived fresh orange juice. Much of the
appellants' income was
sourced from tourists, who were taken on conducted tours of
the orchard and patronised the cafeteria.
[2] In November 1995,
the appellants entered into an agreement with the
respondents, pursuant to which the cafeteria and kitchen would be extended and
the
respondents would set up a bakery business, to be run in conjunction with
established cafeteria activities. The appellants would
retain control of the sale of
cold drinks and the running of the souvenir shop and the orchard tours.
[3] In order to record
their agreement, the parties signed a document entitled
"Deed of lease of commercial premises". Unfortunately, they very rapidly
fell out
and the agreement was terminated. Several years later the respondents commenced
civil proceedings in the District Court
at Kaikohe, claiming damages for what they
alleged was the unlawful termination of the agreement by the appellants. Those
proceedings
were heard by Judge Hubble in May 2004. He delivered a reserved
judgment on 3 June 2004 upholding the respondent's claim and awarding
damages
totalling $40,595.47, together with interest on that sum at 7.5% for a period of 12
months.
[4] Subsequently the Judge
awarded the respondents costs and disbursements
totalling $13,446.78.
[5] On 6 August 2004, the appellants filed a notice of
appeal in this Court against
the District Court judgment (the first appeal). The appeal, expressed to be confined
to the quantum
of damages awarded, was filed under CIV 2004-488-519. The
appeal was out of time. Before the Court for determination is an application,
also
filed by the appellants on 6 August 2004, for an order enlarging the time for filing
the appeal.
[6] The appellants
also applied to the District Court for a rehearing of the
proceeding in that Court. That application was based upon the fact that
Mr Hansen,
one of the appellants, had been admitted to hospital during the hearing, at a time
when he had given his evidence in chief
but had not been cross-examined. The
claim to a rehearing was based upon the argument that there had been a miscarriage
of justice,
in that the Court had discounted Mr Hansen's evidence on the ground that
it was incomplete and because he had not been cross-examined.
[7] That application was heard by Judge Hubble on 8 May 2006. He delivered a
reserved decision on 13 May 2006, rejecting
the application. In broad terms the
Judge held that the hearing had proceeded without the completion of Mr Hansen's
evidence because counsel for the appellants had advised the Court that
his
instructions were that the case should proceed (Mrs Hansen being in Court at the
time this advice was conveyed to the Judge),
and that in any event the appellants'
case had not suffered because virtually all of the evidence given by Mr Hansen was
replicated
by Mrs Hansen, who was subjected to detailed cross-examination.
[8] Ultimately the Judge held Mr Hansen's absence made no
difference to the
outcome. The Judge subsequently awarded costs and disbursements to the
respondents on that failed application
in the sum of $1996.18.
[9] The appellants have appealed against that decision also (the second appeal) in
CIV 2006-488-347.
That notice of appeal was filed and served within the prescribed
period.
[10] On 2 August 2006, Mr Peters, newly instructed
for the appellants, filed an
application for an order in terms of r 716 granting the appellants leave to adduce
further evidence
at the hearing of both appeals. The filing of that application was
presaged in Mr Peters' earlier memorandum to the Court of 11 July
2006. That
application is also before the Court for determination.
[11] In summary therefore, the matters with which this
judgment is concerned are:
a) The appellants' application for leave to bring the first appeal out of
time;
b) The appellants' application for leave to adduce additional evidence on
both appeals.
The
merits of the appeals were not canvassed at the hearing before me, save to the
extent necessary to enable the interlocutory applications
to be properly considered.
Further evidence
[12] I turn to discuss the r 716 application first, and commence by outlining the
circumstances in which it is made.
[13] In the District Court the respondents pleaded that they were not in breach of
any obligation
imposed on them by the agreement. There was a general denial by
the appellants of that averment, but the matter was not put in issue
at the hearing in
the District Court, either in evidence or in argument.
[14] Mr Hansen swore an affidavit in support of the
present application, in which
he said:
I was not well at the time of the trial and it was only in the hiatus that
followed the application for re-hearing (giving rise to the second appeal) I
had the opportunity to read the transcript of
the trial proceedings. When
reading the transcript I realised that the Plaintiffs (the Respondents now) had
alleged
compliance with the Agreement of Lease (licence to occupy). ... At
the same time I realised that they had never put forward
any evidence that
they had carried out all the statutory and legislative compliance requirements
to operate the business
on the premises.
[15] The affidavit is silent as to the date upon which Mr Hansen read the transcript
and became aware of the
state of the evidence thereby, but it must logically have
been after the transcript was prepared following the giving of notice of
appeal.
[16] Mr Hansen goes on to say in his affidavit that he gave instructions to his
solicitors on 16 June 2006, to take up
with the Far North District Council the
question of whether the respondents had ever made applications under the health
legislation
to operate a retail food outlet, or a commercial bakery, or for an
appropriate resource consent under the Resource Management Act.
[17] Three further affidavits are filed in support of the application. One is by
Mr Holgate, a solicitor in Mr Peters' office.
He gives brief evidence of having
inspected the box file held by the Far North District Council for the Kerikeri
property, and of
finding in it no information about the licensing of the premises for
health purposes, other than the grant of the initial licence
in 1982, and then certain
documents relating to the period from 2003 onwards.
[18] A Ms Miller, a technical officer employed in the regulatory section of the
Council, says that any
bakery or restaurant operation carried out at the Kerikeri
premises would need to be licensed and inspected by the Council before
being
allowed to operate, and that the Council had no record of any application by the
respondents to that end, nor of the carrying
out of any inspection by the Council.
[19] Mr Killalea, also employed by the Council, says that a commercial bakery is
not a
predominant use and that any proposed use of the Kerikeri premises for that
purpose would require an application for resource consent.
The Council has no
record of the making of any such application by the respondents.
[20] The appellants apply for leave to adduce
the evidence of Mr Hansen,
Mr Holgate, Ms Miller, and Mr Killalea at the hearing of the appeal.
[21] The application is brought
under r 716 which reads:
716 Further evidence
(1) A party to an appeal may, without leave, adduce further evidence
on a
question of fact if the evidence is necessary to determine an interlocutory
application that relates to the appeal.
(2) In all other cases, a party to an appeal may adduce further evidence
only with the leave of the Court.
(3) The Court may grant leave only if there are special reasons for hearing
the evidence, for example, if the evidence
relates to matters that have arisen
after the date of the decision appealed against and that are or may be relevant
to the determination of the appeal.
(4) Unless the Court otherwise directs, further evidence under this rule
must be given by affidavit.
[22] There is no dispute between counsel as to the manner in which the Court
ought to exercise the
discretion which r 716 confers. A concise and accurate
summary is to be found in New Zealand Co-operative Dairy Co Ltd
v Commerce
Commission (1991) 3 PRNZ 262 at 266, decided under a predecessor to r 716.
Wylie J said in that case:
The limitations commonly placed on the introduction
of new evidence in
ordinary Court proceedings by way of appeal from a lower Court decision
are clear enough further
evidence will not be allowed if by the exercise of
reasonable diligence the party seeking to introduce it could have done
so at
the lower Court hearing, and in any event the new evidence should be of
sufficient materiality and cogency to
be likely to have an important influence
on the result: Dragicevich v Martinovich [1969] NZLR 306 (CA).
[23] That test has been applied in a number of subsequent cases, including Power
New Zealand Ltd v Mercury Energy Ltd [1996]
1 NZLR 106 and Comalco New
Zealand Ltd v TVNZ [1997] NZAR 97.
[24] It was not argued that the enactment of r 716 altered the approach mandated
by such authorities. I am satisfied that it
is proper to have regard to the principles
outlined in NZ Co-operative Dairy Corp v Commerce Commission. The Court will
not grant
leave lightly; the provisions of r 716(3) echo the cautious approach
adopted in earlier cases.
[25] This application fails
in my view to meet either of the primary requirements
for the grant of leave. In the first place, I am unable to hold that the evidence
now
sought to be adduced could not have been made available to the Court at the time of
the trial in 2004. The proceeding was filed
in the District Court in July 1999. A
statement of defence incorporating a counterclaim was filed on 12 October 1999, and
the respondents
served their briefs of evidence on the appellants in February 2002.
By that time at the latest, the appellants must have been aware
of the precise nature
of the respondents' claim and the matters which it was necessary or desirable for
them to call evidence upon.
[26] There was a delay of more than two years before the case came to trial. No
attempt has been made to explain why the evidence
now sought to be adduced was
not called at trial, save for Mr Hansen's account of having read the transcript of
evidence, and realising
that although the respondents had pleaded that they were not
in breach of any obligation under the agreement, they have called no
evidence to that
effect.
[27] That does not begin to constitute a satisfactory explanation for the failure to
call the evidence
at trial. With reasonable diligence, during the course of preparation
for trial (remembering that the appellants had had the respondents'
briefs for two
years prior to trial), the evidence now in issue could have been called.
[28] On that ground alone the application
must be refused.
[29] Additionally however, the appellants have failed to persuade me that the new
evidence is of sufficient
materiality to be admitted. The appellants propose to argue,
if the application is successful, that there was an evidential burden
upon the
respondents to establish that they were carrying on the business lawfully. Council
officers have no record of any relevant
application for regulatory consents by the
respondents. The appellants maintain that the business was therefore being carried
on
illegally, and the respondents are precluded thereby from recovering anything in
consequence of the loss of an illegally operated
business.
[30] That summary perhaps compresses the appellants' argument somewhat, but it
is sufficient for present purposes.
[31] The evidence which the appellants wish to call, is in my view neither material
nor cogent for two quite separate reasons.
First, it is negative in character and
simply goes to the state of the Council's files with respect to the property concerned.
There
is evidence that those files are somewhat disordered. It could not therefore
confidently be said that the Council's files were conclusive
of the true regulatory
position. Further, Mr Watson referred to evidence which suggested that relevant
regulatory consents might
well exist. Without objection from Mr Peters he produced
a copy of a planning consent from the Bay of Islands County Council for
the
Kerikeri property. It is dated 17 December 1982 and consents to the use of the
premises as a kitchen and refreshment rooms.
[32] Moreover, as an exhibit to his affidavit, Mr Hansen produced documentary
material related to regulatory inspections of the
Kerikeri premises during 1995. The
documents include a report dated 30 October 1995 (by which time negotiations
between the parties
were well advanced), written in complimentary language; in
particular the report notes that the renovated kitchen was working well,
there were
good display cabinets for bread sales and that there were plans to alter the kitchen.
The writer of the report notes:
"Good premises". The documents evidence a regular
series of inspections during 1995 by Council officers.
[33] These matters suggest to me that the
evidence sought to be adduced is not
cogent, although it might perhaps be regarded as material.
[34] Secondly, however, the evidence
fails the materiality test on a quite separate
ground. The appellants wish to argue that the respondents carried on the business
pursuant to the agreement with the appellants, without the necessary regulatory
consents and therefore illegally. But that argument
faces the insurmountable hurdle
of the Judge's factual findings. At [77] of his judgment of 3 June 2004, he holds that
the business
intended to be carried on by the respondents "had not even begun". The
appellants are unable to challenge that finding on appeal.
There is no suggestion that
the agreement was illegal in its formation; rather, the appellants wish to argue that
the respondents'
performance of their obligations under the agreement was tainted
by illegality. That argument is unsustainable where, as the Judge
found, the
respondents had not even commenced to operate the business.
[35] In my view, any argument based on illegality is unavailable
to the appellants
on appeal, and the evidence sought to be adduced is therefore immaterial to the
outcome of the appeal.
[36]
For these reasons the application for leave to adduce further evidence is
refused.
Enlargement of time
[37] The appellants'
application for enlarging the time for appeal is made under
r 704 which provides:
704 Time for appeal where there is right
of appeal
(1) This rule applies when a party has a right of appeal to the Court.
(2) An appeal must be brought,--
(a) if the enactment that confers the right of appeal specifies a
period within which
the appeal must be brought, within that
period; or
(b) in every other case, within 20
working days after the
decision appealed against is given.
(3) By special leave, the Court may
extend the time prescribed for
appealing if the enactment that confers the right of appeal--
(a) permits
the extension; or
(b) does not limit the time prescribed for bringing the appeal.
(4) An application
for an extension--
(a) must be made by an interlocutory application on notice to
every
other party affected by the appeal; and
(b) may be made before or after the expiry of the time for
appealing.
[38] The principles to be applied in considering an application for enlargement are
summarised in Juken
Nissho Ltd v Attorney General (1998) 12 PRNZ 380, applying
Brown v Chow Mein Fashions Ltd (1993) 7 PRNZ 43:
a) When and under what circumstances was the decision to appeal
taken?
b) The extent of
the delay;
c) Whether the delay is capable of satisfactory explanation;
d) Whether prejudice will be suffered
by other parties if the time is
extended;
e) The strength of the appeal;
f) Any other relevant
circumstances.
[39] The appellants have filed a relatively brief affidavit in support of the
application. Several affidavits
have been filed by or on behalf of the respondents,
who vigorously oppose the grant of leave. The appellants' affidavits are effectively
silent as to the circumstances in which the decision was taken to appeal. However,
they give the following general explanation of
the delay:
a) The judgment of the District Court was given on 3 June 2004. It was
received by the appellants'
former counsel on 10 June 2004.
b) An issue had arisen between counsel and the appellants in respect of
the nature of the instructions which he had been given in respect of
Mr Hansen's admission to hospital during the
hearing. As a result,
counsel concluded that a conflict has arisen and he could no longer
act. Accordingly,
the appellants were forced to instruct fresh counsel.
c) Former counsel notified the appellants in writing (although
the letter
itself is not in evidence) that the appellants had 20 working days to
appeal from the date
counsel received the District Court judgment (10
June 2004) that is until 8 July 2004.
d) By the time
new counsel was instructed, the prescribed period of 20
working days had expired, albeit at the time that was unknown
to the
appellants.
e) The appellants' new counsel needed time to familiarise herself with
the file before advising as to grounds for appeal.
[40] The respondents in their affidavits complain that the appellants have
instructed at least four separate counsel, and that the affidavit filed in support of the
application for enlargement of time improperly
compresses the course of events.
There may be something in that. However, I have no reason not to accept the
appellants' evidence
that they were given to understand by their former counsel that
they had until 8 July 2004 to appeal. Of course, the appellants took
much longer
than that. There is no detailed explanation from the appellants of the reason for the
delay of several weeks after 8
July 2004, save that counsel needed time to absorb the
contents of the file.
[41] Although the explanation given by the appellants
is short on detail, the
circumstances outlined by them are understandable, and the delay is satisfactorily
explained for the purposes
of the exercise of the Court's discretion. I do not regard
the extent of the delay (several weeks) as disqualifying the appellants.
A delay of
that order was regarded as not excessively long in Juken Nissho.
[42] The respondents do not claim any specific prejudice
arising out of the grant
of leave. There has been no application for a stay and so the respondents will not, if
leave is granted,
be kept out of their money for a significant additional period.
[43] It is necessary to take into account the apparent strength
of the appeal, which
is now confined to the question of quantum. As the respondents point out, it is
correct that the appellants
called no independent evidence of quantum and they
cross-examined Mr Bird only very briefly on the point. However, there is open
to
the appellants a credible argument, based on the authorities to which counsel
referred, to the effect that damages ought to have
been differently assessed. In other
words, the issue is capable of serious argument and is not vexatious.
[44] The interests
of justice must govern the ultimate exercise of the Court's
discretion. I am satisfied in this case that it is proper to grant leave. Accordingly,
there will
be an order enlarging the time for filing the appellants' notice of appeal to
6 August 2004.
Costs
[45] The appellants have
failed in respect of their application for leave to adduce
additional evidence. The respondents are accordingly entitled to costs
on that
application. Although the appellants have succeeded in respect of their application
for an order enlarging the time for appeal,
the grant of such leave is in the nature of
an indulgence. The application was responsibly and properly opposed. The
respondents are accordingly entitled to costs on that application also. Category 2B is
to apply in each case.
[46] Counsel may
file memoranda if the quantum of costs cannot be agreed.
C J Allan J
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