Haines House Removals Ltd v Jamieson

[2012] NZHC 2114

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-003969 [2012] NZHC 2114

BETWEEN  HAINES HOUSE REMOVALS LTD Plaintiff

ANDKATHLEEN MARY JAMIESON First Defendant

ANDTHE REGISTRAR GENERAL OF LAND Second Defendant

CIV-2012-404-003287

BETWEEN  HAINES HOUSE REMOVALS LTD Appellant

ANDTHE OFFICIAL ASSIGNEE Respondent

CIV-2011-404-003878

BETWEEN  THE OFFICIAL ASSIGNEE Plaintiff

ANDKATHLEEN MARY JAMIESON AS TRUSTEE OF THE SPEARHEAD TRUST

First Defendant

ANDKATHLEEN MARY JAMIESON AS TRUSTEE OF THE CASTELLO TRUST Second Defendant

Hearing:         20 August 2012

Counsel:         R C Mark for Haines House Removals Ltd

D W Grove for Kathleen Jamieson
P C Murray for the Official Assignee

Judgment:      22 August 2012

HAINES  HOUSE  REMOVALS  LTD  and  ORS  v  JAMIESON  and  ORS  HC  AK  CIV-2012-404-003969 [22 August 2012]

REASONS JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 22 August 2012 at 11.00 am, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Counsel:     R C Mark P O Box 172 Kerikeri 0245 for Haines House Removals Ltd

D   W   Grove   P   O    Box   130   Shortland   Street   Auckland   1140   for

Kathleen Jamieson

Solicitors:    Meredith   Connell   P   O    Box   2213   Shortland   Street   Auckland   1140 (DX CP24063) for the Official Assignee

Copy To:     Ellis Law (B Ellis) P O Box 4516 Auckland

[1]      There are two interlocutory applications before the Court for hearing.  They have been brought on urgently, as they directly affect an appeal to be heard by this Court on Thursday, 23 August 2012.

[2]      The appeal is brought by Haines House Removals Ltd (Haines), pursuant to s 86 of the Insolvency Act 1967, against a decision of the Official Assignee to discontinue   proceedings   against   Kathleen   Jamieson   as   the   trustee   of   the Spearhead Trust.  Haines contends that this trust owes Ms Jamieson a debt, which in turn  is  recoverable  by  the  Official  Assignee  for  the  benefit  of  Ms  Jamieson’s creditors, including Haines.   The appeal is being brought against a background of two other proceedings involving Haines and Ms Jamieson.

[3]      The interlocutory applications are brought by Ms Jamieson in her capacity as trustee of the Spearhead Trust.   For ease of reference, I shall refer to her and the Spearhead Trust as if they were one and the same (the trust).  The first application is an application to the Court permitting the trust to be heard in the appeal.  The second application is an application permitting the trust access to the court file of the appeal. Both applications are opposed by the Official Assignee and by Haines.

[4]      It is common ground that the only need for the trust to access the court file of the appeal is if it is to appear and be heard in the appeal.  Thus, if its application for intervention should fail, so should its application to access the court file.

[5]      The Official Assignee and Haines contend that some of the material on which the outcome of the appeal will hinge is material that is legally privileged and confidential  in  relation  to  the  other  proceedings  in  which  they  have  common interests as against the trust.   The concerns about disclosure of confidential and legally privileged material have arisen because before the Official Assignee decided to discontinue the proceedings against the trust, he and Haines had common interests in  the  proceeding  against  the  trust.     Consequently,  they  have  shared  legally privileged material in accordance with the privilege that parties having a common interest in proceedings can enjoy.  They do not want the trust to see this material, as if the Official Assignee’s decision to discontinue the proceedings against the trust is set aside, they will want to use this material as part of their case against the trust in

that proceeding.   Thus, they argue that the need to protect the confidential and legally privileged character of the material on the appeal file is a reason to refuse the trust an opportunity to be heard in the appeal.

[6]      Resolution of the application to access the court file of the appeal has been simplified by the stance taken by the trust during the course of the hearing.  In this regard, the trust modified its application for access to the court file of the appeal.  It said that if it were granted leave to intervene in the appeal, it would confine its arguments to addressing the prejudice it would suffer should the Official Assignee’s decision to discontinue the proceedings against the trust be set aside.  The trust said that the parties’ concerns regarding it becoming aware of material that was confidential and legally privileged could be met by the Court adopting a procedure whereby it heard the trust’s arguments first, with the parties having the opportunity to respond to those arguments, and then the trust and its counsel would withdraw from the hearing.  In this way, the confidential and legally privileged material that the parties would be traversing for the purpose of the appeal would remain unknown to the trust and its counsel.

[7]      The resistance that the Official Assignee and Haines display towards the trust having access to the court file on the appeal is understandable.  I anticipate that the Official Assignee will want to refer to some of the confidential and legally privileged material to support his decision to discontinue the proceedings against the trust, whereas Haines will want to refer to other aspects of this material to support its argument that the Official Assignee has a sound case against the trust.  If the trust had access to this material and the appeal were successful, the Official Assignee and Haines will have effectively disclosed their hand in the case that each would be bringing against the trust.   However, I consider that the process suggested by the trust would meet this concern.

[8]      It follows that if the trust were to be permitted to intervene in the appeal, it would be on the limited basis that its arguments were confined to addressing the prejudice the trust would suffer if the decision to discontinue were set aside on appeal.  Its arguments would be addressed to the Court first, with the parties having an opportunity to respond.   The trust and its counsel would then depart from the

courtroom.  This arrangement would occur with the trust’s consent.  It also disposes of the arguments the Official Assignee and Haines make against the trust’s participation in the appeal that draw on the difficulties this would cause regarding its access to the confidential and legally privileged information.

[9]      I now turn to consider the more complex issues that arise from the trust’s

request to intervene and be heard in the appeal.

Background

[10]     Ms Jamieson owed a debt to Haines when Haines supplied and delivered a house to Sunnyside Road for Ms Jamieson in November 2002.  The final payment was due on 23 May 2003, but Ms Jamieson did not pay the agreed price for the house.

[11]     Ms  Jamieson  is  trustee  of  two  trusts,  the  Spearhead  Trust  and  the Castello Trust.   Each of these trusts own property.   The Sunnyside Road property was originally purchased in Ms Jamieson’s name but transferred to the Castello Trust after the house had been relocated onto the property.

[12]     Eventually, Haines obtained summary judgment against Ms Jamieson for the debt  it  was  due.     Haines  then  commenced  bankruptcy  proceedings  against Ms Jamieson, leading to her being adjudicated bankrupt in September 2007.

[13]     Haines   was   closely   involved   with   the   Official   Assignee   from   the commencement  of  the  bankruptcy  proceedings  because  Haines  believed  that Ms Jamieson was financially able to pay the debt, but had transferred assets into the two trusts to avoid paying the debt.

[14]     In September 2010, the Official Assignee filed an objection to Ms Jamieson’s application for discharge from bankruptcy, on the basis that Ms Jamieson was owed money by her trusts.   The Official Assignee was prepared to commence summary judgment proceedings against the trusts, but said that Haines would have to fund the proceedings. A deed was signed to that effect.

[15]     The proceedings against both trusts were filed in August 2011.  Haines did not pay immediately when the Official Assignee asked for payment to support the proceedings against the trusts.

[16]     On 7 February 2012, the Official Assignee’s claim against the Castello Trust was struck out, leaving only a claim against the Spearhead Trust.

[17]     On 24 May 2012, Haines was informed of the decision to discontinue the proceedings against the Spearhead Trust, hence the appeal.

Right to be heard

[18]     This  appeal  is  brought  under  s  86  of  the  Insolvency Act  1967,  because Ms Jamieson’s bankruptcy occurred before the Insolvency Act 2006 came into force. Section 86 states:

86       Appeal from decision of Assignee

If the bankrupt or any creditor or any other person is aggrieved by an act or decision of the Assignee, he may, within 21 days from the date of that act or decision or within such further period as the Court allows, apply to the Court, and the Court may confirm, reverse, or modify the act or decision complained of, and make such order as it thinks fit.

[19]     The meaning of “aggrieved” was interpreted by Tipping J in Gay v Bruns CA193/98, 17 June 1999, who found that this required there to be a detrimental effect of a substantive kind to the person before he or she could bring an appeal (at [6]).  The person must be “legally worse off in some substantive or procedural way as a result of the decision” (at [5]).  In a similar vein, Gallen and Doogue JJ noted that the section confines the status to appeal to a person “aggrieved”, rather than “interested”, which is not the same (at [20]).   Where a person’s substantive rights remained the same whether the decision was valid or not, they did not come within the meaning of “aggrieved”.  Whilst the Court of Appeal was dealing with s 8 of the Insolvency Act 1967, which gave rights of appeal from decisions of this Court, the statutory language was much the same as that used in s 86.

[20]     The issue arose recently in Glynbrook 2001 Ltd v Official Assignee [2012] NZCA 289, where the Court of Appeal adopted Tipping J’s interpretation of “aggrieved person” in Gay v Bruns and noted at [79] that:

An applicant for review did not have an automatic right to apply. There was the statutory condition precedent that the applicant be “aggrieved”. To make sense of this condition and to give it meaning, an objective, rather than a subjective standard of assessment was required. In other words, it was for the Court, not the applicant, to determine whether the applicant was “aggrieved” so that the condition was met.

The Court of Appeal also noted at [79] that the approach in Gay v Bruns reflected the purpose and scheme of the Insolvency Act to limit the nature and scope of challenges to decisions of the Official Assignee.

[21]     The Official Assignee and Haines relied on these authorities to support their argument that the trust has no standing to be heard in the appeal.  Clearly, the trust is not “aggrieved” in terms of s 86, and so it could not have brought an appeal against the  Official Assignee’s  decision.    The  trust  sensibly  accepted  that  this  was  so. However, it does not follow that just because the trust could not have brought an appeal under s 86 regarding the Official Assignee’s decision, that this means it cannot be heard in the appeal.  In this regard, the Official Assignee and Haines have confused the principles that determine if a person has a right to appeal against a decision of the Official Assignee with the principles to be applied when someone wants to participate in an appeal in order to argue for the retention of the decision under appeal.  The latter principles are different from the former and entail different considerations.

[22]     Section 86 and the case law relating to it do not purport to limit who else can be parties or otherwise participate in an appeal that is brought by an aggrieved person.  The trust is presently the beneficiary of the Official Assignee’s decision to discontinue the proceedings brought against it and, therefore, it has an interest in the outcome of Haines’ appeal against that decision.   Haines has not included it as a party to the appeal; quaere whether this Court can and should make directions that allow the trust to be heard in the appeal.

[23]     The trust cites Khan v Official Assignee HC Auckland HC133/95, 5 February

1996 as an instance where the defendant in the proceeding that the Official Assignee had abandoned was given a right to be heard on an appeal under s 86.  This is seen in the passage at 5 of the judgment:

Mr Cropper sought and was granted leave to appear as an interested party on the appeal on behalf of the fourth defendant. I understand that the other defendants were advised of today’s hearing but they have not sought to be heard on the appeal.

However, Barker J did not cite any authority for leave to have been granted.

[24]     The same occurred in Edmonds Judd v Official Assignee [2000] 2 NZLR 135 (CA). Edmonds Judd had appealed to the High Court under s 86 against a decision of the Official Assignee to permit a potential legal action against Edmonds Judd to vest in Mr Hobbs, who had been a bankrupt at the time the right to bring the action accrued. The appeal failed, so Edmonds Judd appealed to the Court of Appeal under what was then s 8 of the Insolvency Act 1967. This appeal was successful; the Court of Appeal found that the Official Assignee had failed to take account of the merits of the claim that Mr Hobbs had against Edmonds Judd, with the result that the Official Assignee had allowed a hopeless and vexatious proceeding to be taken. What is interesting about this case is that Mr Hobbs appeared and was heard in the Court of Appeal and in the earlier High Court hearing before Hammond J. Again, nothing is recorded as to why or how Mr Hobbs was accorded this audience.

[25]     Moreover, in Glynbrook 2001 Ltd v Official Assignee, which is a case relied on by the Official Assignee to show that the trust is not an “aggrieved person” in terms of s 86, I note that the second respondent, Dean Lawrence, a bankrupt, was a person who had benefited from a decision that was being appealed against under s 86.  Thus, like Khan and Edmonds Judd, this case is an example where a party who has benefited from a decision of the Official Assignee has been a participant in the s 86 appeal.

[26]     The trust argues that by a combination of rr 24.1 to 24.3 and r 4.56 of the High Court Rules, this Court has authority to allow it to intervene and be heard in the appeal.  The trust contends that the Court should exercise its authority in its favour

because the trust has a “direct interest” in the outcome of the appeal, in that it will be

prejudiced if the appeal is allowed.

[27]     It is unfortunate that the question of this Court’s jurisdiction to permit a person to be heard as an interested party in an appeal under s 86 has been decided as a matter of urgency, which means that the arguments have been hastily prepared. The Official Assignee is strongly resistant to persons in the position of the trust being heard on appeals under s 86 or its current equivalent (which is framed in much the same way as s 86) and contends that to allow the trust an opportunity to be heard will open the floodgates to the same occurrence in other appeals.  To date, it seems that such participation is not commonplace.

Sources of authority for granting right of audience

[28]     It is a general principle that when this Court sits on an appeal, the appellate authority that it exercises is prescribed by the scope of the statutory provision giving rise to the appeal right.   Here, s 86 says nothing about who else has rights of audience in an appeal by an aggrieved person.

[29]     However, apart from Edmonds Judd, Khan and Glynbrook 2001 Ltd which are specific to s 86, there are a number of cases in which appellate courts have allowed rights of audience to persons not named as parties who have sought to intervene and be heard in the appeal.   These cases are referred to in X v X HC Auckland CIV 2006-404-903, 4 July 2006 by Heath J at [18]-[28].

[30]     An examination of the actual cases referred to by Heath J shows that the interveners were appearing as amicus curiae.  For example, in Z v Z (No 2) [1997] 2

NZLR 258 (CA), there were four interveners, each with different interests and each of whom is described in the judgment as amicus curiae.  This suggests that there is a route by which those interveners were permitted to appear in the appeals.

[31]     Although r 4.27 might cover some of these instances, it does not cover all instances where amicus curiae might be appointed.

[32]     The annotations in McGechan on Procedure to s 99A of the Judicature Act

1908, which provides for payment of costs for interveners/amicus curiae, record that persons are also permitted to intervene under r 97 of the High Court Rules.  This is a reference to the former Rules; the replacement rule is r 4.56.   This suggests that r 4.56 could provide authority for allowing an intervener.  I note, however, that the use of r 4.56 to allow for the addition of persons who are not joined as other plaintiffs or defendants was doubted in Sanofi-Adventis Deutschland GmbH v AFT Pharmaceuticals Ltd HC Auckland CIV-2009-404-1795, 9 August 2011 at [17]-[18].

[33]     Under Part 24 of the High Court Rules, rr 24.1 and 24.2 provide that Part 24 of the High Court Rules applies to matters arising under the Insolvency Act 2006, and I consider that where proceedings are brought under the former Act, Part 24 must apply to them as well.  Under r 24.3, the other parts of the High Court Rules and the general practice of the Court apply when Part 24 applies, unless they are modified by, or are inconsistent with, the Insolvency Act.   Thus, in this indirect fashion, rr 24.1 to 24.3 make the remainder of the High Court Rules applicable to matters arising under the Insolvency Act, which must include appeals either under the current appeal provision or under s 86.  In this way, relevant provisions in the High Court Rules become available to the Court to authorise an intervener in an appeal under s 86.

[34]     As noted at [18] of Sanafi-Adventis Deutschland GmbH, rr 7.9 and 1.6 have been used to join interested parties.  Rule 7.9 authorises the Court to give directions as to the conduct of a proceeding, including joining a party to a proceeding.  Rule 1.6 provides that where cases are not provided for by the rules, the Court must dispose of the matter in the manner the Court thinks best calculated to promote the objective of the rules.  By use of either r 7.9 or r 1.6, I consider that given the availability of rules  permitting  the  joinder  of  persons  as  parties  to  a  proceeding,  a  court  has authority to join the trust as a party in the appeal, or to permit the trust to intervene with rights of audience without joining it as a party to the appeal.

[35]     For completeness, I note that the notice of appeal records that the appeal is brought in reliance on Part 20, which is the provision in the High Court Rules governing appeals to this Court.  The provisions in Part 20 of High Court Rules are

subject to the specific provision providing the right of appeal.  However, where that is silent on procedural issues, the rules in Part 20 apply.  Part 20 does not expressly deal with adding parties to an appeal or giving rights of audience in an appeal hearing to non-parties.   However, there is nothing in doing so that would be inconsistent with the rules in Part 20.   Furthermore, Part 20 is not a code and the other more general rules in the High Court Rules can also be applied to appeals.  It is only when the rules in Part 20 are inconsistent with the other general rules that the latter are excluded from applying: see Air New Zealand Limited v Commerce Commission (2005) 17 PRNZ 786 (HC).

[36]     In any event, irrespective of the prescribed procedural rules, an appellate court has implied or inherent powers that enable it to deal with procedural matters that come before it.  In Zaoui v Attorney-General [2005] 1 NZLR 577 (SC) at [35], the Supreme Court described the inherent or implied power available to a court exercising a statutory appellate jurisdiction, in the following way:

Some confusion may arise because the term “inherent jurisdiction” is applied both to substantive and procedural powers. The ancillary inherent powers of Courts to regulate their own procedure arise equally in relation to their statutory and common law substantive jurisdictions. Courts which do not possess an inherent substantive jurisdiction (as is the case where their substantive powers are entirely statutory) nevertheless have inherent or implied procedural powers necessary to enable them to give effect to their statutory substantive jurisdiction.

[37]     And in Watson v Clarke [1990] 1 NZLR 715 (HC), Robertson J said of the statutory jurisdiction of the District Court:

Although in slightly different ways, each case deals with the question of the inherent power of the District Court. In 1841, Alderson B held in Cocker v Tempest (1841) 7 M & W 502, 503 that:

"The power of each Court over its own process is unlimited; it  is  a  power  incident  to  all  Courts  inferior  as  well  as superior; were it not so, the Court would be obliged to sit still and see its own process abused for the purpose of injustice."

In as much as the District Court is a creature of statute, then its entire criminal jurisdiction is to be founded in the provisions of the Summary Proceedings Act 1957. It does not have jurisdiction from any other source except that given other particular statutes. However, if a Court possesses jurisdiction in respect of criminal proceedings, it has, by reason of that very fact, a power — indeed a duty — to ensure that its processes are not used as

an instrument of oppression or otherwise abused. In short, the power to prevent abuse of process is inherent within its jurisdiction.

In R v Connelly [1964] AC 1254, Lord Morris of Borth-y-Gest said at p

1301:

"There can be no doubt that a Court which is endowed with a particular jurisdiction has powers which are necessary to enable it to act effectively within such jurisdiction. I would regard them as powers which are inherent in its jurisdiction. A Court must enjoy such powers in order to enforce its rules of practice and to suppress any abuses of its process and to defeat any attempted thwarting of its process."

[38]     Thus, when sitting on an appeal, even though the jurisdiction is prescribed by statute, this Court has implied/inherent powers that it can call on to give procedural effect to the appellate jurisdiction under s 86.

[39]     Rosara   Joseph   in    “Inherent    Jurisdiction    and    Inherent    Powers    in New Zealand”  (2005)  11  Canta  LR  220  at  235  summarises  the  wide  range  of purposes for the inherent powers of the Court to regulate its own proceedings to be exercised.  I consider this to be one of those instances.

[40]     I am satisfied that from a variety of sources, I have jurisdiction to permit the trust to intervene and be heard in the appeal.  The next question is whether I should do so.

Exercise of discretion

[41]     I consider that, by analogy, a helpful test to determine whether I should allow the intervention is that which has been applied to persons seeking to intervene in judicial  review proceedings.    So,  for example,  in Ellen  France J’s  judgment  in Wellington International Airport Ltd v Commerce Commission HC Wellington CP151/02, 19 July 2002, the test at [22] was whether the applicant’s rights will be “directly affected by the proceedings”.  Much the same test is applied under r 4.56 when a Court determines if it will permit someone to be joined as either a plaintiff or a defendant to a proceeding: see Mainzeal Corp Ltd v Contractors Bonding Ltd (1989) 2 PRNZ 47 at 50.  In addition, I note that s 9 of the Judicature Amendment Act  1972  provides  for  persons  affected  by  a  decision  that  is  being  judicially

reviewed to be named as parties in the judicial review proceeding, which supports the view that persons who have benefited from a decision that is then challenged by legal process are persons whose rights are directly affected by these proceedings.

[42]     Finally, I note that persons in the equivalent position of the trust have been permitted to appear in s 86 appeals in Edmonds Judd, Khan and in Glynbrook 2001

Ltd.

[43]     Against this background, I can see no proper reason for not permitting the trust, which is directly affected by the outcome of the appeal, to appear and be heard in the limited way in which it has proposed.

[44]     Given the urgency of this application, no one has had a proper opportunity to address whether or not the trust, through Ms Jamieson, should be added as a party to the appeal or simply heard as an intervener.  I propose to leave this matter open for further argument at the appeal hearing.   It makes no practical difference to the exercise of the rights of audience that I have allowed the trust.  Nor does it directly impact on any appeal rights the trust might have from this Court’s decision on the s 86 appeal.  Section 8(2) of the Act permits anyone aggrieved by a decision of this Court to appeal, as does the present Act.  Whether the trust can do so will depend on the outcome of the s 86 appeal.

Result

[45]     The trust has the right to appear and be heard in the limited manner set out in

[8] herein.

Duffy J