Carters v Cancian
[2022] NZHC 1862
•29 July 2022
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE
CIV-2021-470-57
[2022] NZHC 1862
IN THE MATTER AND
IN THE MATTER
of the Insolvency Act 2006
of the bankruptcy of DANNY JOHN CANCIAN
BETWEEN
CARTERS a division of CARTER HOLT HARVEY LIMITED
Judgment Creditor
AND
DANNY JOHN CANCIAN
Judgment Debtor
Hearing: 31 March 2022 (Further submissions filed by the Judgment
Creditor on 19 April 2022 and the Judgment Debtor on 4 May 2022)
Counsel:
PJ Morris for the Judgment Creditor
DJ Cancian, Judgment Debtor in person
Judgment:
29 July 2022
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 29 July 2022 at 4pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Stace Hammond, Auckland
Copy to:
Mr DJ Cancian
CARTERS v CANCIAN [2022] NZHC 1862 [29 July 2022]
Introduction
[1] Carters has applied to adjudicate Mr Cancian bankrupt relying on a failure to pay a High Court judgment in Carters’ favour for $1,078,668.23.1
[2] Mr Cancian appealed the High Court decision, but the Court of Appeal dismissed Mr Cancian’s appeal on 24 August 2021.2
[3] Mr Cancian opposes Carters’ application and seeks a halt of the bankruptcy proceedings. This is to allow him to seek legal advice (and potentially legal aid) to bring civil proceedings against the Tauranga City Council and to appeal his remaining convictions to the Court of Appeal.
[4] Mr Cancian says he has no assets and so there is no benefit for Carters in immediately bankrupting him. He says he has the support of several creditors and that if the bankruptcy proceedings are halted, he presents no threat, risk or otherwise to the community or the business community as he is unable to operate. If he does not proceed with legal proceedings, Mr Cancian says he will not oppose bankruptcy orders being made.
[5] Carters submits in response that it has been involved in litigation with Mr Cancian for over four years now and that it is time for the Official Assignee to investigate Mr Cancian’s estate and to give Carters finality.
[6] Carters submits that Mr Cancian has not satisfied the Court that either it is just and equitable not to make an order for adjudication or that there is some other sufficient reason for the Court not to make an order.
[7] Furthermore, Carters says there are no valid reasons for the Court to halt Carter’s application as any action in defamation is still able to proceed and the Official Assignee could bring proceedings on Mr Cancian’s behalf or assign the right to bring proceedings to Mr Cancian if that is appropriate.
1 Carters v Cancian [2020] NZHC 2838.
2 Cancian v Carters [2021] NZCA 397.
Issues
[8]The issues are:
(a)Has Carters proved a prima facie case for adjudication?
(b)Is there any reason not to adjudicate or to halt the adjudication?
Background
[9] The debt on which Carters’ bankruptcy application is based, arises out of a personal guarantee given by Mr Cancian over the obligations of Bella Vista Homes Ltd (in liquidation) for building supplies purchased on a trade account with Carters. The trade account and guarantee were entered into on 12 October 2016.
[10]When Bella Vista went into liquidation, Carters brought a claim for
$1,078,668.23 against Mr Cancian pursuant to the guarantee in the High Court.
[11] Carters initially filed an application for summary judgment. Mr Cancian opposed on the basis that he was induced to enter into the guarantee by a misrepresentation that the guarantee would be limited to the amount of the credit limit on the account of $50,000. Associate Judge Andrew dismissed the summary judgment application on 22 June 2018 on the basis the issue needed to be tested at trial.3
[12] Following a two-day substantive hearing in the Tauranga High Court, Wylie J issued a judgment on 29 October 2020 ordering Mr Cancian to pay Carters the full amount claimed. 4 Mr Cancian appealed this decision.
[13] On 25 June 2021 Carters served Mr Cancian with a bankruptcy notice for the amount of the High Court judgment. Carters was entitled to do so even though the Court of Appeal had not yet issued its decision on Mr Cancian’s appeal. Mr Cancian failed to comply with the bankruptcy notice and so committed an act of bankruptcy.
3 Carters v Cancian [2018] NZHC 1496.
4 Carters v Cancian, above n 1.
[14] On 16 July 2021 Carters filed the present application for an order adjudicating Mr Cancian bankrupt, with service effected on 10 August 2021.
[15] On 24 August 2021 the Court of Appeal dismissed Mr Cancian’s appeal of the High Court judgment.5
[16] On 13 September 2021 Mr Cancian filed a notice of opposition in this proceeding together with an affidavit in support. The grounds of his opposition were set out as follows:
(a)if Mr Cancian is successful in appealing his criminal convictions, he may have a civil claim which may result in payment of his creditors;
(b)there is no cost to Carters of further delays;
(c)if Mr Cancian is adjudicated bankrupt, Carters will receive nothing;
(d)Mr Cancian presents no risk to Carters or the commercial world.
[17] The hearing of the application for adjudication was delayed until 31 March 2022 as a result of COVID-19 lockdowns and various issues, including the impending decision in Mr Cancian’s appeal of his criminal convictions.
[18] On 28 March 2022, just prior to the hearing of this application, Lang J issued his decision in the appeal of the criminal convictions, overturning one of Mr Cancian’s criminal convictions but not the remaining two.6
[19] Carters was not aware of Lang J’s decision prior to the hearing on 31 March 2022 as a copy of the decision, and various other documents relied on by Mr Cancian, had not been provided to Carters prior to the hearing. This appeared to arise as a result of Mr Cancian being a litigant-in-person rather than being a deliberate attempt to keep documents from Carters.
5 Cancian v Carters, above n 2..
6 Cancian v Tauranga City Council [2022] NZHC 556.
[20] Following the hearing, I issued a minute dated 1 April 2022 providing an opportunity for Carters to file and serve further submissions addressing:
(a)Lang J’s decision on Mr Cancian’s appeal of his criminal convictions under the Building Act 2004;
(b)the draft report by the Ministry of Business, Innovation and Enterprise (MBIE) in relation to the dangerous and affected building determination by the Tauranga City Council referred to by Mr Cancian during the hearing; and
(c)the letters filed by four creditors in support of Mr Cancian’s application for a halt and victim impact statements by members of Mr Cancian’s family.
[21] Carters filed its further submissions on 19 April 2022 and Mr Cancian filed reply submissions on 4 May 2022 as directed.
Has the judgment creditor proved a prima facie case for adjudication?
Legal principles regarding necessary elements for adjudication
[22] Section 36 of the Insolvency Act 2006 (“the Act”) provides that the Court may, at its discretion, adjudicate a debtor bankrupt if the debtor has established the requirements set out in s 13 of the Act.
[23]Section 13 sets out the requirements as follows:
13 When creditor may apply for debtor’s adjudication
A creditor may apply for a debtor to be adjudicated bankrupt if—
(a)the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of
$1,000 or more to those creditors between them; and
(b)the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and
(c)the debt is a certain amount; and
(d)the debt is payable either immediately or at a date in the future that is certain.
Has the judgment creditor satisfied the prima facie requirements for adjudication? Section 13(a)
[24] There is no question that the debt relied on is for more than $1,000 and that it is currently owing to Carters.
Section 13(b)
[25] The second requirement is that the judgment debtor has committed an act of bankruptcy. Carters relies on s 17 of the Act, which provides that failure to comply with a bankruptcy notice is an act of bankruptcy.
[26] A bankruptcy notice was served on Mr Cancian on 25 June 2021. No money has been paid or security or agreement reached in response to the bankruptcy notice and so an act of bankruptcy has occurred.
Section 13(c)
[27] The next requirement is that the debt is for a certain amount. The judgment has been sealed and so there is no question that the debt is for a certain amount.
Section 13(d)
[28] The final element, “that the debt is payable either immediately or at a date in the future that is certain”, is satisfied as the judgment has been sealed.
Conclusion on prima facie case for adjudication
[29] With the four elements set out in s 13 of the Act satisfied, there is a prima facie case for adjudication.
Is there any reason not to adjudicate or to halt the adjudication?
Section 37 of the Insolvency Act 2006
[30] Even where all four elements of s 13 are met, s 37 of the Act provides the Court with a discretion to refuse adjudication if:
(a)the judgment creditor has failed to establish the necessary requirements for adjudication under s 13 of the Act;
(b)the debtor is able to pay his debts;
(c)it is just and equitable not to make an order for adjudication;
(d)if there is any other sufficient reason not to make an order.
[31] The judgment creditor has established the necessary requirements for adjudication under s 13 as discussed above, satisfying (a), and Mr Cancian, by his own admission, is unable to pay his debts, satisfying (b). The factors to consider are therefore (c) and (d).
[32] In Baker v Westpac Banking Corporation, the general discretion under s 37(c) and (d) was described as follows:7
It is proper for the court to consider not only the interests of those directly concerned – the petitioner, other creditors, the debtor – but also the wider public interest. A creditor who establishes the jurisdictional facts as set out in [the equivalent of s 13 of the Insolvency Act] is not automatically entitled to an order. On the other hand, it is for the opposing debtor to show why an order should not be made. The court will give proper weight to the commercial judgment of the petitioner but the oppressive use of the bankruptcy process may be a ground for refusing an order. Another ground may be the undoubted absence of assets but that would not necessarily preclude an order given the range of interests involved including the public interest in the continuing oversight of a bankrupt’s affairs and the disqualifications that go with bankruptcy. In the end the court must balance the various considerations relevant to the case and determine whether the debtor has succeeded in showing that an order ought not to be made.
[33] In Re Tootell, ex parte Rabobank Australia Ltd, Associate Judge Osborne (as he then was) referred with approval to the factors listed in Re Epirosa, ex parte Diner’s Club NZ Ltd8 and set out the following as a combined list:9
(a)What are the wishes of all affected parties, including the applying creditor, other creditors and the debtor?
7 Baker v Westpac Banking Corporation CA212/92, 13 July 1993 at 4 per Richardson J.
8 Re Tootell, ex parte Rabobank Australia Limited [2013] NZHC 2975 at [7], citing Re Epirosa, ex parte Diner’s Club (NZ) Ltd HC Wellington B498/91, 6 March 1992 at 5–8.
9 Re Tootell, ex parte Rabobank Australia Limited, above n 8, at [8].
(b)Does the debtor have the ability to meet his or her debts over time and, if so, does that meet the requirements of achieving finality within a reasonable period?
(c)What were the circumstances in which the debt was incurred and do those circumstances suggest that the creditor is acting unreasonably in pursuing adjudication?
(d)Will adjudication be pointless?
(e)Will the debtor, if adjudicated, be rendered unable to support himself or herself?
(f)Does the debtor have such a standing in the community that significant issues of stigma or embarrassment will result?
[34] If the Court considers that the case falls within s 37(c) or (d), then the application for adjudication is dismissed. A fresh application would then need to be made if the debt remained unpaid and adjudication was sought.
[35] Section 38 provides the Court with a general power to halt, rather than dismiss, a bankruptcy application. Under s 38(2), a halt can be subject to any terms or conditions the Court considers appropriate.
[36] The cases considering s 38 emphasise that the final decision should balance all of the relevant factors to achieve a just outcome. In Bank of New Zealand v Koroniadis it was held that the lack of any particular matters the Court must take into account makes it clear that Parliament intended the discretion to be flexible, allowing the courts to respond to varying circumstances by affording differing weight according to each case.10
[37] In Re Kipping, ex p Sharrock, it was noted that “[b]y the very wording of the provisions, the discretion is intended to be exercised flexibly” and not by identification or application of fixed rules. The Court referred to a situation in which adjudication
10 Bank of New Zealand v Koroniadis [2013] NZHC 2865 at [11].
proceedings are quite frequently halted as being where the debtor is pursuing and awaiting a decision of the Court which might reverse or materially alter the debt owed to the creditor or might otherwise materially affect the debtor’s financial position.11
[38] In Anderson v DeMarco, Associate Judge Johnston held in relation to applications based on a judgment debt and the service of a bankruptcy notice, that the broad thrust of previous authorities appeared to be that the Court will only halt proceedings under s 38 if:12
(a)the judgment debtor can point to a particular course of action that they are taking or proposing to take which, if successful, would have the effect of undermining the indebtedness upon which the proceedings are based;
(b)the Court is satisfied that the judgment debtor is bona fide in their intention;
(c)the Court is able to discern that there is some merit in the course of action;
(d)the judgment debtor has acted candidly by putting all relevant information before the Court; and
(e)the granting of a halt will not operate unjustly on the judgment creditor.
[39] In addition, Mr Cancian’s opposition relied on s 42 which provides a more specific power to halt where the judgment relied on in the bankruptcy notice is under appeal. Section 42 provides:13
42 Halt or refusal of application when judgment under appeal
…
(2)If the debtor has appealed against the judgment or order underlying the bankruptcy notice or the judgment for nonpayment of trust money, as the case may be, and the appeal is still to be decided, then the court may—
11 Sharrock v Kipping [2018] NZHC 3421 at [14].
12 Anderson v DeMarco [2021] NZHC 1757 at [16].
13 Insolvency Act 2006, s 42(2)
(a)halt the creditor’s application for adjudication; or
(b)refuse the application.
[40] The judgment debt on which Carters’ application is based is the debt on the guarantee. This judgment is not the subject of an appeal and so s 42 does not apply in these circumstances. Whether to halt the application must therefore be considered in terms of the general power in s 38.
Should the proceedings be dismissed or halted?
[41] By his opposition, Mr Cancian is essentially asking for time to allow him to bring proceedings against the Tauranga City Council. He submits that if he recovers damages from the Tauranga City Council, he may be in position to pay Carters. In these circumstances it would be more appropriate to halt rather than dismiss the application for adjudication.
[42] I consider below whether the bankruptcy application ought to be halted in terms of the helpful list of factors identified by Associate Judge Johnston in Anderson v DeMarco as set out above. I add to this list a consideration of the wishes of all affected parties.
Can Mr Cancian point to a particular course of action that he is taking or proposing to take which, if successful, would have the effect of undermining the indebtedness upon which the proceedings are based?
[43]Mr Cancian seeks a halt of the bankruptcy proceedings to allow him to:
(a)appeal to the Court of Appeal in respect of his remaining convictions under the Building Act;
(b)seek legal advice and legal aid, if necessary, to bring a claim against the Tauranga City Council.
[44] Mr Cancian has provided a letter from a barrister dated 11 February 2022 regarding possible claims against the Tauranga City Council in relation to the Bella Vista development. The barrister records that any potential civil claim would be
enhanced if Mr Cancian and the Mr Cameron’s appeals against their convictions for breaches of the Building Act were successful.
[45] The barrister records that the actions of the Tauranga City Council in shutting down the Bella Vista development in 2018 may have been based on incorrect assumptions or findings and that this could give rise, if correct, to significant civil liability particularly given the catastrophic impact that the shutting down of the project had on Mr Cancian both financially and reputationally.
[46] The barrister further records that, on the barrister’s instructions, Mr Cancian is seeking time to determine the best path regarding any potential civil claim. A series of steps is set out including completing the appeal hearing in respect of the criminal convictions scheduled for 28 February 2022.
[47] As recorded above, Lang J issued his decision on the appeal on 28 March 2022, just prior to the hearing of this bankruptcy application. There has been no updated letter provided by the barrister since the appeal decision. Mr Cancian states in his reply submissions that leave is being sought to appeal his remaining convictions to the Court of Appeal. I note that the convictions of the engineer, Mr Cameron, were quashed by the High Court.
[48] Mr Cancian submits that without filing proceedings against the Tauranga City Council, it is unlikely that any resolution with the Council is likely to be reached and that being adjudicated bankrupt will impact on his ability to negotiate a resolution.
[49] If he is successful in a claim against the Tauranga City Council, Mr Cancian says that he intends to repay Carters and the other creditors.
[50] On the basis of the information provided and submissions made, I accept that the proposal to explore bringing civil proceedings is a course which may result in reducing the indebtedness of Mr Cancian to Carters.
Can the Court be satisfied that Mr Cancian is bona fide in his intention?
[51] Carters submits that the Court cannot be satisfied that Mr Cancian is bona fide. Carters say that despite the appeal overturning one of Mr Cancian’s convictions, he has still been convicted of two further offences which would need to be overturned. Furthermore, they say in relation to the litigation on the guarantee, Wylie J found Mr Cancian not to be credible.
[52] In addition, Carters refers to Lang J’s reference to the District Court Judge having not found Mr Cancian to be a reliable witness generally and preferring the evidence of other witnesses to that given by Mr Cancian.14
[53] In Mr Cancian’s submissions in reply on 4 May 2022, he goes into significant detail as to the basis for his appeal on the remaining convictions. The essence of this appears to be that he was not the project manager for the particular property concerned and that the first indication of this being considered and being relevant to the decision was in the decision of Lang J. Mr Cancian submits that he therefore had no opportunity to defend this assumption and that there is significant evidence that contradicts it.
[54] In addition, Mr Cancian says that although Lang J refers to the District Court Judge finding that the Tauranga City Council expert witnesses were more reliable than anyone else, including Mr Cancian, the building compliance report by Mr Nick Dibley (referred to below) records in relation to one Tauranga City Council expert witness in his conclusion on 9 July 2020:
7.1 This report finds there is insufficient evidence of most of the claimed non-structural defects to enable an opinion that they would have resulted in non-compliance with the NZBC.
[55] Mr Cancian further refers to Wylie J’s finding as to his credibility15 and submits that it was very difficult for Mr Cancian to find witnesses to support his evidence as no one wished to be associated with the Bella Vista project given the dangerous and affected determination made.
14 Cancian v Tauranga City Council, above n 6, at [23].
15 Carters v Cancian, above n 1, at [64].
[56] The question I have to consider is whether Mr Cancian is bona fide in his intention to take the course of action relied on in seeking a halt. Mr Cancian explains in his submissions that he would have preferred to have lodged civil proceedings against Tauranga City Council already but his legal advice has recommended the criminal appeals should have closure first to provide certainty going forward.
[57] Mr Cancian seeks a halt of the proceedings both to appeal the criminal convictions and to allow him to take legal advice on proceeding against the Tauranga City Council.
[58] The barrister who provided a letter on behalf of Mr Cancian recorded that any potential civil claim would be enhanced if the criminal appeals were successful. This does not mean that Mr Cancian is required to overturn those convictions prior to proceeding against the Tauranga City Council. Proceedings would appear to be able to be brought even if Mr Cancian does not succeed in overturning the remaining two convictions.
[59] If any halt is only for a reasonably short period to allow civil proceedings to be considered and filed, it would protect against any risk that Mr Cancian is not genuine in pursuing the course proposed.
Is the Court able to discern that there is some merit in the proposed course of action?
[60] Mr Cancian referred to a draft MBIE report in the hearing that he submits supports possible legal proceedings by him against the Tauranga City Council. It was not clear what report he was referring to and so Mr Cancian was asked to provide a copy of the report following the hearing. On 1 April 2022, Mr Cancian provided copies of a number of documents including:
(a)MBIE’s Draft Determination 3128 dated 18 February 2020 headed “Regarding the issue of a dangerous and affected building notice for residential dwelling at 311 Lakes Boulevard, Tauranga”;
(b)Structural Engineering Opinion by WSP Opus dated 16 October 2019 headed “Bella Vista: Dangerous and Affected Building Determination, 311 Lakes Boulevard, Determination Reference 3128”;
(c)MBIE Review of Tauranga City Council: Performance of statutory functions under the Building Act 2004 with respect to the Bella Vista development (undated but released in March 2019);
(d)MBIE’s Building Compliance Report for 307 and 311 Lakes Boulevard, Tauranga, MBIE Determination Reference number 3179, dated 9 July 2020 (Dibley Report); and
(e)Part of a redacted document “Systems Recommendations”.
[61] Counsel for Carters submits that the question of whether Tauranga City Council was entitled to issue dangerous and affected building notices for residential dwellings at Lakes Boulevard is irrelevant to the factors to be considered by the Court when exercising its discretion whether to make an order adjudicating Mr Cancian bankrupt.
[62] Counsel continues however that the issue may only be relevant in determining whether Mr Cancian has a claim against Tauranga City Council as a result of its actions in issuing the notices. This is the reason why Mr Cancian is seeking a halt to these bankruptcy proceedings so he can seek further legal advice to assist in determining whether he may have a claim and, if so, to file such a claim.
[63] Counsel for Carters says it is relevant to note that MBIE’s Draft Determination states:
The experts said that, while they consider that the dwelling was not dangerous or affected, it had many defects and also:
… the combination of defects, particularly with respect to the bracing system and retaining walls, will significantly reduce the capacity and robustness of the building to withstand extreme events when compared to the consented drawings.
[64]Furthermore, Carters submits the Draft Determination goes on to state:
The experts also commented that in their view the authority had interpreted the engineering advice it received correctly on the notice.
[65]Carters further notes that MBIE’s determination is still only in draft.
[66] Mr Cancian says in response that the finalised report by WSP Opus, who were instructed by MBIE, concludes that WSP Opus have not identified anything that, in their opinion, meets the test for issuing a notice for a dangerous and/or affected building under s 121 of the Building Act.
[67] Furthermore, Mr Cancian refers to the transcript of the presentation by Hon Paul Heath QC of his investigation and review into the Tauranga City Council’s involvement with the 21 properties in the Bella Vista subdivision dated 1 June 2018 in which he stated:
I did not investigate whether any particular products were or were not fit for purpose, and as I have noted in the report, those expert opinions on which I was asked to rely, have not been robustly tested.
[68] Mr Cancian submits that the expert reports were finally robustly tested as recommended by the Hon Paul Heath QC when MBIE engaged WSP Opus and Nick Dibley to review the reports prepared by experts employed by Tauranga City Council. Mr Cancian submits that both the WSP Opus report and the Dibley report have said the experts were wrong and that the buildings were not dangerous and/or affected and that they complied with the Building Code.
[69] Mr Cancian further refers to the Colgan Report which he describes as having remained confidential. He relies on statements made in that report but I do not refer to them here given its confidential status.
[70] I am not in a position in the context of this bankruptcy application to make any determination on the merits of a possible claim against the Tauranga City Council. Sufficient material has been provided to the Court however to show that Mr Cancian has carefully considered the material available and there may be a potential claim.
Has Mr Cancian acted candidly by putting all relevant information before the Court?
[71] Carters submits that there is a dearth of information before the Court relating to either the criminal proceedings or the proposed “significant civil proceeding”. However, Carters does not submit that Mr Cancian is not acting candidly.
[72] Counsel for Carters submits that from what Mr Cancian has said it can perhaps be discerned that any potential claim will be for defamation. If that is the case, bankruptcy would not prevent a claim as any right to bring defamation proceedings does not pass to the trustee in bankruptcy but remains with the bankrupt.
[73] It is clear however that Mr Cancian’s claim may not be restricted to defamation and that there may be a claim in negligence against the Tauranga City Council. Mr Cancian explains that the reason he has not provided detail of his legal case against the Council is that he would like to keep the details and particulars private between his legal team and himself so as not to risk having the particulars leaked to the Council prior to proceedings being filed.
[74] Carters submit that if Mr Cancian is adjudicated bankrupt, there would be no impediment to the Official Assignee bringing a proceeding on behalf of Mr Cancian’s estate or, alternatively, assigning the claim to Mr Cancian depending on the merits.
[75] Although technically these may be possibilities, as Associate Judge Johnston recorded in Anderson v DeMarco, the reality is that the Official Assignee is unlikely to pursue proceedings.16 Furthermore, Mr Cancian’s ability to do so once he is adjudicated bankrupt is likely to be reduced.
[76] Mr Cancian has provided copies of all of the reports referred to above and considerable detail on the basis of his appeal of the remaining criminal convictions.
[77] I therefore consider that there is no question that Mr Cancian has acted candidly by putting all relevant information before the Court. This has been hampered
16 Anderson v DeMarco, above n 13, at [24].
to some extent by the fact that he is a litigant-in-person but not through Mr Cancian not being willing to do so.
Will the granting of a halt operate unjustly on Carters?
[78] Carters submits that a halt will operate unjustly on it as it is entitled to finality, emphasising that Carters has been involved in litigation against Mr Cancian for over four years now. Carters submits that it is past time for the Official Assignee to investigate Mr Cancian’s affairs.
[79] Mr Cancian has provided a statutory declaration of his current financial circumstances and there does not seem to be any competing evidence that puts this into question. It does not appear to be a case where any investigation by the Official Assignee will lead to recovery by Carters or protection of other creditors.
[80] Furthermore, if Mr Cancian were successful in proceedings against the Tauranga City Council, there is a prospect of recovery for Carters. I do not consider therefore that the granting of a halt for a short time to allow proceedings to be considered and brought would operate unjustly on Carters as they appear very unlikely to recover any amount if bankruptcy were ordered now.
What are the wishes of other affected parties including other creditors and Mr Cancian?
[81] Mr Cancian’s position will be clear from the above. He is seeking an opportunity to take further advice (now his position on his criminal convictions is clearer) as to whether he ought to bring civil proceedings against the Tauranga City Council.
[82] Four other creditors of Bella Vista have provided letters in support of Mr Cancian’s preferred course. As Carters’ counsel notes, the director of one of the creditors is Mr Cancian’s son. One of the other letters is from Bruce Cameron, from The Engineer Limited, whose criminal convictions were quashed by Lang J in the recent appeal decision.17
17 Cancian v Tauranga City Council, above n 6, at [80] and [83].
[83] Carters refers to Mr Cancian’s statement in his affidavit opposing the adjudication application that, other than a debt to the Inland Revenue Department (which Mr Cancian says is not correct and is currently being addressed by the Inland Revenue Department), Mr Cancian has no other liabilities except for the judgment creditor. Carters submits that the letters provided by creditors in support of Mr Cancian’s application for a halt are inconsistent with this statement.
[84] The four letters each record, however, that they are creditors of Bella Vista with only one recording that Mr Cancian had also provided a guarantee. No further detail is given in respect of this guarantee and whether it is enforceable. It is not clear therefore whether Mr Cancian’s statement is inconsistent with the letters of support provided.
[85] These letters still however provide a measure of support for the granting of a halt to the bankruptcy proceedings (or at least do not dissuade me from granting a halt).
[86] Mr Cancian has also filed victim impact statements from members of his family. Counsel for Carters recorded his view that the behaviour of some members of the community referred to in these statements is abhorrent. I agree, but further agree that the impact on family members is not clearly a factor to be taken into account in determining whether to halt the proceedings.
Final weighing of the factors
[87] Weighing all of the above factors, in my view, it is appropriate for a halt to be ordered to allow Mr Cancian to take legal advice and apply for legal aid to bring proceedings. At this stage, I consider that it is appropriate to halt the bankruptcy application for four months to ensure that matters are progressed as quickly as possible balancing the interests of Carters against Mr Cancian’s interests in pursuing legal remedies. I record that I do not consider it to be appropriate to await the outcome of any appeal of the remaining criminal convictions. If civil proceedings are to be pursued, they need to be pursued now.
[88] As I am only ordering a halt of these proceedings, if Mr Cancian decides not to file proceedings after taking legal advice, then orders ought to be able to be made promptly in this proceeding by consent allowing a bankruptcy order to be issued.
Result
[89]I order:
(a)Carters’ application to adjudicate Mr Cancian bankrupt is halted until further order of the Court;
(b)Mr Cancian is to file and serve a memorandum by Friday, 25 November 2022 confirming whether:
(i)proceedings have been filed; and
(ii)if not, updating the Court on when proceedings are to be filed;
(c)Carters may file and serve any memorandum in response by 30 November 2022; and
(d)further orders will then be made on the papers either extending the halt, making orders by consent or further directions for next steps.
Costs
[90] Mr Cancian has succeeded in his application for a halt of these proceedings but is not entitled to recover costs as he is a litigant-in-person. Litigants-in-person may in some cases recover disbursements. Mr Cancian’s success in this proceeding has been in seeking an indulgence from the Court. The costs of any disbursements incurred by him are not therefore recoverable from Carters.
Associate Judge Sussock
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