Erwood v Maxted

[2007] NZCA 572

IN THE COURT OF APPEAL OF NEW ZEALAND

CA631/07
[2007] NZCA 572

BETWEENROBERT ERWOOD

Applicant

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

First Respondents

ANDTHE OFFICIAL ASSIGNEE

Second Respondent

Court:William Young  P, Glazebrook and Robertson JJ

Counsel:Applicant in person

G M Downing for First Respondents
R MacDuff for Second Respondent

Judgment:13 December 2007 at 4 pm

JUDGMENT OF THE COURT

AOrder that there be a stay of public advertising or calling of a creditors meeting in respect of the adjudication made on 22 November 2007 of Robert Erwood as a bankrupt pending the hearing of the appeal in this Court, or the abandonment or striking out of the appeal.

B        Leave is reserved for any party to apply for further and other directions.

____________________________________________________________________

REASONS OF THE COURT

(Given by Robertson J)

Introduction

[1]       On 22 November 2007, in the High Court at Nelson, Associate Judge Christiansen made an order for the applicant’s adjudication as a bankrupt.

[2]       Mr Erwood has filed an appeal against that order and now seeks a stay of the order, particularly publication of newspaper advertisements relative to the bankruptcy, pending the hearing of this appeal.

[3]       By Minute of 30 November 2007, the President directed a hearing in this Court on 5 December 2007 and granted a stay confined to advertising until that time.

[4]       By consent, the matter is being dealt with on the papers.

Background

[5]       The act of bankruptcy underlying the adjudication  was a bankruptcy notice filed and served in July 2007 relating to costs ordered against Mr Erwood in the High Court, the Court of Appeal and Supreme Court flowing from a lengthy saga of litigation between himself and the first respondents.

[6]       Mr Erwood applied to set aside the bankruptcy notice which was for a total sum of $27,401.97: HC NEL CIV-2007-442-331 28 September 2007.  This was refused following a hearing on 27 September 2007 with reasons delivered the following day.  Mr Erwood filed an appeal against that judgment (CA567/07) and sought a stay of proceedings pending the hearing of the appeal.

[7]       The stay was considered by the President on 24 October 2007 and in a Minute he said:

Mr Erwood has submitted that if a stay is refused his right of appeal is rendered nugatory.  I disagree.  If he is adjudicated bankrupt, his challenge to the bankruptcy notice along with any other challenge to the adjudication can be addressed in this Court.  On the other hand, if a stay is granted, this will inevitably delay the prosecution of the bankruptcy proceedings.  There are, of course, good reasons why bankruptcy proceedings should not be allowed to stand in abeyance.

[8]       There has not been a substantive hearing of this first appeal.

[9]       The creditor’s petition, filed on 2 November 2007, related only to an order for costs in the High Court which, together with interest and consequential fees, was for a total sum of $23,456.09.

[10]     In his judgment of 22 November 2007, Associate Judge Christiansen referred to an application filed on 16 November 2007 to remove the bankruptcy proceedings from Nelson to Wellington.  This the Judge refused.  He noted a request for the appointment of a litigation guardian and that Mr Erwood had been unable to find legal counsel.

[11]     He found there was no substance in any of the matters raised by Mr Erwood.  He noted there was an application to set aside the bankruptcy notice and that the stay pending that appeal had been refused by this Court. 

[12]     The Associate Judge specifically held that there was no substance in Mr Erwood’s claim of failure to comply with formal requirements.  He dismissed the suggestion that there was a need for a litigation guardian.  He held that there had been adequate opportunity for Mr Erwood to be heard.  The Judge specifically rejected an invitation to dismiss the bankruptcy petition on the basis that Mr Erwood was not insolvent.

The stay application

[13]     There are now two substantive appeals pending relative to the processes in the High Court.  The stay is sought to hold action on the bankruptcy until they are disposed of.

[14]     The Official Assignee abides the decision of the Court.

[15]     The application generally (and particularly the application to suspend newspaper advertising) is opposed by the first respondents.  The respondents contend that there is no merit in the appeal against the adjudication and that potentially there will be other creditors who are interested in Mr Erwood’s situation.

[16]     The enumerated grounds in support of Mr Erwood’s appeal preventing advertising and suspending the bankruptcy order pending an application for it to be annulled, and/or hearing of this appeal, are never succinctly expressed, but include:

(a)that Mr Erwood is unequivocally not insolvent and that over $500,000 is held pursuant to a charging order of 22 June 2007 made in the High Court at Wellington by Associate Judge Gendall on the application of another creditor;

(b)that various formalities were not complied with in regard to form and service of the bankruptcy notice on the creditor’s petition including the correct Court for filing;

(c)that Mr Erwood needed proper opportunity to obtain counsel;

(d)that Mr Erwood has a counter-claim which had not been dealt with; and

(e)that he required a litigation guardian to be appointed.

[17]      These issues were  substantially raised before the Associate Judge on both September 2007 and on 22 November 2007 and he ruled against Mr Erwood on all of them.

Discussion

[18]     There is no serious engagement by Mr Erwood with the fact that there is due and owing by him the costs awarded in the High Court.

[19]     The cross claim has emerged only in recent times.  The amount claimed is $60,058.75.  The most cursory examination of the list demonstrates that the values asserted could never be substantiated.  There has been no proceeding instituted and no judgment in his favour.  The issues are quite unrelated.

[20]     Mr Downing, not unfairly, pointed to the fact that Mr Erwood has a long history of not complying with court orders and adopting processes aimed at delaying matters.

[21]     However, two substantive matters arise concerning the circumstances in which order was made.  First, the question of the proper venue for the proceedings, and secondly, Mr Erwood’s mental health and the possibility of the need for a litigation guardian.

Venue

[22]     Mr Erwood raised the question of the proper Court for filing of the bankruptcy proceedings in both High Court hearings.

[23]     In his judgment of 28 September, Associate Judge Christiansen addressed the issue of whether the bankruptcy proceedings should have been initiated in Wellington rather than the Nelson High Court. 

[24]     This is governed by r 833(a) of the High Court Rules which provides that if a debtor is resident in New Zealand the bankruptcy petition must be filed in the office of the High Court nearest to where the debtor has resided for the majority of the last six months.

[25] At [13] Associate Judge Christiansen noted that in his Court papers Mr Erwood described himself as of no fixed abode and that evidence disclosed periods of residence by Mr Erwood in Nelson, Wellington and Auckland. Associate Judge Christiansen then noted that Mr Erwood had not given a proper address for service and that it was not clear where Mr Erwood lived, but that, “[t]he Court file discloses that invariably the post office at Manners Street, Wellington, is used for communication with Mr Erwood”: at [15].

[26]     He then held, without further elaboration, that the Nelson Court was the “most convenient” place to deal with the bankruptcy proceedings. 

[27]     In his judgment of 22 November 2007, Associate Judge Christiansen noted that Mr Erwood sought a change of venue and stated at [8]:

I informed Mr Erwood that his application for a transfer of the proceeding to Wellington was refused. I said to him that the dealing of this matter was well and truly cemented in Nelson and that is where it would stay.

[28]     Associate Judge Christiansen’s brief engagement with Mr Erwood’s application to change venue in his judgment of 22 November is perhaps understandable given that he had dealt with the issue only two months earlier but, even when viewed in combination, these judgments do not appear to address the relevant tests. 

[29]     Rule 107(4) gives the Court a discretion to transfer proceedings where it appears a claim has been filed in the wrong office of the Court, or where it appears another office would be more convenient to the parties.  Venue for trial can also be the subject of a distinct application under r 479 which provides that where it appears to the Court that the proceedings “can be more conveniently or more fairly tried at any other place” the Court may change the venue. 

[30]     The Court will order a change of venue if, after balancing the respective considerations of convenience and fairness, the Court is satisfied that the action can more conveniently or more fairly be tried elsewhere.  The onus on the applicant is not to be regarded as an especially difficult onus to discharge: Consumer Council v Pest Free Services Ltd [1978] 2 NZLR 15 (CA). Convenience is not for the convenience of one party, but rather the convenience having regard to the case in all its bearings.

[31]     It is arguable that the Associate Judge did not sufficiently balance the convenience of the location for the parties.  In his judgment of 28 September he held that it was more convenient that the case be located in Nelson, but did not identify any factors influencing that determination. 

[32]     In his judgment of 22 November, the Associate Judge stated only that the proceedings are cemented in Nelson and so ought to stay there.  The Associate Judge does not appear to have assessed the fact that Mr Erwood had found it difficult to obtain counsel in the area.  Convenience was a live issue and required attention.

Litigation Guardian

[33]      Mr Erwood’s history in the Courts suggests that there are issues about this man’s current mental capacity.

[34]     Rule 84 provides that an incapacitated person must be represented by a litigation guardian unless the Court orders otherwise.

[35]     “Incapacitated person” is defined in r 82 as:

incapacitated person means a person who by reason of physical, intellectual, or mental impairment, whether temporary or permanent, is—

(a)not capable of understanding the issues on which his or her decision would be required as a litigant conducting proceedings; or

(b)unable to give sufficient instructions to issue, defend, or compromise proceedings

[36]     Incapacity was a live issue in both hearings.  There was evidence that Mr Erwood was schizophrenic and that he resided in the Atareira health facility.  The Associate Judge held that Mr Erwood was not an incapacitated person because he had previously conducted extensive litigation before the High Court, Court of Appeal and Supreme Court without need of a litigation guardian.  We note that there was at least one point where he had a litigation guardian, but that has had its own problems.

[37]     The fact that Mr Erwood has brought and conducted other proceedings is a factor but this is arguably not determinative on the point. 

[38]     We are not in a position to make a finding as to whether Mr Erwood is an incapacitated person and, if he is, whether there is a reason why a litigation guardian should not be appointed. It is arguable that Associate Judge Christiansen did not consider all relevant matters in  refusing to appoint a litigation guardian.

Conclusion

[39]     In a real sense the bankruptcy proceeding is being used as a debt collecting process.  Mr Erwood appears to accept that there is over $500,000 which is registered in the name of another which is his.  The charging orders over it leave more than enough to cover this modest claim.  There is apparent impatience and frustration with Mr Erwood’s activities.  There are, however, alternative means of recovering this relatively small debt so a stay would not necessarily deny the first respondents an early satisfaction of the debt owing to them.

[40]     In all the circumstances, we are persuaded that a stay should be granted limited to public advertising and the calling of a creditors meeting in respect of the adjudication pending the hearing of this appeal and CA567/07 or the abandonment or striking out of the appeal, whether in accordance with r 37 of the Court of Appeal (Civil) Rules 2005, or otherwise.  The hearing will take place in this Court on 23 April 2008 at 2.15pm, providing security for costs is paid by 14 December 2007 in accordance with the decision of Ellen France J dated 22 November 2007.  The issues in the earlier appeal are largely subsumed by this, but both appeals will be listed at that time.

[41]     In the meantime, no steps are to be taken by the Official Assignee with regard to public advertising or the calling of a creditors meeting in respect of Mr Erwood’s bankruptcy. 

[42]     We make no order as to costs on this application.

Solicitors:
McFadden McMeeken Phillips, Nelson, for First Respondents