Ali v GTT Mechanical 2018 Limited

[2024] NZCA 331

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA784/2023
 [2024] NZCA 331

BETWEEN	MUKHTAR ALI Applicant
AND	GTT MECHANICAL 2018 LIMITED Respondent

Court:	Palmer and Collins JJ
Counsel:	Applicant in person M J Robinson and A Mandal for Respondent
Judgment:  (On the papers)	19 July 2024 at 12pm

JUDGMENT OF THE COURT

AThe application for an extension of time to appeal is declined.

BThe applicant must pay costs to the respondent for a standard application on a band A basis, with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Palmer J)

1. On 2 November 2023, the High Court adjudicated Mr Mukhtar Ali bankrupt.[1]  Mr Ali filed an appeal on 13 December 2023, nine working days out of time.  He applies for an extension of time to appeal.[2]

What happened?

[1]GTT Mechanical 2018 Ltd v Ali HC Auckland CIV-2023-404-909, 2 November 2023.

[2]Court of Appeal (Civil) Rules 2005, r 29A.

1. Around May 2018, Mr Ali guaranteed the debts of Bridge Transport Ltd (BT) and Paradise Earthworks Ltd (Paradise) which were to receive mechanical services from GTT Mechanical 2018 Ltd (GTT), the respondent, on credit. 

2. The services were provided in 2019 but BT and Paradise defaulted.  In June 2021, GTT filed a liquidated demand in the District Court at Manukau against BT and Mr Ali as guarantor.  The proceedings were served on Mr Ali in November 2022.  Mr Ali took no steps to defend the proceedings.  In January 2023, judgment in default in the amount of $9,560.89 plus future interest was given by the Deputy Registrar.[3]  In May 2023, GTT filed a bankruptcy notice against Mr Ali in the High Court.  Mr Ali took no steps to comply.  Mr Ali also took no steps to address a creditor’s application for adjudication and debtor’s summons filed in September 2023.  On 2 November 2023, he was adjudicated bankrupt.

   [3]GTT Mechanical 2018 Ltd v Bridge Transport Ltd DC Manukau CIV-2021-092-3187, 19 January 2023.

3. On 13 December 2023, Mr Ali applied for an extension of time to appeal his bankruptcy.  On 12 February 2024, he filed submissions with this Court but did not serve them on GTT. 

Submissions

1. Mr Ali says he did not engage with the debtor’s summons “because legally I was out of business and didn’t want to go back in the mess again in business”.  He is now appealing because he is at risk of losing his house.  He appears to submit that he is not liable for the debt, which he says was $20,000, because in December 2019 he entered a sale and purchase agreement by which BT sold vehicles and contracts to Paradise.  He says cl 4 of that agreement requires Paradise to offset the $20,000 owed to GTT and it did so.

2. Counsel for GTT submit Mr Ali deliberately decided to avoid taking any steps in relation to the bankruptcy proceedings and throughout the entirety of the legal action brought against him.  This non-cooperation and delay is relevant to whether an extension of time should be granted.[4]  The costs involved in the appeal would be disproportionate to the value of the debt.  The delay and prejudice to GTT of reopening the matter would be significant.  The merits of the appeal are extremely weak and hopeless because Mr Ali was never released from the guarantee, which is not nullified by any cross-claim he has against Paradise.

Should an extension be granted?

[4]Arranmore Developments Ltd v Don Ha Real Estate Ltd [2011] NZCA 85 at [5] and [8].

1. In Almond v Read, the Supreme Court summarised the principles guiding this Court’s exercise of discretion to grant or decline an extension of time to appeal under r 29A of the Court of Appeal (Civil) Rules 2005.[5]  The ultimate question is what the interests of justice require in the particular circumstances of the case.[6]  Relevant considerations are likely to include the length of the delay, the reasons for the delay, the conduct of the parties, any prejudice or hardship to the respondent, and the significance of the issues raised by the proposed appeal, both to the parties and more generally.[7]  The Supreme Court confirmed that the merits of a proposed appeal may be relevant to the exercise of discretion to extend time because there will be occasions on which a court will risk facilitating unjustifiable delaying tactics on the part of dilatory or recalcitrant litigants if it does not consider the merits.[8] The Court observed the merits will sometimes be overwhelmed by other factors, will not generally be relevant where there has been an insignificant delay, and an extension should only be refused for lack of merit where the appeal is clearly hopeless.[9] 

   [5]Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [35]–[40].

   [6]At [38].

   [7]At [38].

   [8]At [39].

   [9]At [39].

2. Here, the delay is relatively short, but completely unexplained.  Furthermore, before that, Mr Ali entirely failed to engage with the legal processes regarding the debt in the District Court or the bankruptcy proceedings in the High Court for around two and a half years.  We consider the application now falls into the category identified by the Supreme Court that would “risk facilitating unjustifiable delaying tactics on the part of dilatory or recalcitrant litigants”.[10]  Mr Ali should have appealed promptly, within the time available to him.  He has not explained why he did not.  And the proposed appeal is hopeless because a cross-claim does not obviate a guarantee.  It would be contrary to the interests of justice to permit the proposed appeal to proceed. 

Result

[10]At [39]. See also Huh v Korea Deposit Insurance Corp [2024] NZCA 294 at [29].

1. The application for an extension of time to appeal is declined.

2. The applicant must pay costs to the respondent for a standard application on a band A basis, with usual disbursements.

Solicitors:
Turner Hopkins Lawyers, Auckland for Respondent