Mawhinney v Environment Court

[2014] NZHC 2872

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2014-404-002503 [2014] NZHC 2872

BETWEEN

PETER WILLIAM MAWHINNEY

Applicant

AND

ENVIRONMENT COURT First Respondent

AUCKLAND COUNCIL Second Respondent

Hearing:	18 November 2014
Appearances:	Applicant in Person First Respondent Abiding Decision of Court P Moodley for the Second Respondent
Judgment:	18 November 2014

[ORAL] JUDGMENT OF WYLIE J

MAWHINNEY v ENVIRONMENT COURT & ANOR [2014] NZHC 2872 [18 November 2014]

Introduction

[1]      The appellant, Mr Mawhinney, has commenced proceedings seeking judicial review.  He seeks to set aside a decision of the Environment Court given on 14 June

2012, ordering him to pay costs of $427,139 to Auckland Council.

[2]      The judicial review proceedings were filed on 22 September 2014.  On the same day, Mr Mawhinney filed an interlocutory application under s 8 of the Judicature Amendment Act 1972, seeking an order that Auckland Council be restrained  from  taking  any  action  to  enforce  the  costs  order  made  by  the Environment Court  until  the  claim  in  his  judicial  review  proceedings  has  been determined.

[3]      When the matter was called before me today, Mr Mawhinney also sought an order  under  s  8  restraining Auckland  Council  from  taking  any  further  steps  to bankrupt him in respect of the costs order.

[4]      The first respondent, the Environment Court, has advised that it will abide the decision of this Court.  Auckland Council opposes the application under s 8.  It has not, as yet, filed a statement of defence in the judicial review proceedings. Rather, it has sought security for costs.   In a minute issued on 6 November 2014, Ellis J directed that the present application for stay should be heard first.   The application for security for costs has been adjourned pending the outcome of this hearing.

Background

[5]      The proceedings which resulted in the costs order have a lengthy history.  It is summarised in part in my reserved judgment issued on 26 October 2011.1

[6]      The  substantive  proceedings  in  respect  of  which  the  Environment Court made the costs order commenced as long ago as 1998 when Mr Mawhinney lodged a reference in respect of a proposed plan.   There were hearings in 2002 and 2003.

There were further hearings in 2006, 2007 and 2010.

1      Mawhinney v Auckland Council (2011) ELRNZ 608 (HC).

[7]      In July 2010, Mr Mawhinney was adjudicated bankrupt.  He was discharged from bankruptcy on 24 September 2013.

[8]      While Mr Mawhinney was a bankrupt, the Environment Court issued its final decision in regard to the 1998 reference.   That decision issued on 25 November

2010.  The decision was appealed to this Court by Mr Mawhinney claiming to be a trustee of the Waitakere Forest Land Trust and its successors.   I issued a reserved judgment on that appeal on 26 October 2011.  I found that the appeal failed and I dismissed it.  In the course of my ruling, I expressed reservations about the process followed by the Environment Court.   I considered that the Environment Court had exceeded its jurisdiction and that it should have disallowed Mr Mawhinney’s appeal at an earlier point in time and left it to him to initiate a private plan change, or to the Council to introduce a variation to its plan.   I formed the view that all decisions relevant to the dismissal of the appeal were, in fact, made in the interim decision released by the Environment Court.  Nevertheless, I upheld the Environment Court’s decision ultimately dismissing the appeal.

[9]      The Council then sought costs against Mr Mawhinney in relation to the Environment Court   proceedings.      In   a   decision   dated   14   June   2012,   the Environment Court  ordered  Mr  Mawhinney  to  pay  $427,139  in  costs,  being approximately one-third of the costs incurred by the Council in dealing with the multitude of matters raised by Mr Mawhinney.

[10]     Mr Mawhinney appealed the costs decision.  He was ordered to pay security for  costs  in  the  sum  of  $995  by  Ellis  J  in  a  minute  dated  7  August  2012. Mr Mawhinney was bankrupt at the time and the security was not paid.  The appeal was deemed to be abandoned as a result.

[11]     The  Council   issued   a  bankruptcy  notice   against   Mr  Mawhinney  on

23 September 2013.  It seeks to have this Court adjudicate Mr Mawhinney bankrupt for his failure to pay the debt resulting from the costs order.

[12]     Mr  Mawhinney  did  not  pay  the  costs  order  following  the  issue  of  the bankruptcy notice.  Rather, he applied to set aside the notice.  That application was

heard by Associate Judge Doogue and  it was  dismissed on 27 February 2014.2

Mr Mawhinney  then  filed  an  application  for  re-call  of  that  judgment.     That application for re-call was also dismissed by Associate Judge Doogue, on 7 May

2014.  Mr Mawhinney then applied to review the two decisions of Associate Judge

Doogue.   The application for review was dismissed by Thomas J on 7 October

2014.3

[13]     There is no dispute that Mr Mawhinney has not paid the costs awarded in favour of Auckland Council by the Environment Court.

[14]     I  am  told  from  the  bar  that  the  application  for  bankruptcy  has  been advertised.  No creditors appeared in support of it. As I understand it, the application is being called this Thursday, 20 November 2014.

Submissions

[15]     Mr  Mawhinney submits  that  an  interim  order  under  s  8  is  necessary  to preserve his position in relation to the judicial review proceedings.  He says that if he is adjudicated bankrupt, it is “most unlikely” that the Official Assignee will continue with the application for judicial review of the Environment Court’s costs decision, or allow him to continue.   He says that an interim order is necessary to prevent that risk.

[16]     Mr Mawhinney took me through his application for review.  He stated that his key argument is based on my comments in relation to the jurisdiction of the Environment Court.    He  argued  that  this  Court  has  already determined  that  the Environment Court  had  no  jurisdiction  to conduct the proceedings  in  respect  of which it awarded the costs the subject of the application for review.  He submits that Auckland Council’s bankruptcy claim is based purely on the costs order, and that, as a consequence, the application for review stands a good chance of success.

[17]     Mr Moodley, appearing for Auckland Council, took me through the key cases dealing with s 8.   He argued that the first issue for consideration is whether an

2      Re Auckland Council ex parte Mawhinney [2014] NZHC 297.

3      Re Auckland Council ex parte Mawhinney [2014] NZHC 906.

interim  order  is  necessary  to  preserve  Mr  Mawhinney’s  position.     He  noted Mr Mawhinney’s submission that it is “most unlikely” that the Official Assignee will continue  with  the  application  for  review,  or  allow  him  to  continue,  and  that, therefore, an interim order is necessary to prevent that risk.  Mr Moodley submitted that there is no evidence to support that assertion and he suggested that the history to this matter suggested otherwise.   He argued that the Court could not find that an order is necessary to preserve Mr Mawhinney’s position and that his application should be dismissed on that basis alone.

[18]     Mr Moodley went on to address the strength of Mr Mawhinney’s application for judicial review.  He argued that the comments made by me in my earlier decision were obiter, and noted that I upheld the Environment Court’s decision, and dismissed Mr Mawhinney’s appeal.  He submitted that the Environment Court had jurisdiction to make the costs order, that the costs order was made in the exercise of a discretion and that there is nothing to suggest that that discretion was exercised improperly.  He submitted that the various matters raised by Mr Mawhinney seek to re-open the substantive proceedings, which have now been authoritatively determined by this Court on appeal.

Analysis

[19]     Section 8 of the Judicature Amendment Act 1972 provides as follows:

8        Interim orders

(1)       Subject to subsection (2) of this section, at any time before the final determination of an application for review, and on the application of any party, the Court may, if in its opinion it is necessary to do so for the purpose of preserving the position of the applicant, make an interim order for all or any of the following purposes:

(a)       Prohibiting  any  respondent  to  the  application  for  review from taking any further action that is or would be consequential on the exercise of the statutory power:

(b)       Prohibiting or staying any proceedings, civil or criminal, in connection with any matter to which the application for review relates:

…

[20]     Two approaches have been taken over the years to the application of s 8.  The preferred approach is now that discussed by the Court of Appeal in Carlton & United Breweries Ltd v Minister of Customs.4    In that case, Cooke J said that the power conferred by s 8 is a valuable power, and that it should not be restricted by any formulations such as are found in interim injunction-type cases.  The Court said that, in general, if the Court is to make an order under s 8, it must be satisfied that the order sought is necessary to “preserve the position of the applicant” which must mean “reasonably necessary”.  The Court continued by saying that if that condition

is satisfied, it has a wide discretion to consider all the circumstances of the case, including the apparent strength or weaknesses  of the claim of the applicant for review and all repercussions, public or private, of granting interim relief.

[21]     Cases following Carlton & United Breweries have adopted and expanded on this flexible approach.   It has been endorsed by the Supreme Court in Easton v Wellington City Council.5

[22]     Here,   Mr   Mawhinney’s   claim   that   it   is   most   unlikely   that   the Official Assignee would allow the judicial review proceedings to continue falls to be tested.   If he is wrong in that regard, it cannot be said that an interim order is necessary to protect his position.

[23]     Section 64(1)(e) and 101(1) of the Insolvency Act 2006 provide that, on adjudication, all property belonging to a bankrupt, or vested in a bankrupt, vests in the Assignee, without the Assignee having to intervene or take any other step in relation to the property, and any rights of the bankrupt in the property are extinguished.

[24]     The word “property” is defined in s 2 of the Act.  It means property of every kind, whether tangible or intangible, real or personal, corporeal or incorporeal, and includes rights, interests and claims of every kind in relation to property however

they arise.

4      Carlton & United Breweries Ltd v Minister of Customs [1986] 1 NZLR 423 (CA).

5      Easton v Wellington City Council [2010] NZSC 10, (2010) 20 PRNZ 360.

[25]     The definition is clearly wide enough to catch such rights as Mr Mawhinney may have under the judicial review proceedings.

[26]     Under s 117 of the Insolvency Act, the Official Assignee “may disclaim onerous property”.  “Onerous property” means, inter alia, a litigation right that, in the  opinion  of  the Assignee,  has  no  reasonable  prospect  of  success  or  cannot reasonably be funded from the assets of the bankrupt’s estate.

[27]     As can be seen, the section gives the Official Assignee a discretion whether or not to disclaim a litigation right that is considered to be onerous.

[28]     The difficulty from Mr Mawhinney’s perspective in the present application is that there is simply no evidence of what the Official Assignee might do or might not do in the event that a stay is declined and Mr Mawhinney is adjudicated bankrupt. Mr   Mawhinney   has   filed   two   affidavits.      Neither   touches   on   the   issue. Mr Mawhinney effectively asked me to take judicial notice of the approach the Official Assignee might take.  I cannot do so.  I simply have insufficient knowledge of how the Official Assignee proceeds in such cases.

[29]     In  my view,  it  is  speculative  to  conclude  in  this  case  what  the  Official

Assignee might do in the event that Mr Mawhinney is adjudicated bankrupt.

[30]     I do note that the bankruptcy application has been advertised.  According to Mr Mawhinney, no other creditor has come forward.  Mr Mawhinney has acted for himself in a very large number of pieces of litigation.  There can be no certainty that the Official Assignee would decide to disclaim the proceedings for judicial review. It is possible that the Official Assignee could decide to let them continue, and entrust their conduct to Mr Mawhinney.

[31]     Necessity to preserve an applicant’s position is the statutory threshold under s 8, and it must be found to exist before any of the discretionary factors can be taken into account.

[32]     I am not satisfied on the materials before me that an interim order under s 8 is necessary to preserve Mr Mawhinney’s position.  There is simply no evidence before me on which I can reach that conclusion.

[33]     Usually, the Court in applications under s 8 goes on to test the strength or otherwise of the application for review which founds the application for interim relief.  Here, I refrain from doing so.  I do not want my views to colour the exercise by  the  Official  Assignee  of  the  discretion  vested  in  him  under  s  117  of  the Insolvency Act.  The Official Assignee should approach that issue himself, and not be influenced by any views that the Court might express.

[34]     Accordingly, the application for interim relief is declined.

Costs

[35]     The Council has sought costs on a 2B basis.  This application was opposed by Mr Mawhinney.  He submitted to me that it has been the behaviour of the Council throughout that has been the underlying cause of the litigation, and the costs order that he now faces.

[36]     I cannot accept that suggestion by Mr Mawhinney.  In effect, Mr Mawhinney is seeking to revisit decisions which were made some time ago, and which have not been challenged.

[37]     Costs should follow the event.   I am satisfied that costs on a 2B basis are

appropriate in the circumstances of this case and an order is made in the Council’s

favour in that regard.

Wylie J