Erwood v Maxted

[2012] NZSC 81

IN THE SUPREME COURT OF NEW ZEALAND

SC 28/2012 [2012] NZSC 81

BETWEEN  ROBERT ERWOOD Appellant

ANDJANET MAXTED AND JANET MAXTED AND ALEXANDER JAMES JEREMY GLASGOW AS TRUSTEES OF THE ESTATE OF EDWARD ERWOOD Respondents

Court:            McGrath, William Young and Chambers JJ Counsel:  Applicant in person

C R Carruthers QC and R P Harley for Respondents

Judgment:      3 October 2012

JUDGMENT OF THE COURT

A        The application for leave to appeal is dismissed.

BThe  applicant  is  to  pay  costs  of  $5,000  to  the  respondents,  plus  all reasonable disbursements, to be fixed if necessary by the Registrar.

REASONS

[1]      Robert  Erwood,  the  applicant,  brought  proceedings  against  his  sister, Janet Maxted, in her personal capacity and against her and Alexander Glasgow as trustees   of   Edward   Erwood’s   estate.     The   proceedings   being   unsuccessful, Mr Erwood was required to pay costs to the defendants, the current respondents.[1]

[1] Erwood v Maxted HC Nelson CIV-2003-442-363, 26 May 2006.

When  Mr  Erwood  failed  to  pay  them,  the  respondents  brought  bankruptcy

proceedings.      Mr Erwood   applied   to   set   aside   these   proceedings,   but   was

ERWOOD v MAXTED & ORS SC 28/2012 [3 October 2012]

unsuccessful.[2]    Mr Erwood brought an appeal against that decision (the bankruptcy notice appeal).  Before that appeal was heard, Mr Erwood was adjudicated bankrupt. He  filed  a  separate  appeal   against   that   decision   (the  adjudication   appeal). Mr Erwood failed to pay security for costs with respect to the two appeals, as a consequence of which both appeals were struck out.

[2] Maxted v Erwood HC Nelson CIV-2007-442-331, 27 September 2007.

[2]      This Court subsequently allowed an appeal from that strike-out, because it held that the Court of Appeal had overlooked the fact Mr Erwood had abandoned the adjudication appeal.[3]     Because the adjudication appeal had been abandoned, Mr Erwood should not have been required to pay security for costs in respect of it and it followed that it was wrong to strike out the bankruptcy notice appeal on the ground of non-payment of security for costs.[4]   This Court expressly noted, however, that, in reinstating the bankruptcy notice appeal and remitting it to the Court of Appeal for hearing, the Court was saying nothing about “the merits of the bankruptcy notice appeal or its efficacy in circumstances where there is now no challenge by way of appeal against the adjudication”.[5]

[3] Erwood v Maxted [2011] NZSC 23. A full history of the tangled procedural course followed is contained in that judgment.

[4] At [19].

[5] At [20].

[3]      The Court of Appeal duly heard the bankruptcy notice appeal and dismissed it.[6]   It is from that decision Mr Erwood now seeks leave to appeal.

[6] Erwood v Maxted [2012] NZCA 110.

[4]      Although Mr Erwood is acting for himself on this application, he tells us that Mr McKenzie QC, who appeared as amicus curiae in the Court of Appeal, prepared the detailed notice of application for leave.   We are grateful to Mr McKenzie for assisting Mr Erwood in that regard.   We note also that Mr Erwood has prepared additional submissions, which we have also considered.

[5]      Two matters are said to be of general and public importance.   The first is whether someone with “a history of incapacity and known difficulties in understanding the full implications of legal process ... should have been provided

with legal assistance when that person is the subject of bankruptcy proceedings”.

While  we  accept  such  an  issue  could  potentially be  one  of  general  and  public importance, we do not consider it can arise here because of the conclusions, first by the Associate Judge and then by the Court of Appeal, that Mr Erwood was not incapacitated and had a good understanding of the issues and the nature of the proceedings.   We consider these conclusions to be reasonable.   While those conclusions involved evaluative assessments rather than orthodox findings of fact, they  are  in  effect  concurrent  findings,  which  in  addition  are  very  particular  to Mr Erwood.   We do not consider it appropriate  to revisit those evaluations and findings on a second appeal.

[6]      We  would  also  observe  that  the  bankruptcy  proceedings  were  simple. Mr Erwood  was  not  faced  with  a  complex  case  involving  pleadings,  collecting evidence, assembling documents and the like.  All that was required of him was the payment of money which he had been ordered to pay.   It is far from clear that he would have behaved any differently had a litigation guardian been appointed.   A litigation guardian could not have paid the money that was owed.  That required a decision by him.  We also note that in the various skirmishes that took place in the Court of Appeal in relation to the bankruptcy, he was, from time to time, either represented or had the assistance of an amicus, but he nonetheless continued to behave in an obdurate way.

[7]      The second issue said to be of general and public importance is whether the Court can set aside a bankruptcy notice when the debtor is clearly solvent and there are means of execution readily available and known to the judgment creditors.  The Court of Appeal rejected this argument on two grounds.  First, it was unclear exactly

what his financial position was, because of his attempts to hide his assets.[7]   That was

a factual finding which undermines the asserted point of general importance: he was not “clearly solvent”.  Secondly, and in any event, the Court of Appeal held that a debtor’s solvency is not a ground on which a bankruptcy notice must necessarily be set aside if a debtor unreasonably refuses to pay a debt plainly owed.[8]    That proposition of law is clearly right.  This ground of appeal does not meet the statutory

test.

[7] At [57].

[8] At [57].

[8]      Mr Erwood also asserted there may be “a substantial miscarriage of justice ... unless this appeal is heard”.  The application of that criterion in the context of civil appeals is explained in Junior Farms Ltd v Hampton Securities Ltd (in liq).[9]    None of the points raised under this head come close to meeting that test.

[9] Junior Farms Ltd v Hampton Securities Ltd (in liq) [2006] 3 NZLR 522 (SC).

[9]      No miscarriage of justice arose from the fact the bankruptcy proceeding was filed in Nelson rather than Wellington. The Court of Appeal’s answer on that point is clearly right.  As well, the argument is precluded by s 30 of the Insolvency Act 1967 in view of the abandonment of the adjudication appeal.

[10]     The point about the Associate Judge permitting the bankruptcy process to proceed against Mr Erwood as an unrepresented and incapacitated person founders for the same reason the equivalent argument must fail under the “general and public importance” head, namely that it is factually unsupported.

[11]     We have considered the other points raised by Mr Erwood.  None gives us any concern whatever that a miscarriage of justice may have arisen.  The simple fact is Mr Erwood was ordered to pay costs to the respondents and has refused to obey that order.  He has deliberately hidden his assets.  In those circumstances, an order for adjudication was plainly warranted.

Solicitors:

McFadden McMeekin Phillips, Nelson, for Respondents