Commissioner of Inland Revenue v Niwa

[2017] NZHC 2273

IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY

I TE KŌTI MATUA O AOTEAROA NGĀMOTU ROHE

CIV-2016-443-79 [2017] NZHC 2273

IN THE MATTER

of the Insolvency Act 2006

AND IN THE MATTER

of the Bankruptcy of Donald James Niwa

BETWEEN

THE COMMISSIONER OF INLAND REVENUE

Judgment Creditor

AND

DONALD JAMES NIWA Judgment Debtor

Hearing:	19 September 2017
Counsel:	J E Bourke for Judgment Creditor and Official Assignee No appearance for Judgment Debtor
Judgment:	19 September 2017

ORAL JUDGMENT OF ASSOCIATE JUDGE SMITH

[1]      Mr Niwa was adjudicated bankrupt on the application of the Commissioner of Inland Revenue on 28 March 2017.  The debt owing to the Commissioner at that stage was said to be $254,010.71.  Mr Niwa did not appear at the hearing.

[2]      On 2 June 2017, Mr Niwa filed a document described as an “interlocutory application on notice annulment of Bankruptcy”.  In it, he sought the “discharge of trust  estate  of  DONALD  JAMES  NIWA of  bankruptcy”,  refund  of  all  revenue income collected, and compensation from all corporations/persons involved in the

bankruptcy.

COMMISSIONER OF INLAND REVENUE v NIWA [2017] NZHC 2273 [19 September 2017]

[3]      The application was accompanied by a two-page document headed “Notice: Affidavit in support of annulment of Bankruptcy”.

[4]      The  Commissioner  has  filed  a  notice  of  appearance  indicating  that  she opposes the application. The Official Assignee has filed a report.

[5]      The Official Assignee’s report notes that the debts of which she is aware total

$257,335.86. All of that is owed to the Commissioner.  Mr Niwa owns a property in

Cambridge  which  is  estimated  to  be  worth  somewhere  between  $300,000  and

$650,000.  There is a mortgage to ASB Bank Limited, and $165,875.38 was owing on that mortgage as at May 2017.  Accordingly, and depending on the value of the Cambridge property, it is possible that Mr Niwa may be “balance sheet solvent”.

[6]      The Official Assignee has been endeavouring to arrange a valuation of the Cambridge property, but she says that she has been actively obstructed in that by Mr Niwa,  who  has  instructed  a  tenant  in  the  property  not  to  let  the  Official Assignee’s agent onto the property.  Mr Niwa has also failed or refused to complete the required statement of affairs form.

[7]      Section 309 of the Insolvency Act 2006 (the Act) provides:

309     Court may annul adjudication

(1)      The court may, on the application of the Assignee or any person interested, annul the adjudication if—

(a)       the court considers that the bankrupt should not have been adjudicated bankrupt; or

(b)       the court is satisfied that the bankrupt’s debts have been fully paid or satisfied and that the Assignee’s fees and costs incurred in the bankruptcy have been paid; or

(c)       the court considers that the liability of the bankrupt to pay his or her debts should be revived because there has been a substantial change in the bankrupt’s financial circumstances since the date of adjudication; or

(d)      the court has approved a composition under subpart 1 of

Part 5.

(2)       In the case of an application on one of the grounds specified in subsection (1)(a) to (c) by an applicant who is not the Assignee,—

(a)       a copy of the application must be served on the Assignee in the manner and within the time that the court directs; and

(b)       the Assignee may appear on the hearing of the application as if the Assignee were a party to the proceeding.

(3)      The adjudication is annulled—

(a)       from the date of adjudication, in the case of an application on the ground specified in subsection (1)(a):

(b)       from the date of the court’s order of annulment, in the case of an application on one of the grounds specified in subsection (1)(b) to (d).

(4)       In the case of an application for annulment on the ground that the adjudication should not have been made because of a defect in form or   procedure,   the   court   may,   in   addition   to   annulling   the adjudication, exercise its powers under section 418 to correct the defect and order that the application for adjudication be reheard as if no adjudication had been made.

(5)       If the court annuls the adjudication on one of the grounds specified in subsection (1)(a) to (c),—

(a)       the court may, on the Assignee’s application, fix an amount as reasonable remuneration for the Assignee’s services and order that it be paid, in addition to any costs that may be awarded:

(b)      that amount must be paid into a Crown Bank Account:

(c)      the Assignee is not entitled to remuneration under section

406 for those services.

[8]      The Official Assignee notes in her report that s 309(1)(b) and (c) cannot apply – Mr Niwa has not paid all his debts and there is no issue of his liability to meet his debts being revived because of some change in his financial circumstances occurring since the date of adjudication.  I agree.  The only issue is the s 309(1)(a) issue, whether Mr Niwa should have been adjudicated bankrupt.

[9]      Mr Niwa did not appear when his application was first called in the list on

8 August 2017.   I adjourned the application to  today’s date, and Mr Niwa was advised of the adjournment by letter from the Registrar posted on 11 August 2017. The letter advised that if Mr Niwa did not attend, his application may be dismissed. Mr Niwa was again absent when his application was called this morning.

[10]     In addition to his interlocutory application and notice/affidavit in support, Mr Niwa filed a substantial set of documents headed “Executor Notice/Order” (filed

9 August 2017), and a document headed “Notice of Declaration in the Form of Commercial Affidavit of Truth, and Notice of Common Law Copyright, Copy Claim, Trademark” (emailed to the Court on 11 September 2017.  I have considered each of those documents.

[11]     I note first that Mr Niwa does not appear to raise any alleged defect in the procedure which resulted in his bankruptcy.  His arguments all appear to be directed to the proposition that the Commissioner has acted unlawfully in collecting the taxes and/or that there is no debt owing for some other reason.

[12]     In this case, judgment was entered against Mr Niwa on 22 July 2016, and there is nothing to suggest that judgment has been set aside on appeal or on any review.  Mr Niwa did not apply to set aside the bankruptcy notice, which had been served on him on 12 December 2016.

[13]     Large parts of the documents filed by Mr Niwa contain challenges to the legitimacy of the Government of New Zealand and/or to the Acts of Parliament under which the Commissioner is empowered to collect taxes.   Those arguments cannot provide any basis on which I could find that Mr Niwa should not have been adjudicated bankrupt.

[14]     In R v Mason,1 Heath J noted that the courts derive their authority to hear and determine criminal cases from the exercise of Parliament’s legislative powers.  Once a statute has conferred jurisdiction on a court to hear and determine a criminal cause, it is impermissible for any other institution or tribunal to attempt to replicate those powers.  His Honour went on to refer to the judgment of Randerson J in Barrett v Police,2   where  the  Judge  addressed  two  broad  challenges  to  the  relevant  law, including a submission that the New Zealand Parliament was unconstitutional and its laws invalid.  The other submission was that Parliament and the courts created under

various constitutional instruments had no authority over Māori.  In addressing those

1      R v Mason [2012] NZHC 1361.

2      Barrett v Police HC Hamilton CRI-2003-419-64, 14 June 2004.

arguments, Randerson J considered the doctrine of Parliamentary sovereignty, arguments based on rights derived from the Treaty of Waitangi and the Declaration of Independence, arguments based on Te Ture Whenua Māori Act 1993 and others grounded on s 71 of the New Zealand Constitution Act 1852 (Imp) and the Native Districts Regulation Act 1858.   Randerson J held that, since the adoption of the Statute of Westminster 1931 (Imp) in 1947, the New Zealand Parliament has had full and exclusive power to legislate in New Zealand.

[15]     Heath J noted in R v Mason that today the power to legislate springs from the

Constitution Act 1986.

[16]     More recently, the Supreme Court has held in a brief judgment declining leave to appeal a judgment of the High Court given on a habeas corpus application, that challenges to the sovereignty of Parliament have been rejected by the Supreme Court.3

[17]     Mr Niwa raises various arguments concerned with his identity, and in some parts of the documents claims to be a Māori incorporation under Te Ture Whenua Māori Act 1993.   In one statement he claimed to be the sole beneficiary of the “estate” of Donald James Niwa, saying that if all charges and all court costs were charged to that “estate”, the “estate” would pay them.  He referred at one other point to “corporate fictions through the birth certificate”.

[18]     There is nothing in these arguments.  The “dual personalities” argument has been run by a number of debtors in recent years, and has been inevitably rejected by the courts.   See for example the judgment of Dobson J in Hill v Māori Trustee,4 where His Honour said:

The  reality  is  that  Mr  Hill  has  only  one  capacity  for  the  purposes  of appearing as a defendant to a District Court civil claim brought against him. It is in the same capacity as that in which he signed the lease, and the capacity  in  which  he  has  defaulted  on  the  contractual  obligations  he assumed.  Enforcement of orders made in personam operate against him and any of his assets that may be sought in subsequent processes to execute the judgment against him.

3      Warren v Chief Executive of Department of Corrections [2017] NZSC 20, citing Wallace v R

[2011] NZSC 10, at [2].

4      Hill v Māori Trustee [2016] NZHC 364.

[19]     The sovereignty of Parliament point applies equally to the Commissioner’s claims against Mr Niwa, as does the statement of Dobson J quoted above from the judgment in Hill v Māori Trustee.

[20]     Mr Niwa raises a number of other matters, none of which in my view could provide  either  a  defence  to  the  claims  on  which  the  Commissioner  obtained judgment or a basis for finding that the bankruptcy adjudication order subsequently made should not have been made.   He refers to a claim to copyright in the name DONALD JAMES NIWA, which is said to be owned by the Crown in circumstances which are somehow said to render the Crown liable for the debt.   There is no evidence of any relevant copyright or trademark owned by Mr Niwa, and even if there were, I cannot see how it might have provided him with a defence.

[21]     Other   parts   of   Mr   Niwa’s   submissions   were   extremely   difficult   to comprehend, including references to the Vatican having created a “world trust”, and a Papal Decree apparently issued in August 2013.  I could see nothing in any of this which might have afforded Mr Niwa a defence to the Commissioner’s claims, even if the arguments had been raised at the proper time.

[22]   Mr Niwa has also adopted the ploy of sending communications to the Commissioner  and  others  setting  out  his  views  and  saying  that  if  they  are  not rebutted within ten days they will be deemed to have been accepted by the recipient. That ploy could not assist him – he could not unilaterally impose any effective consequence of a failure to respond on the recipient.

[23]     Mr Niwa’s papers also include references to a purported “security” under the Uniform Commercial Code, but it is unclear how that might have afforded him a defence, and highly improbable that the Commissioner would ever have agreed to be bound by it.

[24]     Having considered the material provided by Mr Niwa, I can find nothing in it which would justify an annulment order being made under s 309(1)(a).   The application is accordingly dismissed.

Associate Judge Smith

Solicitors:

Inland Revenue Department, Legal and Technical Services, Hamilton for Judgment Creditor