Māori Trustee v Hill
[2017] NZHC 2377
•29 September 2017
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
I TE KŌTI MATUA O AOTEAROA TE PAPAIŌEA ROHE
CIV-2016-454-85 [2017] NZHC 2377
UNDER the Insolvency Act 2006 IN THE MATTER
of an application by
Fredrick Piripi Kingi Hill to set aside a bankruptcy notice
BETWEEN
MĀORI TRUSTEE
Judgment creditorAND
FREDRICK PIRIPI KINGI HILL Judgment debtor
Hearing: 7 April 2017 Appearances:
C M Reuhman for the judgment creditor
Mr Hill in personJudgment:
29 September 2017
JUDGMENT OF ASSOCIATE JUDGE SMITH
Introduction
[1] Fredrick Hill (Mr Hill) applies to set aside a bankruptcy notice issued by the Māori Trustee (the Trustee) on 31 August 2016 (the bankruptcy notice). The bankruptcy notice required Mr Hill to pay the Trustee the sum of $87,423.33 together with $796 costs, being the amount of a judgment the Trustee obtained against Mr Hill in the District Court at Palmerston North on 23 February 2015.
Background
[2] The Trustee is the registered proprietor of certain Māori freehold land at
Mangatainoka near Pahiatua (the land), as responsible trustee of an ahu whenua trust
MĀORI TRUSTEE v HILL [2017] NZHC 2377 [29 September 2017]
under pt 12 of the Te Ture Whenua Māori Act 1993 (the Act).1 The Trustee leased the land to Mr Hill for a nine year term commencing on 11 December 2006 (the lease).
[3] The Trustee alleged that Mr Hill breached the terms of the lease. Following a defended hearing of the Trustee's claim, Judge Ross ordered that the lease be cancelled and found Mr Hill liable for damages of $87,423.33 together with costs.2
An order was made granting possession of the land to the Trustee.
[4] Mr Hill filed an appeal to the High Court, which was dismissed by Dobson J.3 The Judge also declined Mr Hill's application for leave to appeal to the Court of Appeal.4
[5] On 9 August 2016 the Court of Appeal dismissed Mr Hill's application for a stay of proceedings.5 The Court of Appeal also dismissed an application by Mr Hill for leave to appeal to that Court.6
[6] On 31 August 2016 the Trustee issued a bankruptcy notice claiming the
$87,423.33 judgment debt, along with $796 costs. Mr Hill was served with the bankruptcy notice on 29 October 2016. On 11 November 2016 he filed an interlocutory application, inter alia asking the Court to refuse or dismiss the bankruptcy notice.
[7] On 25 November 2016 the Trustee filed a notice of opposition to Mr Hill’s
interlocutory application.
[8] On 1 December 2016 the Trustee also applied for an order adjudicating
Mr Hill bankrupt. The Trustee claimed the amount set out in the bankruptcy notice,
1 The trust was originally established under s 438(1) of the Māori Affairs Act 1953. Under s 354 of the Act, trusts constituted under s 438(1) of the 1953 Act which were still in existence when the Act came into force continued to exist as ahu whenua trusts, to which pt 12 of the Act applied.
2 Māori Trustee v Hill DC Palmerston North CIV-2011-054-533, 23 February 2015.
3 Hill v Māori Trustee [2016] NZHC 364.
4 Hill v Māori Trustee [2016] NZHC 1847.
5 Hill v Māori Trustee [2016] NZCA 380.
6 Hill v Māori Trustee [2016] NZCA 487.
and stated that the judgment debtor had committed an act of bankruptcy by failing to comply with the bankruptcy notice served on him.
[9] A half-day hearing was set down for 7 April 2017. Two matters were listed for the hearing:
(a) Mr Hill’s interlocutory application dated 11 November 2016; and
(b)the 1 December 2016 application by the Trustee for an order adjudicating Mr Hill bankrupt.
[10] At the hearing on 7 April 2017 Ms Reuhman accepted that Mr Hill had filed and served his application to set aside the bankruptcy notice within the ten working days allowed by s 17 of the Insolvency Act 2006. The application had not been determined when the Trustee filed the adjudication application, so failure to comply with the bankruptcy notice could not then have constituted an act of bankruptcy by Mr Hill.7
[11] The result was that the only application that could properly be heard, and which is the subject of this judgment, was Mr Hill’s application dated 11 November
2016 to set aside the bankruptcy notice.
Applications to set aside bankruptcy notices – General principles
[12] Where a creditor has obtained a final judgment or order against a debtor for the payment of money and execution of the judgment or order has not been stayed, the creditor may request the Registrar of the High Court to issue a bankruptcy notice.
[13] A debtor has a number of options when served with a bankruptcy notice. He or she can, within 10 working days, pay the amount due in the bankruptcy notice,
7 Rule 24.10 of the High Court Rules provides:
24.10 Setting aside bankruptcy notice
(1) If an application to set aside a bankruptcy notice cannot be heard until after
the expiration of the time specified in the notice as the day on which the act of bankruptcy will be complete, the time is treated as extended until the application has been determined.
(2) An act of bankruptcy is not committed by reason only of non-compliance with the notice until the application has been determined.
enter into a new formal agreement with the creditor, obtain the High Court’s approval of terms of payment,8 or satisfy the High Court that he or she has a cross claim.9
[14] The expression “cross claim” is defined in s 17(7) of the Insolvency Act as follows:
17 Failure to comply with bankruptcy notice
…
(7) … cross claim means a counterclaim, set-off, or cross demand that—
(a) is equal to, or greater than, the judgment debt or the amount that the debtor has been ordered to pay; and
(b) the debtor could not use as a defence in the action or proceedings in which the judgment or the order, as the case may be, was obtained.
[15] The learned authors of Brookers Insolvency Law and Practice note that a debtor arguing that he or she has a cross claim must demonstrate that he or she has a cross claim of true substance which he or she genuinely proposes to pursue, or a “genuine triable claim”.10 There must also be “some coincidence, some nexus or correlation between the circumstances out of which the opposing claims arise”.11
[16] The inability referred to in s 17(7)(b) is primarily a legal inability, but in cogent circumstances a factual inability may be enough (although the claim will be closely scrutinised). The leading authority on the point is Clark v UDC Finance Ltd, which confirmed that position, while emphasising that mere failure to take up the opportunity to raise the claim will not qualify as inability to do so for the purposes of s 17(7)(b).12 Simple neglect to take the elementary step of seeking further
information or advice cannot avail the debtor.
8 FM Custodians Ltd v McNally [2013] NZHC 34.
9 See High Court Rules 2016, sch 1 Form B2 and Insolvency Act 2006, s 17.
10 Brookers Insolvency Law and Practice (online looseleaf ed, Thomson Reuters) at [IN 17.10]
citing Sharma v ANZ Banking Group (1992) 6 PRNZ 386 (CA) at 389.
11 Re Elvin, ex parte Sandilands [1990] 3 NZLR 124 (HC) at 127.
12 Clark v UDC Finance Ltd [1985] 2 NZLR 636 (HC) at 640.
[17] Res judicata and issue estoppel can arise in the context of an application to set aside a bankruptcy notice, where the claims relied upon by the debtor in the bankruptcy proceeding are essentially the same as the claims that were rejected by the Court in the proceeding on which the bankruptcy notice was based.13 That is on the basis that it is unreasonable to allow the debtor to revisit the issues in the context of the creditor’s enforcement of the judgment, when the creditor has already satisfied
the Court that the claims were unarguable (in the case of a bankruptcy notice based on a summary judgment obtained by the creditor),14 or judgment has been entered for the creditor after a trial.
[18] In addition to the “cross claim” ground of opposition, the Court retains inherent jurisdiction to prevent any abuse of process in the issue of a bankruptcy notice,15 but the Court will only intervene in the exercise of its inherent jurisdiction
to prevent an abuse of process in very special circumstances.16 The “abuse of
process” ground is unlikely to be available to a debtor whose real argument is over a claim which could have been brought before the Court which entered the judgment relied upon by the creditor.17
Evidence and Submissions: Mr Hill
[19] Mr Hill said that he has now bought shares in the land from one of the beneficial owners, and is in the administrative process of having those shares vested in him by the Māori Land Court. Once these shares are vested in him, he intends to ask the Māori Land Court to call a meeting of the beneficial owners of the land for the purpose of considering resolutions: (i) calling for an audit and account of the trust; (ii) removing the Trustee as responsible trustee; (iii) investigating a possible farming venture proposal; (iv) remitting the rent which is the subject of the judgment debt; (v) regarding the sale and purchase of shares; and (vi) other matters of mutual interest including formalising resolutions made at publically advised meetings and/or
family gatherings.
13 Minter Ellison Rudd Watts v Hampton [2012] NZHC 1715.
14 At [45].
15 Re Wise, ex parte Benecke B227/95, 21 June 1995.
16 Re Krukziener, ex parte Hanover Finance Ltd HC Auckland CIV-2007-404-2896, 12 August
2008 at [36].
17 Re Saker, ex parte Benecke HC Wellington CIV-2008-485-124, 26 May 2008 at [26].
[20] Mr Hill produced a copy of a share transfer agreement completed between himself and Wiki Spencer dated 13 November 2016, along with a bank statement showing a payment made by Mr Hill for the shares. He also provided copies of documents dated 9 February 2017 filed with the Māori Land Court, regarding the vesting of the equitable share interest in the land in himself.
[21] Mr Hill also produced a two-page handwritten document, said to be a “copy of the resolution of equitable interest owners”, put to a meeting of owners held on
4 December 2016. The document was signed by four individuals, three of whom appear on the beneficial ownership list provided by Mr Hill in his affidavit as beneficial owners in their personal capacity and one of whom was a responsible trustee of a trust holding an ownership interest in the land. The resolution purported to call for an audit and account and an order calling a meeting of beneficial owners to review and consider the trustee’s obligations. It contained a resolution that Mr Hill was to retain possession and occupation of the land until a properly constituted meeting of beneficial shareholders had occurred and resolutions had been made, and it called for an injunction against enforcement of any Court orders or decisions issued against Mr Hill.
[22] Mr Hill submits that the Trustee and the Courts have failed to recognise his two distinct personalities, which should have enabled the personality sued to avoid liability under the lease and judgment debt. He also submits that, as he has declared allegiance to the independent “Niu Terani (e)State”, the Crown is unable to claim any proprietary rights against his property. He also attached to his affidavit a copy of a “Common Law Copyright Notice” purporting to protect the name “Fredrick Hill”.
[23] Mr Hill submits that he has a number of claims to set off against the amount claimed by the Trustee:
(a) a claim for $16,000 for improvements made to the land;
(b)a claim for $4.5 million for costs of his appearances representing himself in the District Court and High Court proceedings, and for property violation;
(c) a judicial review application and notice of proceeding in the High
Court, which are pending determination; and
(d)a private prosecution in the District Court and a High Court claim following the alleged theft of his property from the land, that property being “secured” for $10 million.
[24] As to the latter, Mr Hill submits that on 28 November 2016 the Trustee wrongly removed the property (including a campervan and a number of personal items) from the land. He attached a copy of an unpaid invoice for violation of the “secured property” or chattels, issued to the Trustee on 23 February 2017, for the sum of $10 million. Mr Hill stated that the High Court had yet to process the claim for $10 million following this alleged crime.
[25] Mr Hill has also commenced a private prosecution against two parties, Peter Gommans and Junk Removers Ltd, arising from the alleged wrongful removal of his chattels from the land. He produced copies of certain directions made by Judge Large in the District Court on 15 December 2016, directing him to file formal statements, and any exhibits referred to in those statements, which will form the evidence that Mr Hill will call at the trial of the private prosecution. The Judge’s minute stated that when the formal statements and exhibits were filed, the Court could then consider whether the charging documents should be accepted for filing.
[26] Mr Hill has not since the hearing sought leave to file further evidence on the outcome of the private prosecution.
[27] Mr Hill next submits that the land was never lawfully vested in the Trustee by the orders of the Māori Land Court under which the land became Māori freehold land. He contended that only about 25 acres of the land (total area approximately 55 acres) were properly made Māori freehold land, and that the balance of the land is Māori customary land, which could not be lawfully alienated (by lease or otherwise).18 Mr Hill submits that the Trustee has infringed his customary rights by
wrongfully having him evicted from the land.
18 Te Ture Whenua Māori Act 1993, s145.
[28] Mr Hill produced a copy of an application he has filed in the Māori Land Court seeking to determine the status of the titles to certain parcels of land at Mangatainoka, including the land. At the date of the hearing, that application had not been determined.
[29] Quite apart from the status of the land comprised in the lease, Mr Hill contends that the lease was not valid because of the Trustee’s alleged failure to comply with certain orders made by the Māori Land Court. He produced copies of orders of the Māori Land Court made on 13 May 1986, which recited that on 8 May
1964 the Court had vested the land in the Trustee (under s 438 of the Māori Affairs Act 1953) as trustee for the beneficial owners. The Court had also appointed Advisory Trustees. The revised Trust Orders made in May 1986 required the Trustee to consult with the Advisory Trustees before it entered into any lease of the land, but Mr Hill alleges that that never occurred. He relies on the following clause in the May 1986 Trust Orders:
Obligations and Restrictions
Notwithstanding anything to the contrary hereinbefore or hereinafter contained or implied:
(a) To lease: The Trustee shall not enter into any contract to lease the whole or any part of the land without prior consultation with the Advisory Trustees and with the concurrence of the majority of them.
[30] Mr Hill noted in his evidence that the Advisory Trustees did not attend a meeting of owners convened in October 2006 to consider the entry into the lease by the Trustee, and he questioned whether there was a quorum for that meeting as required by the Māori Assembled Owners Regulations 1995 (he contended that only two shareholders were present and another individual who voted in favour of the lease was not in fact a beneficial owner of the land).
[31] Mr Hill further noted that the Māori Land Court was notified of the appointment of two new Advisory Trustees in August and September of 2007. He pointed out that that was after the Trustee had entered into the lease, and he questioned whether anyone was actually holding office as an Advisory Trustee at the time of the October 2006 owners’ meeting and the subsequent entry into the lease.
[32] Mr Hill says that he was unaware of the May 1986 Trust Orders until he obtained them from the Māori Land Court in July of 2016. He says that he did apply to the District Court for discovery of such documents in 2014, but the Trustee did not produce them at the time and the District Court did not make any order for their production. He submits on that basis that he was unable to raise in the District Court the “lease invalidity” issue which he now raises.
Evidence and Submissions: the Trustee
[33] The Trustee rejects Mr Hill’s suggestion that the beneficial owners of the land wish (or may wish) to remit the rent that he owes. The Trustee does owe the beneficial owners of the land fiduciary duties, but it has not been considered to be in the owners’ best interests to remit the rent owed by Mr Hill. Any owner who might be dissatisfied with that stance would need to apply to the Māori Land Court and establish that the Trustee had acted in bad faith or ultra vires, before that decision could be set aside.
[34] As for the steps Mr Hill has been taking to acquire a beneficial interest in the land, Ms Reuhman submits that Mr Hill is not currently an owner, and regardless of whether he may become one, the action taken by the Trustee in enforcing the debt was not taken in bad faith, or outside the Trustee’s powers. The Trustee does not propose to exercise his powers as Trustee to remit the debt.
[35] Ms Reuhman submits that Mr Hill has not provided any evidence to prove that the beneficial owners of the land have passed a resolution to remit the judgment debt. On 14 June 2016 Judge Doogan, sitting in the Māori Land Court, dismissed an application by Mr Hill to summon a meeting of the assembled owners under s 173 of the Act, and there is no evidence that any meeting has been lawfully convened since then.
[36] On 28 October 2016 Mr Hill did apply to the Māori Land Court for certain orders based on what he said were resolutions passed at a meeting of owners of the land, including an order for remission of rent due by “lessee FPK Hill under unregistered lease agreement dated May 2007”, but on 1 November 2016 Judge Doogan issued a minute inviting Mr Hill to clarify his standing to bring the
application and proceed with it, in light of the judge’s earlier decision of 14 June
2016.
[37] In an email to the Māori Land Court case manager dated 15 November 2016, Mr Hill stated that he was “now a shareholder (pending administrative vesting) in [the land]”. The case manager advised that Mr Hill’s application to have an owner’s interest in the land transferred to him had not yet been accepted by the Court, as it contained no proof of a familial connection to land (as is required by the Act). The case manager advised Mr Hill that the application was likely to be rejected.
[38] Ms Reuhman submits that even if a duly constituted meeting of beneficial owners had been held, no resolution passed by the assembled owners would have any force unless and until it had been confirmed by the Māori Land Court in accordance with the Act.19 And even if Mr Hill established a familial connection with the land, and the Māori Land Court vested the shares in him, Mr Hill would then only obtain 5.79 shares out of a total of 8,918 shares — a 0.06% ownership
share.
[39] Ms Reuhman submits that Mr Hill’s “separate personalities” submissions have already been considered and rejected by Dobson J in Mr Hill’s appeal to this Court against the District Court judgment.20
[40] Ms Reuhman further submits that none of the matters raised by Mr Hill amount to a “cross-claim” within the meaning of s 17 of the Insolvency Act. The matters raised in his application are matters that have either been previously comprehensively rejected by the Courts, or are otherwise matters that do not amount to a cross claim.
Issues
[41] The issues are as follows:
19 Citing Te Ture Whenua Māori Act, s 175.
20 Hill v Māori Trustee, above n 3, at [50].
(1)Was Mr Hill sued in the correct capacity (and has the bankruptcy notice been issued against him in the correct capacity)?
(2)Has the judgment debt been remitted (or are there grounds to believe that it will be remitted, such that there is a genuine, triable issue of abuse of process in the issue of the bankruptcy notice)?
(3)Should the bankruptcy notice be set aside on the basis that Mr Hill has an available cross claim?
Issue (1): Was Mr Hill sued in the correct capacity (and has the bankruptcy notice been issued against him in the correct capacity)?
[42] Mr Hill submits that the bankruptcy notice should be set aside because “there is no birthing registration, IRD account, passport category ‘P’ or any Crown agency registration of a Frederick Piripi Kingi Hill”. He produced copies of his birth certificate (registered name “Fredrick Hill”) and correspondence with Massey University showing that the name under which he sought to graduate from the university in August 2016 was “Fredrick Piripi Kingi Hill”.
[43] Mr Hill’s “two personalities” argument was considered and dismissed in a thorough judgment given by Dobson J on Mr Hill’s appeal from the District Court judgment.21 It is sufficient to quote the conclusion of Dobson J that:22
The reality is that Mr Hill has only one capacity for the purposes of appearing as a defendant to a District Court civil claim brought against him. It is the same capacity as that in which he signed the lease, and the capacity in which he has defaulted on the contractual obligations he assumed. Enforcement of orders made in personam operate against him and any of his assets that may be sought in subsequent processes to execute the judgment against him.
[44] There is no doubt that the person against whom the Trustee obtained judgment in the District Court at Palmerston North on 23 February 2015, and the
person against whom the bankruptcy notice was issued on 31 August 2016, is the
21 Hill v Māori Trustee, above n 3, at [41]-[51]. See also Meenkin v Family Court at Masterton [2017] NZHC 2103 at [43]-[48] in which the concept of the “double/split” legal and natural person argument was discussed and dismissed by Cull J.
22 At [50].
same person – Mr Hill. There is no separate “corporate entity” called “Fredrick Hill”, and it is apparent that Mr Hill has himself used both names, for example in signing the lease and in graduating from Massey University.
[45] There is a minor error in the judgment and the bankruptcy notice in that Mr Hill’s first name has been spelt “Frederick” in both documents, rather than “Fredrick”. Ms Reuhman submits that it is “de minimis”, and within the Court’s power to correct. I agree with Ms Reuhman and consider that s 418 of the Insolvency Act provides sufficient jurisdiction to amend the notice to correct Mr Hill’s name.
[46] Section 418 provides:
418 Defects in proceedings
(1) A proceeding under this Act must not be invalidated or set aside for a defect (which includes misdescription, misnomer, or omission) in a step that must be taken as part of, or in connection with, the proceeding, unless a person is prejudiced by the defect.
(2) The court may order the defect to be corrected, and may order the proceeding to continue, on the conditions that the court thinks appropriate in the interests of everyone who has an interest in the proceeding.
[47] The error in Mr Hill’s name is clearly a “misdescription”, and correcting it will cause no prejudice to Mr Hill. I make an order correcting the bankruptcy notice by amending Mr Hill’s name to read: “Fredrick Piripi Kingi Hill, also known as Fredrick Hill”. That correction does not require service of an amended bankruptcy notice on Mr Hill, or further time being given to him to comply with the notice. I make an order correcting the bankruptcy notice accordingly, and find that Mr Hill’s argument based on his name or names, and the alleged “separate personalities” involved, does not provide a basis on which the (amended) bankruptcy notice should be set aside.
Issue (2): Has the judgment debt been remitted (or are there grounds to believe that it will be remitted, such that there is a genuine, triable issue of abuse of process in the issue of the bankruptcy notice)?
[48] A bankruptcy notice may be set aside where there has been a formal agreement between the parties having the effect of discharging the judgment debt. Mr Hill contends that the bankruptcy notice should be set aside on the grounds that “remission of the substantive claim amount in this case is the subject of resolution of owners… and is on application with the Māori Land Court”.
[49] The evidence, however, does not establish that the judgment debt has been remitted, and at this stage it seems unlikely that will occur.
[50] First, there is no evidence that the Māori Land Court has approved and convened a meeting of the assembled owners. On 14 June 2016 the Māori Land Court dismissed an application by Mr Hill to summon a meeting of the assembled owners, and any meeting of owners held on 4 December 2016 could not have been an authorised, duly constituted meeting of assembled owners. Further, it appears that there was no quorum.23
[51] Even if a duly constituted meeting had been held, I accept Ms Reuhman’s submission that s 175 of the Act provides that no resolution passed by assembled owners would have effect unless and until it was confirmed by the Māori Land Court in accordance with the Act. In his judgment given on 14 June 2016, Judge Doogan referred to Mr Hill’s desire to call a meeting of the owners so that he could renegotiate with them the terms and conditions of the lease. His Honour went on to
note:24
Mr Hill is not an owner. He has deprived the owners of income from the land since 2009. He has failed to pay rates and to manage gorse. He has actively resisted attempts by [the Trustee] to regain possession and the land has continued to deteriorate. … He also appears to have a naïve expectation that the owners who have suffered from his defaults would be pleased to meet him. … It is clear that the retention, use, development and control of
23 Māori Assembled Owners Regulations 1995, reg 32. The quorum for passing any resolution at a meeting consists of persons present throughout the meeting who together own, or represent the owners of, at least 40% of the beneficial interest in the land, not in any case being less in number than 10 or one quarter of the total number of owners, whichever is less.
24 Hill v Māori Trustee – Mangatainoka IBC2B3 (2016) 50 Tākitimu MB 28 at [14]-[16].
the land by the Māori owners would be more effectively promoted by severing Mr Hill’s hold of the land, not by providing him with opportunities to extend it.
[52] As at the date of this judgment it is not clear that Mr Hill has provided evidence to the Māori Land Court sufficient to satisfy that Court that he is one of the “preferred classes of alienees” (as defined in s 4 of the Act), to whom the vendor of the relevant beneficial interest would be entitled to transfer the shares under s 148 of the Act. And even if such an application were granted, Mr Hill would still need to get approval from the Māori Land Court to convene a meeting of the beneficial owners, and confirmation by the Māori Land Court of any resolution passed by the beneficial owners to remit the judgment debt. The prospects of all of those events occurring appear to be remote.
[53] I conclude that there is no basis for setting aside the bankruptcy notice on the ground that the judgment debt has been remitted, or that there is a genuine triable issue that it will or may be remitted, such as to render the issue of the bankruptcy notice an abuse of process.
Issue (3): Should the bankruptcy notice be set aside on the basis that Mr Hill has an available cross claim?
[54] A bankruptcy notice may be set aside where the judgment debtor can prove the existence of a genuinely triable issue, in a sum that is equal to or greater than the judgment debt and which could not have been used as a defence in the proceeding in which the judgment creditor obtained the judgment on which it relies.25
[55] Mr Hill makes the following claims:
(a) for $16,000, for works done by him on the land;
(b)for $4.5 million, comprising $3 million for costs for appearances before Judge Ross and Dobson J and $1.5 million in respect on
alleged property violation by a bailiff;
25 Insolvency Act 2006, s 17(7).
(c) for judicial review and other orders; and
(d) for $10 million, for the removal of his property remaining on the land; (e) claims based on alleged invalidity of the lease, including contentions
that the land was improperly vested in the Māori Trustee as Māori freehold land (when over half of it was customary land, which was inalienable), and that the lease was invalid for failure to comply with the Trust Orders made in May 1986.
[56] Dobson J specifically considered and rejected the claim for $16,000, holding that the provisions of the lease did not entitle the lessee to claim the cost of improvements from the lessor.26
[57] Dobson J also addressed a claim by Mr Hill for $1.5 million for costs in respect of his appearances in the District Court, and a further claim for $1.5 million for alleged violation of property rights. His Honour described the claims as:27
…utterly frivolous and without legal foundation. It gives rise to a concern that Mr Hill has been abusing the processes of the court that he should persist with claims for such amounts without legal justification.
[58] Those conclusions have not been overturned by the Court of Appeal, and I am bound to follow them. I think the same reasoning applies to the additional $1.5 million now claimed by Mr Hill (ie in addition to the $3 million he was claiming when his appeal was before Dobson J). The invoice sent to the Trustee referred to the same claims or kinds of claim that were characterised by Dobson J as an abuse of process. Mr Hill now attempts to re-run the same arguments that failed before Dobson J, but they have been the subject of findings which were adverse to him, and I cannot reopen those arguments now.
[59] Mr Hill referred to two further proceedings, including a judicial review proceeding, said to be pending in this Court. Both were rejected for filing by Dobson
J in a minute dated 29 November 2016. His Honour considered that the application
26 Hill v Māori Trustee, above n 3, at [70].
27 At [72].
for judicial review was misconceived and had no prospect of success. In the other proceeding, the relief sought included a public apology by the Māori Trustee , and a claim for $4.5 million for Mr Hill’s costs in appearing on his own behalf in litigation against the Māori Trustee. His Honour considered that this claim was “utterly untenable”, “utterly frivolous”, and “without legal foundation”. To allow the proceeding to be pursued would “take up time of the defendant and the Court and
would indeed be an abuse of process”.28
[60] On Mr Hill’s claim for wrongful removal of items of his property from the land late in 2016, it is clear that by then the lease had been terminated. Quite apart from the judgment of Judge Ross given on 23 February 2015 (and subsequently upheld on appeal), the lease would have expired in December 2015.
[61] The Trustee sent an email to Mr Hill on 16 November 2016. It advised Mr Hill that he had not complied with a trespass notice served on him, and that his belongings would be removed. Mr Hill responded by serving a trespass notice on the Trustee, dated 17 November 2016.
[62] A second email from the Trustee, dated 29 November 2016, stated that the Trustee considered himself entitled to treat Mr Hill’s property as abandoned goods. It informed Mr Hill that the goods would be available for him to collect, and it advised him of the location at which he could do that. The email stipulated a period of five working days for Mr Hill to pick up his property. The Trustee assessed the goods as having no market value, and advised that they would be disposed of if not collected.
[63] In my view the Trustee was fully entitled to remove Mr Hill’s goods from the land, on which he had been trespassing for over 18 months. He has produced no evidence as to the market value of the items which have been on the land, except that he says that he purchased the campervan for a figure in excess of $1,700 in 2012. The claim for $10 million appears to be fanciful, and in a similar category to the
costs claims considered by Dobson J to be frivolous and an abuse of process.
28 Hill v Māori Trustee CIV-2011-54-533, CIV-2015-454-39, CIV-2016-485-273, 29 November
2016 (minute of Dobson J).
[64] But even if the items had some market value, and there was fault on the part of the Trustee in having them removed from the land (neither of which has been shown by Mr Hill to be the case), it was for Mr Hill to produce some evidence of their value. He has not done that, and in those circumstances I do not consider that he has a genuine, triable case that any cross claim he might have would exceed the amount claimed in the bankruptcy notice.
[65] There is nothing in Mr Hill’s claims based on the purported copyright notice and the “security” allegedly held by him, whether relating to the chattels removed from the land or the use of his name. There is no evidence that “Frederick Hill” (or “Fredrick Piripi Kingi Hill”) is an original literary work in which copyright subsists, nor any evidence that any such copyright (if it existed) is owned by Mr Hill. As for the claimed “security”, the Trustee never agreed to assume liability to Mr Hill of the kind for which he now contends, and he could not impose that liability on the Trustee unilaterally.
[66] Mr Hill makes a number of arguments disputing the right of the Trustee to the land. He disputes the validity of the lease, and contends that the trustee has failed to act in the best interests of the trust.
[67] In his judgment on the appeal from the Distinct Court, Dobson J discussed the independence of the Trustee,29 the enforceability of the lease,30 and the argument based on alleged breach of fiduciary obligations owed by the Trustee to Mr Hill.31
These matters having been determined against Mr Hill, I do not intend to deal with them further.
[68] I do not think there is anything in Mr Hill’s application to the Māori Land Court for a determination of the status of the land, and his submission that over half of the land comprised customary land which was inalienable, and should not have been vested in the Trustee as Māori freehold land, which might raise a genuinely triable cross claim or provide a basis for arguing abuse of process in the issue of the
bankruptcy notice.
29 Hill v Māori Trustee, above n 3, at [44].
30 At [52]-[55].
31 At [56]-[57] and [63]-[69].
[69] Under the Māori Affairs Act 1953, the Māori Land Court did have power to make “freehold orders”, under which customary land could be vested in persons named by the Court, and the land would thereafter become Māori freehold land.32
And under s 2(2)(b) of that Act, Māori freehold land acquired by [the Trustee] was deemed to “be and to remain Māori freehold land”. Having regard to those provisions, I am not satisfied that any determination the Māori Land Court might make in the future regarding the status of this land could somehow operate retrospectively, and invalidate transactions lawfully entered into by the Trustee in respect of the land in the belief that the land was Māori freehold land. I do not think Mr Hill has a genuine triable claim that the lease was unenforceable (and presumably a nullity), or that he has been deprived of customary land rights, on the basis that part of the land should not have been vested in the Trustee as Māori freehold land. In any event, those would have been claims he could have researched, and put before the District Court in opposition to the Trustee’s claims. It is accordingly too late to raise them now as purported cross claims under s 17(7) of the Insolvency Act.
[70] Mr Hill makes a claim based on alleged invalidity of the lease on the basis that the Trustee failed to comply with the May 1986 Trust Orders. Clause 4(a) of the May 1986 Trust Orders required prior consultation with the Advisory Trustees, and concurrence of the majority of them, in order for the Trustee to enter into a contract to lease the land or any part of it.
[71] Mr Hill noted that no Advisory Trustees appear to have attended the meeting of beneficial owners in which the owners resolved to proceed with the lease. On that basis, he alleges the lease was invalid. He says further that wrongful failure by the Trustee to disclose documents relating to the May 1986 Trust Orders in the course of the District Court proceeding, and the failure of the District Court to order such disclosure, prevented him from raising his present contentions in the proceeding in which judgment was entered against him.
[72] I do not think there is anything in this claim which would amount to a genuine, triable cross claim for the purpose of s 17(7) of the Insolvency Act. First,
there is nothing in the May 1986 Trust Orders which expressly required the Advisory
32 Māori Affairs Act 1953, ss 161 and 162.
Trustees to attend the owners’ meeting. Secondly, there is no evidence that the Advisory Trustees were not consulted, or that their concurrence was not obtained, before the granting of the lease.
[73] Thirdly, even if the Trustee did grant the lease in breach of the consultation requirements of the May 1986 Trust Orders, I do not consider that would have affected the obligations of Mr Hill. In Reynolds v Napier a lease was granted in breach of trust. Williams J stated:33
In the present case I think it is quite clear that the defendant, the lessee under the lease set out in the declaration, is liable for the non-payment of rent and for the breach of the covenant contained in the lease. The lease describes the lessors as trustees under a certain settlement. The first plea alleges that they had no power to lease under the settlement. The plea, however, does not allege that they had not the legal estate in fee in the land demised. By implication it admits that they had the legal estate, but it avers in effect that they committed a breach of trust in executing the lease. This would have been a ground in equity for setting aside the lease, but I need hardly remark that after the lessee and his assignees have enjoyed the demised premises for the whole term of the lease, the lessee could not now come to the Court and ask on this ground to be relieved from the obligations the lease imposed on him.
[74] The same applies here. The Trustee had legal ownership of the land, and Mr Hill had the enjoyment of the land for the original nine year term. Judgment has been granted against Mr Hill for unpaid rent, and his appeals against that judgment have been unsuccessful. He cannot now seek to be retrospectively relieved of the obligations which the lease imposed on him.
[75] Further, any claims for relief Mr Hill might have brought in equity for an order setting aside the lease would in my view have had little or no prospect of success. It is trite that a party seeking the aid of equity must come to Court with clean hands, and Mr Hill’s breaches of the lease and continued trespass on the land following the District Court judgment make it highly improbable that he would meet that requirement.
[76] I note further that s 49(4) of the Trustee Act 1956 and s 224(g) of the Te Ture
Whenua Māori Act both provide:
33 Reynolds v Napier (1882) 1 NZLR 277 (CA) at 289.
No person dealing with the responsible trustee(s) in relation to any trust property shall be concerned to inquire as to the concurrence or otherwise of the advisory trustee, or be affected by notice of the fact that the advisory trustee has not concurred.
[77] Mr Hill also raised the issue of whether there was a quorum at the meeting of October 2006, at which a small number of owners considered the entry into the lease by the Trustee. This argument is misconceived. The lease was not granted pursuant to a resolution passed at a meeting of the beneficial owners: the lease was entered into by the Trustee pursuant to his powers under the Te Ture Whenua Māori Act and the May 1986 Trust Orders. Under cl 3(xiv) of the May 1986 Trust Orders, the Trustee was empowered to lease the whole or any part or parts of the land upon consultation with and approval of a majority of the Advisory Trustees. There was no requirement for the Trustee to call a general meeting of the equitable owners in order to exercise that power.
Result
[78] The application to set aside the bankruptcy notice is dismissed.
[79] The Trustee’s application for an adjudication order which was filed prematurely (before Mr Hill had committed the act of bankruptcy relied upon) is dismissed.
[80] The Trustee is entitled to costs. In view of the fact that Mr Hill has attempted to re-run some of the same arguments which have been rejected by the Courts in the past, it may be that the case is appropriate for an award of increased or indemnity costs. The Trustee may file a memorandum on costs within 15 working days of this judgment. Mr Hill may file a memorandum in reply on costs, within 15 working days of service of the Trustee’s memorandum.
Associate Judge Smith
Solicitors:
Te Tumu Paeroa, Māori Trustee, Wellington
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