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Carl James Peterson v/s Graham Howard Mills

    CA No. 35 of 2021

    Decided On, 13 May 2021

    At, Court of Appeal of New Zealand


    For the Applicants: In person. For the Respondent: J.R. Sparrow, Advocate.

Judgment Text


(Given by French J)


[1] The applicants, Ms Mills and Mr Peterson suing in their own right and in the name of their partnership, seek leave to appeal a decision of Palmer J in the High Court.[1] Leave is required under s 60 of the Senior Courts Act 2016 because it would be a second appeal, the High Court decision being itself an appeal from the District Court.[2]

[2] As required under the Senior Courts Act, the applicants first sought leave to appeal from the High Court. However, leave was declined by Palmer J,[3] prompting the applicants to seek leave directly from this Court.


[3] Ms Mills and the respondent Mr Mills were personal and business partners. They separated in 2010. In October 2014 they began negotiations for a division of their assets. The primary assets were two rural properties which were subject to three ASB bank mortgages.

[4] Mr Peterson who was a friend of Ms Mills and now her personal partner agreed under a written contract to buy Mr Mills’s half share of the two properties for $100,000. 50 per cent of the purchase price was to be paid by 31 May 2015 as a deposit.

[5] The terms of the agreement included provisions that Mr Peterson would assume responsibility for Mr and Ms Mills’s debts including the mortgage payments and a bank overdraft facility. It was further agreed that Ms Mills who was also a signatory to the agreement would retain items on the properties that had been used for the business. These were described in the agreement as building materials and tools.

[6] On 26 May 2015, Mr Peterson paid $50,000 into Mr Mills’s bank account.

[7] However, problems arose in fully implementing the agreement because the ASB bank refused to agree to Mr Mills’s liabilities under the overdraft to be transferred to Mr Peterson.

[8] On 19 June 2015 Mr Peterson deposited $40,000 into the ASB overdraft account. The following month, Mr Mills withdrew $40,000 from the account and transferred it to his own personal account.

[9] Mr Mills’s explanation for that action was that he had discovered Mr Peterson did not intend to honour his obligations under their agreement and that he and Ms Mills had increased the overdraft facility. Mr Mills purported to cancel the agreement.

[10] Ms Mills and Mr Peterson then issued proceedings against Mr Mills. By the time the case was heard by the District Court, the overdraft facility exceeded $180,000 and the properties were being occupied by Ms Mills and Mr Peterson. There were also disputes about other assets including a digger which Mr Peterson and Ms Mills accused Mr Mills of removing from one of the rural properties despite having surrendered his claim to it under the agreement.

[11] In the District Court, Judge Christiansen held the agreement had been cancelled by Mr Mills on the last day of the hearing.[4] The Judge invoked the Court’s remedial powers on cancellation under s 43 of the Contract and Commercial Law Act 2017 and issued the following orders:[5]

(a) One of the properties was to be sold, with sale costs to be met by Mr Mills and Mr Peterson.

(b) The sale proceeds were to be applied towards the ASB indebtedness and the balance paid to Mr Mills to satisfy certain instalments due to him, with any remaining funds to go to Ms Mills and Mr Peterson.

(c) In the event that the sale proceeds were insufficient to satisfy the debts, the parties were to request a mortgagee sale of the other rural property and any remaining proceeds to be distributed as per the above.

[12] On appeal to the High Court, Palmer J found the District Court judgment contained two errors.[6] The first was a finding that the agreement had been cancelled by Mr Mills at the conclusion of the hearing in the District Court. In fact, it was Mr Peterson who had cancelled the contract at the hearing. The second error was a finding that Ms Mills was not a party to the agreement, when she clearly was.

[13] However Palmer J was satisfied that both errors were ultimately inconsequential and not determinative. The Judge considered the orders made by the District Court represented a pragmatic and appropriate solution.[7] He therefore upheld them subject to some amendments.

[14] In his judgment, Palmer J also addressed an appeal brought by Ms Mills and Mr Peterson against a separate costs decision in the District Court proceeding that had been made by Judge Ingram.[8] Judge Ingram had awarded costs to Mr Mills because of a Calderbank offer he had made offering to settle the proceeding. Palmer J saw no basis for overturning that decision. As regards costs in the High Court, he held these should lie where they fell.[9]

The application for leave

[15] In order to be granted leave, the applicants must persuade us that their proposed appeal raises some question of law or fact capable of bona fide and serious argument in a case involving some interest public or private of sufficient importance to outweigh the cost and delay of a second appeal.[10]

[16] The applicants contend that the errors in the District Court judgment identified by Palmer J have created “an entirely new legal landscape” giving rise to new grounds of appeal and potentially meaning this would now be a first appeal not requiring leave.

[17] Insofar as the proposed grounds of appeal concern factual matters, they primarily revolve around the business assets and in particular the digger. The applicants also wish to submit for determination a number of points of law including whether the proposed appeal is a second appeal on the original costs order or a first appeal based upon new factual rulings, the continued relevance of the Calderbank offer as well as a number of arguments regarding repudiation and affirmation.

[18] They further contend that these issues are of considerable importance to them because of the sums involved, their age and serious health issues.


[19] We have come to a very clear view that the proposed appeal falls well short of meeting the threshold for granting leave.

[20] Not only are the proposed grounds of appeal case-specific and not of public importance, they are also not seriously arguable.

[21] First, they are largely based on a misconception as to the effect of Palmer J’s decision. It is clear that the first error the Judge identified was simply a slip on the part of Judge Christiansen.[11] The latter had already found that Mr Mills’s purported cancellation in July 2015 was questionable.[12] And the only person who purported to cancel the agreement at the hearing was Mr Peterson. What mattered was the finding that the contract had been cancelled, not who had cancelled.[13] Cancellation is and was not a live issue.

[22] Similarly, nothing turned on the finding of an error regarding Ms Mills not being a signatory to the agreement. The applicants claim it bears on the dispute about ownership of the digger. However, that would require construing the words “building materials and tools” in the contract as including the digger, an interpretation which Palmer J rejected and which we do not consider is seriously arguable. Nor is it seriously arguable that the agreement was a relationship property agreement which conferred property rights on Ms Mills when the statutory requirements for such an agreement were not met.

[23] We acknowledge Palmer J amended the terms of the order made in the District Court. However, the amendments were for the purpose of clarification. They made explicit the transfer of title from Mr Mills to Mr Peterson and also included an order that any interest earned by Mr Mills on the $40,000 he used from the overdraft facility be returned to Mr Peterson. The amendments did not alter the essence or substance of the orders and therefore it is wholly untenable to suggest as the applicants do that they created an entirely new landscape. Even if they did, it would not transform a second appeal into a first appeal.

[24] The questions of law proposed for determination by this Court are also not seriously arguable. Arguments about repudiation and affirmation are irrelevant to the scope of the relief under s 43 of the Contract and Commercial Law Act. There is also no serious argument to be had about the continued relevance of the Calderbank offer which was close to the terms of the final judgment.

[25] We appreciate that Ms Mills and Mr Peterson feel very strongly about the importance to them of the proposed appeal. However, in our assessment, viewed objectively, the application for leave is without merit.


[26] The application for leave to bring a second appeal is declined.

[27] There is no reason why costs should not follow the event. That is to say, there is no reason why the unsuccessful party — in this case the applicants whose application has been declined — should not pay costs to the successful party. We therefore order the applicants to pay one set of costs to the respondent calculated on the bas

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is of a standard application on a band A basis together with usual disbursements. ------------------------------------------------------------------ [1] Peterson v Mills [2020] NZHC 2400 [High Court judgment]. [2] Peterson v Mills [2019] NZDC 21874 [District Court judgment]. The facts of this case are further explained in an earlier District Court decision: see Peterson v Mills [2019] NZDC 9128. [3] Peterson v Mills (No 2) [2020] NZHC 3466. [4] District Court judgment, above n 2, at [27]. [5] At [30]–[35]. [6] High Court judgment, above n 1, at [19]–[20]. [7] At [25]. [8] Peterson v Mills [2020] NZDC 10199. [9] High Court judgment, above n 1, at [27]. [10] Waller v Hider [1997] NZCA 221; [1998] 1 NZLR 412 (CA) at 413. [11] High Court judgment, above n 1, at [18]. [12] District Court judgment, above n 2, at [14]. [13] High Court judgment, above n 1, at [19].