Hampton v Official Assignee
[2015] NZCA 264
•22 June 2015 at 2 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA423/2014 [2015] NZCA 264 |
| BETWEEN | DAVID JOHN HAMPTON |
| AND | THE OFFICIAL ASSIGNEE THE COMMISSIONER OF INLAND REVENUE MINTER ELLISON RUDD WATTS |
| Court: | Stevens, White and Cooper JJ |
Counsel: | Applicant in person |
Judgment: (On the papers) | 22 June 2015 at 2 pm |
JUDGMENT OF THE COURT
The application is dismissed.
____________________________________________________________________
REASONS OF THE COURT
(Given by Cooper J)
The applicant, David John Hampton, was adjudicated bankrupt on 5 June 2013. He applied for annulment of his bankruptcy under s 309(1)(a) and (c) of the Insolvency Act 2006 (the Act). By a judgment dated 26 June 2014, Associate Judge Matthews dismissed the application.[1]
[1]Hampton v The Official Assignee [2014] NZHC 1458 [decision under appeal].
Mr Hampton has filed a notice of appeal against that judgment, but it was filed one day late. He now seeks an extension of time for appealing. The first respondent, the Official Assignee, abides the decision of the Court on the application, but the application is opposed by counsel for the second and third respondents, the Commissioner of Inland Revenue and Minter Ellison Rudd Watts (Minter Ellison) respectively. In both cases, a substantial ground of opposition is that the appeal lacks merit.
Although formally abiding the decision of the Court, Mr Slevin has filed a memorandum on behalf of the Official Assignee in which he states that the administration of the applicant’s bankrupt estate has been delayed by the filing of the notice of appeal and the present application. That delay is said to compound the effects of his two earlier unsuccessful applications for annulment, which caused the Official Assignee to defer taking steps that would otherwise have been taken to enforce Mr Hampton’s obligations under the Act. Mr Slevin claims that Mr Hampton has been dilatory in providing information required under the Act.
Mr Hampton disputes the latter claim and asserts that he has cooperated fully with the Official Assignee to the extent that work commitments in Northland requiring him to be absent from Christchurch have allowed.
The second respondent also complains that the existence of the intended appeal is being used by Mr Hampton to defer the progress of matters in the High Court, including debt recovery proceedings and applications to strike out various claims for malicious prosecution and misfeasance in public office brought by the applicant and related entities against the Commissioner of Inland Revenue and her employees.
Background
The third respondents had obtained a judgment against the applicant on 11 February 2010 for a total amount including interest and costs of over $220,900.[2] They secured a charging order over a fund, from which they received payment of $176,553.86 in December 2012.[3] The balance of the judgment debt remained unpaid, and a bankruptcy notice was served. An application by Mr Hampton to set aside the notice was unsuccessful.[4] The notice expired and an application for adjudication followed. It was granted after a number of adjournments. The Commissioner of Inland Revenue appeared as a creditor in support of the application for adjudication, asserting sums owing for tax and awards for litigation costs. Mr Hampton did not appear on the date the order for adjudication was made, claiming he had made a mistake as to the date.
[2]Minter Ellison Rudd Watts v Chesterfields Preschools Ltd HC Christchurch CIV-2009-409-1700, 11 February 2010.
[3]As recorded in Minter Ellison Rudd Watts v Hampton [2013] NZHC 2434 at [2]–[3].
[4]Re Minter Ellison Rudd Watts, ex parte Hampton [2012] NZHC 1715.
Mr Hampton has previously applied for the annulment of his bankruptcy, but his application was opposed by the Commissioner of Inland Revenue and Minter Ellison, and dismissed by Associate Judge Osborne.[5]
Assessment
[5]Minter Ellison Rudd Watts v Hampton, above n 3.
The considerations relevant to an application to extend the time for appealing include the length of the delay and the reasons for it, the conduct of the parties, the extent of prejudice caused by the delay, the prospective merits of the appeal and whether the appeal raises any issue of public importance.[6] The overall test is whether granting an extension would “meet the overall interests of justice”.[7]
[6]My Noodle Ltd v Queenstown-Lakes District Council [2009] NZCA 224, (2009) 19 PRNZ 518 at [19]; Barber v Cottle [2010] NZCA 31 at [6]; Robertson v Gilbert [2010] NZCA 429 at [24].
[7]My Noodle Ltd, above n 6, at [19] citing Havanco Ltd v Stewart (2005) 17 PRNZ 622 (CA) at [5].
Here, the length of the delay is minimal. The appeal was filed on 25 July 2014, which was the day after it should have been filed according to r 29 of the Court of Appeal (Civil) Rules 2005. Mr Hampton has also offered an explanation for delay. He claims that the notice of appeal was delivered to the offices of New Zealand Couriers Ltd situated at Whangarei by 5.45 pm on Wednesday 23 June 2014. He anticipated that this would enable the appeal to be delivered to the Court of Appeal in Wellington the following day. However, unbeknownst to him, the courier’s offices in Whangarei closed at 5.30 pm. The result was that the appeal was filed late and was not received until 10 am on 25 June.
We do not consider there is anything in Mr Hampton’s conduct which is relevant for present purposes. The suggestions that he has not cooperated with the Official Assignee are disputed. None of the parties has filed an affidavit which might have enabled the Court to form a view on the relevant facts and of course there has been no cross-examination. Although there is a suggestion in the stance of the respondents that there will be prejudice arising from the time that would necessarily elapse in dealing with the substantive appeal, none of the parties asserts prejudice arising from the delay in filing the appeal itself. Consequently, there is no issue of prejudice which ought properly to be weighed against the application.
The appeal does not raise any issue of public importance, but given the appeal is as of right, the short period of delay and the absence of prejudice attributable to the delay would favour the granting of the extension subject to the issue of merit. It is on this issue that the applicant faces real difficulty.
Section 309(1) of the Act relevantly 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
…
(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; …
As noted, the High Court judgment the subject of the present appeal was given on a second application for annulment made by Mr Hampton. Insofar as it relies on s 309(1)(a), the appeal would re-litigate issues raised in the context of the first application.
In essence, Mr Hampton seeks to argue that as he did not appear at the hearing when he was originally adjudicated bankrupt, he had been unable to inform the Court that monies he had been expecting from the Earthquake Commission in relation to a damaged property had in fact been received.
However, Mr Hampton had run essentially the same argument in the context of his first application for annulment, when he said that money payable by the Earthquake Commission had recently been received as well as sums from a private insurer, IAG. The argument was rejected.[8] As Judge Osborne pointed out, the argument was premised on an assumption that had Mr Hampton been present and applied for an adjournment in the new circumstances, the adjournment would have been granted. The Judge did not accept that was necessarily so. In any event, the Court had not been asked for an adjournment, the creditor was entitled to proceed and an order for adjudication had been correctly made on the basis that Mr Hampton had committed an act of bankruptcy in 2012 and there was a balance of at least $44,395 owing as at the date of the order.
[8]Minter Ellison Rudd Watts v Hampton, above n 3, at [34]–[35].
Associate Judge Matthews in the judgment now subject to appeal noted that Mr Hampton’s argument was essentially presented for a second time, with the additional claim that, as he had not been present at the hearing when he was adjudicated bankrupt, he had not been in a position to inform the Court that certain insurance monies had been received. The Judge said:[9]
[9] The first difficulty with this submission is that it goes directly to how the Court might have exercised its discretion in relation to adjudicating Mr Hampton bankrupt, a matter outside the consideration of this Court on an annulment application under s 309(1)(a). The second difficulty is that, as noted in the earlier judgment, Mr Hampton had committed an act of bankruptcy as long ago as 2012, Minter Ellison had a judgment dating back to February 2010 which was still partly unsatisfied, and there is no evidence that as at the date of adjudication, a decision that the funds which had been received could be released to satisfy that debt was imminent. As well, on the day of adjudication an appearance in support of the application was entered for the Commissioner in respect of a judgment of approximately $35,000, including interest, for costs awarded to the Commissioner by the Court of Appeal. I think it unlikely that in these circumstances a further adjournment would have been granted.
[9]Decision under appeal, above n 1.
We see no prospect of this Court reaching a different conclusion on appeal. There is no tenable argument that the order for adjudication should not have been made.
The second basis upon which Mr Hampton’s application proceeded in the judgment under appeal was that a property owned by him had been sold, resulting in his receipt of some $91,000. This was said to constitute a substantial change in his financial circumstances since the date of adjudication, as contemplated by s 309(1)(c).
The Judge accepted that sum was held by the Official Assignee but found it was insufficient to pay debts owing to the Commissioner of Inland Revenue: the costs of approximately $35,000, awarded in the Court of Appeal, and a taxation debt of $925,235.34.[10] The Judge recorded Mr Hampton’s denial that amount was owing, and his reference to two civil proceedings on foot against the Commissioner as well as a notice of proposed adjustment that might materially affect his liability for the sums claimed. However, as the Judge noted:
[21] The sum stated by the Commissioner to be owing reflects the final judgment of the Court of Appeal in relation to Mr Hampton’s taxation affairs, which is not itself subject to an appeal to the Supreme Court. I am satisfied for present purposes that it is the last word on the subject of his liability.
[10]Decision under appeal, above n 1, at [18]–[19].
We consider the Judge was clearly correct to take that approach. The decision of this Court to which the Judge referred was not cited in the judgment, but we infer it was Commissioner of Inland Revenue v Chesterfields Preschools Ltd,which dealt extensively with the tax liabilities of Mr Hampton and of entities that he and his former wife controlled.[11]
[11]Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500.
In these circumstances it cannot be said that the receipt of the $91,000 on which Mr Hampton purports to rely constituted a substantial change of circumstances that should have led to annulment under s 309(1)(c) of the Act. We do not consider that Mr Hampton’s appeal would have reasonable prospects of success insofar as it is advanced against the Judge’s determination under s 309(1)(c).
Result
We have concluded that the appeal would have no prospect of success whether under s 309(1)(a) or (c). Consequently, notwithstanding the short period of delay in filing the appeal, we do not consider that time for filing it should be extended.
The application for an extension of time is accordingly dismissed.
Solicitors:
Insolvency and Trustee Service, Christchurch for First Respondent
Crown Solicitor, Auckland for Second Respondent
Minter Ellison Rudd Watts, Wellington for Third Respondents
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