Kake v Registrar of the High Court at Rotorua
[2018] NZHC 789
•24 April 2018
IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY
I TE KŌTI MATUA O AOTEAROA TE ROTORUA-NUI-A-KAHU
CIV-2015-463-000145
[2018] NZHC 789
BETWEEN RAMARI KAKE
Applicant / Judgment Debtor
AND
THE REGISTRAR OF THE HIGH COURT AT ROTORUA
First Respondent
AND
LESLIE CURRIE
Second Respondent
AND
UDC FINANCE LIMITED
Third Respondent / Judgment Creditor
AND
MINTER ELLISON RUDD WATTS
Fourth Respondent
AND
THE ATTORNEY GENERAL
Fifth Respondent
Hearing: 10 April 2018 Appearances:
Applicant in Person
J W McDougall on instruction for the Third and Fourth Respondents
P Cornegé for Official AssigneeJudgment:
24 April 2018
JUDGMENT OF ASSOCIATE JUDGE SARGISSON
Solicitors:
Minter Ellison, Auckland Holland Beckett, Tauranga
UDC FINANCE LTD v KAKE [2018] NZHC 789 [24 April 2018]
This judgment was delivered by me on 24 April 2018 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
[1] Ms Kake was adjudicated bankrupt in this proceeding on 20 June 2016.1 The time allowed for her to appeal has long gone but she believes the order for her adjudication is unjust and has now filed two applications to challenge that order and another for a stay of enforcement of her adjudication. Both applications state they are made as originating applications:
(a)The first application was filed on 24 January 2018 and seeks an order setting aside her adjudication as “an irregular proceeding and an abuse of process”;2
(b)The second, filed on 2 February 2018, seeks a stay of enforcement pending determination of the first application. Also filed with this application was a document that purports to be a protest to jurisdiction.
[2]The applications state that they are made under the Insolvency Act 2006.
[3] Documents in opposition have been filed by Minter Ellison Rudd Watts. (That firm is named fourth respondent in the two applications; it acted for UDC Finance Limited, the judgment creditor that sought the order of adjudication).
[4] On 20 February 2018, I heard submissions from Ms Kake and briefly from counsel for Minter Ellison. I explained to Ms Kake my preliminary view was that I doubted the Court’s jurisdiction to make an order setting aside an adjudication and
1 The order of adjudication was made by Associate Judge Christiansen on 20 June 2016. His Honour had earlier made an order of adjudication on 18 April 2016, but recalled the order minutes after making it, upon Ms Kake’s appearance and request to be heard.
2 The application was subsequently re-filed, but in all essential respects the re-filed version is the same.
anticipated that on a correct interpretation of the statutory regime in the Act, the annulment procedure was the only means left to her of challenging the adjudication. I asked if she wished the Court to deal with her application as such. She stressed that she was not seeking annulment, but was indeed relying on the existence of jurisdiction to set aside an adjudication. She indicated that as a lay person she was in difficulty identifying the basis for it, and needed a further opportunity to do so. Given the considerable significance of the adjudication to Ms Kake, whose property was being sold by the Official Assignee, I adjourned the matter to the next available date to give her the opportunity to address me further on the point. I also indicated that it would be desirable to have appearances from the Official Assignee and the judgment creditor and I referred to this in the minute I issued.
[5] The applications have now come back before me. Counsel for the Official Assignee and the judgment creditor have entered appearances and filed memoranda. Ms Kake continues to reject any suggestion that her application to set aside ought to be treated as an application for annulment, but she has not addressed the issue I raised. She instead argues that as the applications are stated to be originating applications, an Associate Judge has no jurisdiction to deal with them, and therefore they should be placed before a High Court Judge on the basis of her protest. I deal first with this submission.
Jurisdiction
[6] Putting aside momentarily whether the first application is correctly or incorrectly described as an originating application, it is plainly intended to found a challenge to the order of adjudication by a means other than an appeal. The second is ancillary to the first, and obviously interlocutory in nature.
[7] Heath J recently and conveniently observed in Commissioner of Inland Revenue v Faloon that the question of how to challenge an adjudication order is determined by the Insolvency Act itself.3 His judgment makes clear that the Act stipulates a statutory regime for the permitted pathways for challenging an adjudication.
3 Commissioner of Inland Revenue v Faloon [2016] NZHC 990.
[8] As Ms Kake is emphatic that she is not seeking an annulment and does not want her “setting aside” application treated as such. The question whether another pathway for challenging an adjudication, against which her application to set aside might be assessed, is a question for determination under the Act. That question could of course be dealt with by a High Court Judge, but it can also be dealt with by an Associate Judge (whether it is described as an originating application or an interlocutory application), because (with limited exceptions not relevant to this case) an Associate Judge has the jurisdiction and powers of a High Court Judge under the Insolvency Act 2006.4
[9] The fact therefore that Ms Kake has described her application to set aside as an originating application is no impediment to an Associate Judge’s jurisdiction.
[10] Ms Kake’s argument on the question of an Associate Judge’s jurisdiction also fails because the applications ought properly to have been made as interlocutory applications. This is because matters affecting and following the person’s adjudication must be made by interlocutory application unless prescribed otherwise. Rules 24.2 and 24.4 relevantly provide:
24.2 Application of Part
This Part applies to matters arising under the Act … and to proceedings
relating to them in the court, whenever commenced.…
24.4 Forms
(1) The prescribed forms must be used whenever appropriate.
(2) If a form has not been prescribed for an application, it must be an interlocutory application, and an order made on that application must be in the form prescribed for an interlocutory order.
[11] There is no form prescribed for an application to set aside adjudication or an application to stay enforcement. I therefore treat the applications as interlocutory applications. I turn then to whether the Court has jurisdiction under the Act to grant
4 Senior Courts Act 2016, s 20(2)(d).
an application to set aside an adjudication. If there is no jurisdiction, then both of Ms Kake’s applications must fail.5
Is an application to set aside an available pathway for challenging an order of adjudication?
[12] The courts have found repeatedly that there is no general power to review or rescind an adjudication. The person adjudicated must either appeal or seek annulment. Heath J makes plain in Faloon6 that previous authorities on the point remain good law. He noted with approval the approach taken in Re Byron (a Debtor) ex parte Commissioner of Inland Revenue,7 which closed off any room for challenge via an application to rescind under s 9(e) of the former Bankruptcy Act 1908 (akin to s 414(e) of the current Act).8
[13] The point that there is no power to rescind under the Act was also dealt with by Associate Judge Matthews in Payne, ex parte New Zealand National Party. It establishes that an adjudication cannot be rescinded.9 His Honour said:
[22] Although r 11.9 permits a Judge to recall a judgment prior to it being sealed, this does not apply to an adjudication in bankruptcy. It is well established that an adjudication cannot be rescinded. In Re Byron, Tompkins J said:
In my view, s 9(e) in spite of its wide and far reaching character does not give power to rescind an order of adjudication. The rescission of an order of adjudication is quite different from reviewing an order dismissing a petition, or revoking an order of discharge. In the first case the bankrupt’s property has been transferred to the Official Assignee, rights of creditors against the bankrupt have been restricted, and there has been a change in the status of the debtor. In the second and third cases the property of the bankrupt has not been affected by being vested in any other person, and rights of creditors have not been restricted. My view as to this is reinforced by the terms of s 136(1) which gives a special power to the Court to annul an adjudication where the order ought not to have been made It is in my opinion
5 It was unnecessary to determine the application to stay enforcement in advance of the application to set aside the adjudication, given the advice of the Official Assignee that an order for possession was needed and would await a determination on the question of jurisdiction by this Court.
6 He observed that s 61 endorses the final and binding nature of an order of adjudication on all persons unless it is successfully appealed.
7 Re Byron (a debtor) ex parte Commissioner of Inland Revenue [1964] NZLR 508.
8 S 414(1) provides that the court may review, rescind, or vary any decision of the court or a Judge under this Act.
9 Re Payne, ex parte New Zealand National Party [2012] NZHC 3465, at [22].
the appropriate and only power to be invoked where an order of adjudication should not have been made for any reason.
[14] Though the established authorities deal with rescission, there is no basis in principle to treat a setting aside application differently from one for rescission. I can only conclude, therefore on the basis of these and similar authorities, that Ms Kake’s attempt to have her adjudication set aside is misconstrued and must fail. The Court lacks jurisdiction to set aside her adjudication and I find accordingly.
[15] As the application for a stay of enforcement is premised on a power to set aside an adjudication, it must also fail. The same applies to the misconceived protest.
Should I treat the application to set aside as one for annulment?
[16] Counsel for the Official Assignee has suggested it would be helpful to have the Court provide the parties with some guidance as whether Ms Kake’s grounds for an order setting aside could found an application for annulment. He advises that the Assignee has been actively involved in administering Ms Kake’s estate for some months and has entered a (now) unconditional agreement for sale and purchase of her property in Rotorua.
[17] Ms Kake has not in fact made an application for annulment, and whether or not she might have proper grounds for doing so is not something for the Court to rule upon at the present time. Moreover, she is emphatic that she does not want her present application to set aside treated as such. It is sufficient to note that the grounds for annulment, set out in s 309, are limited; the onus would be on Ms Kake to establish sufficient grounds (a matter not to be taken lightly). I will say no more. If the grounds of the setting aside application reappear in a later application, that would be the appropriate time to rule upon them.
Costs
[18]The remaining issues are as to costs.
[19]The Official Assignee does not seek costs.
[20] The judgment creditor seeks costs. As costs follow the event under the statutory costs regime, it is entitled to some compensation for the time and cost it has been put to it is successfully opposing the applications. Putting aside steps the judgment creditor’s lawyers have taken on their own behalf, the judgment creditor is entitled to costs for the limited number of steps it has taken. These are:
(a)Filing a memorandum for the hearing on 10 April 2018;
(b)Appearing on 10 April.
[21] Counsel has not satisfied me that costs on a 2B basis would be an insufficient measure of compensation for these steps. I therefore allow $1,784, being 0.8 days x $2,230.
Associate Judge Sargisson
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