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Lw354 Limited v/s Lepionka & Company Investments Limited

    CA No. 389 of 2019

    Decided On, 06 May 2020

    At, Court of Appeal of New Zealand

    By, THE HONOURABLE MR. JUSTICE COLLINS

    For the Appellant: K.P. Sullivan, Advocate. For the Respondent: M.G. Colson, S.J. Leslie, Advocates.



Judgment Text


REASONS

[1] Two applications to review decisions of the Deputy Registrar are addressed in this judgment:

(a) LW354 Ltd applies for a review of the Deputy Registrar’s decision to not dispense with security for costs for the appeal.

(b) Lepionka & Company Investments Ltd (Lepionka) applies for review of the Deputy Registrar’s decision to extend the time period to comply with r 43 of the Court of Appeal (Civil) Rules 2005.

[2] There has been extensive litigation between these parties in relation to a property in the Hawkes Bay. This appeal concerns a caveat over the property lodged by LW354 Ltd. Lepionka is the first mortgagee of the property and applied to have the caveat removed so the property could be sold.[1] On 15 July 2019, Associate Judge Bell issued a judgment removing the caveat.[2] LW354 Ltd filed a notice of appeal against this decision on 12 August 2019.

The decision to not dispense with security for costs

[3] Security for costs for the appeal was set at $7,060.[3] LW354 Ltd applied for security for costs for this appeal to be dispensed with. The Deputy Registrar declined this application. She considered that there was no independent evidence to support LW354 Ltd’s contention it was impecunious. Similarly, no other financial information had been provided. While the potential benefit of preserving access to the property outweighed the potential legal costs of the appeal, the appeal raises no issues of public interest and has little prospect of success.

[4] LW354 Ltd seeks review of this decision. It posits that security for costs should be dispensed with as Lepionka already has “non-cash security” in the form of the security held over the property at issue and funds from the sale of various chattels. Otherwise, the amount payable for security for costs should be reduced to $1,000. LW354 Ltd has not provided any further information about its current financial position. It asserts that the appeal has a very good prospect of success.

[5] Lepionka opposes this application for review. It submits that there has been no financial information provided and the appeal is hopeless. Since the caveat has been removed, the property has been subdivided and new titles created. The property at issue no longer exists.[4] Further, Lepionka submits that the appeal is vexatious and an abuse of process. This is because the appeal is ultimately concerned with related litigation that has already been determined in the High Court.[5] The caveat at issue was not permitted to be lodged due to orders related to these proceedings.[6] Costs against LW354 Ltd have already been ordered in the High Court on this basis.[7]

[6] Additionally, Lepionka opposes the filing of documents in relation to this appeal by Mr Paterson. Mr Paterson was appointed director of LW354 Ltd in October 2019. He has filed all material in relation to these reviews in his personal capacity, despite LW354 Ltd having legal representation. Although not an express rule in New Zealand, it is generally accepted that leave is required for someone other than a practicing lawyer to represent a company in Court.[8] Lepionka also asserts that this applies to the filing of documents on behalf of a company.[9] Simply filing documents may fall outside the scope of the general rule,[10] but Mr Paterson’s conduct in this matter has been akin to representing LW354 Ltd. Mr Paterson has been afforded some latitude in other related proceedings,[11] but there is no reason to depart from the general rule in this case. Therefore, I agree with Lepionka’s objection. A direction to the Registry is made accordingly. All further filing should be done through LW354 Ltd’s counsel, as it should have been from the outset.

[7] However, for the purposes of this review application, I have considered the material filed by Mr Paterson to have been filed on behalf of LW354 Ltd. While this is not a satisfactory outcome, it does avoid the need to protract this application by requiring the material in issue to be filed by LW354 Ltd’s counsel.

Analysis

[8] The principles for determining whether security for costs should be dispensed with were reviewed by the Supreme Court in Reekie v Attorney-General.[12] Security for costs should be dispensed with if “it is right to require the respondent to defend the judgment under challenge without the usual protection as to costs provided by security”.[13] A respondent may be required to do so in order to preserve access to this Court by an impecunious appellant who is bringing an appeal that a solvent appellant would reasonably wish to prosecute.[14]

[9] I agree with Lepionka that there are no grounds upon which to dispense with or reduce security for costs. I have been supplied with no further information from LW354 Ltd about its financial position for this review. Additionally, there is little merit to the proposed appeal. It would be unfair to require Lepionka to defend the judgment under appeal without the protection of security for costs.

[10] Lepionka also seeks the imposition of costs on an indemnity basis if the appeal is abandoned. I am not prepared to give this direction at this stage. The appropriateness of any costs order upon determination of the appeal can be assessed at that point in time.

Decision to extend the time period to comply with r 43

[11] Currently, compliance with r 43 is extended until 18 May 2020. This has been extended by the Deputy Registrar in order to accommodate resolution of the review of the decision not to dispense with security for costs.[15] Lepionka seeks review of this decision to extend the time period. It submits that the clear lack of merit to the appeal should have been determinative and the extension not granted.

[12] I consider the Deputy Registrar’s decision to extend time to have been both practical and reasonable. If the time period had been allowed to lapse, the review would have been overtaken by operation of r 43 and deemed abandoned. It is appropriate that the security for costs review application is resolved first. I therefore agree with the Deputy Registrar’s decision to provide scope for the review of the security for costs decision to proceed.[16] Lepionka’s application for review is therefore declined.

Result

[13] The application for review of the Deputy Registrar’s decision to decline to dispense with security for costs is declined.

[14] The application for review of the Deputy Registrar’s decision to extend the time period to comply with r 43 of the Court of Appeal (Civil) Rules is declined.

[15] The applicant must pay security for costs by Monday 18 May 2020.

[16] Registry is not to accept any documents for filing from Mr Paterson in person in relation to this appeal.

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[1] Land Transfer Act 2017, s 142.

[2] Lepionka & Company Investments Ltd v Naldapat Ltd [2019] NZHC 1646.

[3] Court of Appeal (Civil) Rules 2005, r 35(5).

[4] Similar circumstances arose in Bishop Warden Property Holdings Ltd v Autumn Tree Ltd [2018] NZCA 285, [2018] 3 NZLR 809 at [77].

[5] AFI Management Pty Ltd v Lepionka & Co Investments Ltd [2017] NZHC 3116. LW354 Ltd has already attempted, unsuccessfully, to join itself to the now abandoned appeal against that decision, see GLW Group Ltd (in liq) v Lepionka & Company Investments Ltd [2019] NZCA 24.

[6] GLW Group Ltd v Lepionka & Company Investments Ltd [2018] NZHC 1658 at [66]–[73].

[7] Lepionka & Co Investments Ltd v Naldapat Ltd [2019] NZHC 2679 at [14]–[15] and [27] –[28].

[8] See discussion in Re G J Mannix Ltd [1984] 1 NZLR 309 (CA); Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [25]–[34]; and Dreamtech

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Designs & Productions Pty Ltd v Clownfish Entertainment Ltd [2015] NZCA 491, (2015) 23 PRNZ 141 at [8]–[10]. [9] Alpha Cars Wholesale (2018) Ltd v Commissioner of Inland Revenue [2019] NZHC 291 at [9]–[14]. [10] This Court in Re G J Mannix Ltd noted that in setting out the general rule it was only concerned with the conduct of hearings in Court or in Chambers. The Court observed that there may be grounds for “relaxing” the rule in relation to the filing of documents, see above n 8, at 311. [11] For example, see GLW Group Ltd v Lepionka & Company Investments Ltd, above n 6, at [23]. [12] Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737. [13] At [31]. [14] At [35]. [15] Court of Appeal (Civil) Rules, r 43(1B)(c). [16] Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [39(c)].
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