Meder v Official Assignee
[2018] NZHC 821
•27 April 2018
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2017-404-1193
[2018] NZHC 821
BETWEEN MARCUS HENRY MEDER
Applicant
AND
THE OFFICIAL ASSIGNEE
Respondent
Hearing: 6 September 2017 Appearances:
No appearance for Applicant
G Neil and G Montgomery for RespondentJudgment:
27 April 2018
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 27 April 2018 at 12.30pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors:
Meredith Connell, Auckland
MEDER v THE OFFICIAL ASSIGNEE [2018] NZHC 821 [27 April 2018]
Introduction
[1] The respondent, the Official Assignee (Assignee), has applied to the Court to use its inherent jurisdiction to stay this proceeding in order to pressure the applicant, Marcus Meder, to comply with orders made by the District Court following Mr Meder being adjudged bankrupt. The application is not based on any alleged lack of substantive merit or procedural defect in the proceeding but seeks the stay for the collateral purpose of purging Mr Meder’s contempt for not complying with the District Court’s orders.
[2] The Assignee says the proposed stay is the only means of exerting effective pressure on Mr Meder to comply with the District Court’s orders and to hand over an inheritance he obtained after he had been adjudicated bankrupt.
[3] Mr Meder was not represented and took no part in the consideration of the Assignee’s application which was heard by me on 7 September 2017 by way of formal proof. On the day before the hearing, Mr Meder sent an email to the Court advising that he was unable to attend the hearing and had been unable to obtain legal representation.
Background
[4]The following summary of facts is drawn from:
(a)An affidavit sworn on 12 June 2017 by Mr Meder in support of his application for leave to review decisions of the Assignee:
(i)Imposing conditions for Mr Meder to meet before the Assignee would agree to assign the right to apply to set aside the judgment adjudicating him bankrupt (bankruptcy judgment); and
(ii)Refusing Mr Meder’s application for consent to be self- employed; and
(b)Affidavits sworn on 12 July 2017 and 18 July 2017 by Anthony Pullen, Deputy Assignee, in opposition to Mr Meder’s application and in support of the Assignee’s application to have Mr Meder’s application stayed.
[5] From 8 June 2007, Mr Meder was a 50 per cent shareholder in a company, Marie Harper 2007 Ltd (Marie Harper), to which Mr Meder provided services.
[6] On 3 November 2008, liquidators were appointed for Marie Harper pursuant to an order of the High Court following an application by the Commissioner of Inland Revenue.
[7] In the course of their investigations, the liquidators became aware of payments made by Marie Harper to Mr Meder under transactions made at a time the liquidators considered Marie Harper to have been insolvent. Accordingly, the liquidators considered those transactions voidable under s 292 of the Companies Act 1993.
[8] On 5 December 2009, the liquidators served notice on Mr Meder seeking recovery of $87,187.90, being the amount paid to Mr Meder under the transactions with Marie Harper. Mr Meder took no formal steps in response to the notice.
[9]On 30 October 2010, Mr Meder departed for Chile.
[10]In November 2010, Mr Meder was adjudicated bankrupt by default.
[11] In his affidavit sworn on 12 June 2017, Mr Meder says that before he left New Zealand he had not been served with and had not become aware of:
(a)The notice served by the liquidators of Marie Harper;
(b)The bankruptcy proceeding against Mr Meder.
[12] Mr Meder’s assertions that he had not been served with and was not aware of the bankruptcy proceeding are contradicted by documentary evidence in exhibits to Mr Pullen’s affidavits.
Mr Meder’s inheritance
[13] As a consequence of Mr Meder being adjudged bankrupt, all Mr Meder’s property vested in the Assignee in accordance with s 101 of the Insolvency Act 2006. This included property to which Mr Meder became entitled under the will of his mother, Elsie Meder, who died a month before Mr Meder was adjudged bankrupt.
[14] Under the will, Mr Meder was an executor, trustee and beneficiary of his mother’s estate. The largest asset in Mr Meder’s mother’s estate was a unit in a retirement village in Rotorua. The will directed the balance of the estate to be distributed to the surviving children.
[15] In March 2015, Mr Meder returned to New Zealand. In late 2016, as executor of the will, he sold the Rotorua retirement unit, realising $168,879.50 as the net proceeds of the sale.
[16] On 23 and 24 November 2016, Mr Meder distributed the proceeds of the Rotorua unit’s sale to his siblings and to himself.
[17]The distributions Mr Meder made to himself were:
(a)A cash withdrawal of $10,000;
(b)A direct credit transfer to his personal bank account of $55,000.
[18] In April and May 2017, the Assignee sought to recover Mr Meder’s share of the inheritance from the estate. The following steps were taken:
(a)On 20 April 2017, the Assignee made a demand for Mr Meder’s share of the inheritance;
(b)On 18 May 2017, Mr Meder refused the Assignee’s demand through his solicitors;
(c)On 19 May 2017, the Assignee made further demand;
(d)On 24 May 2017, the Assignee applied to the District Court without notice for orders preserving the property;
(e)On 26 May 2017, the District Court made preservation orders (the Preservation Orders) on the terms sought;
(f)On 29 May 2017, the Preservation Orders were emailed to Mr Meder and his solicitors;
(g)On 9 June 2017, the Preservation Orders were formally served on Mr Meder.
[19]The Preservation Orders as made by Judge Harrison were:
(a)an order restraining Marcus Henry Meder from removing his share of the inheritance distributed to him in or around November 2016 from the deceased estate of the late Elsie Meder, or such of it as remains in possession custody or control, from New Zealand or from disposing of it, dealing with it, or diminishing the value of it whether it is in or outside New Zealand.
(b)an order directing Mr Meder to forthwith pay into Court the property described at order (a) above.
[20] Mr Meder has taken no steps to comply with the Preservation Orders. He asserts in his affidavit of 12 June 2017 that he used the inheritance to cover his living costs such as accommodation, food and health care.
[21] On 19 June 2017, Mr Meder failed to appear on a summons for his examination before the District Court in relation to his property and to surrender documents in his possession. A warrant was issued for his arrest the same day. As far as the Court is aware, Mr Meder remains at large.
Mr Meder’s attempts to annul his bankruptcy
[22] On 8 March 2017, solicitors acting for Mr Meder wrote to the Assignee expressing the view that the bankruptcy judgment should be set aside by application made under r. 15.10 of the High Court Rules, and the bankruptcy annulled. On 15 March 2017, a meeting involving the solicitors acting for Mr Meder, Mr Pullen (the
Deputy Assignee) and solicitors for the Assignee was held to discuss those propositions. At that meeting, the Assignee’s solicitors advised Mr Meder’s solicitors that:
(a)The right to apply to set aside the bankruptcy judgment vested in the Assignee upon Mr Meder’s adjudication as a bankrupt;
(b)The Assignee would not assign the right to apply to set the judgment aside unless satisfied as to the merits of the application;
(c)Before assigning the right to set the judgment aside, the Assignee required an upfront payment of $5,000 from Mr Meder to cover the costs of obtaining legal advice on the merits of the proposed application, and that this sum would have to come from a third-party source and could not be from funds already vested in the Assignee;
(d)The Assignee required indemnification for all costs that might be incurred from assigning the right, and payment of a sum in the region of $50,000 as security for such costs.
[23] Mr Meder’s solicitors said at the meeting on 15 March 2017 that there was no prospect of his meeting those requirements.
[24] The Assignee’s requirements before agreeing to an assignment of the right to apply to set the bankruptcy aside were reiterated in a letter dated 19 May 2017 from the Assignee’s solicitors to Mr Meder’s solicitors, responding to a letter dated 18 May 2017 from Mr Meder’s solicitors. These letters and subsequent correspondence between the two sets of solicitors also discussed whether the Assignee’s requirements had been conveyed to Mr Meder on 15 March or 19 May 2017 and, if so, whether it was still open to Mr Meder to apply to review the Assignee’s decision. The Assignee’s position was that the time for review had expired.
[25] The letter of 19 March 2017 from the Assignee’s solicitors again demanded that Mr Meder deliver up his share of his mother’s inheritance or as much of it as remained.
Mr Meder’s application to be self-employed
[26] On 15 November 2016, Mr Meder applied to the Assignee for consent to be self-employed, having regard to s 149(1)(a) of the Insolvency Act under which a bankrupt cannot enter into business without consent of the Assignee or the court. In support of his application Mr Meder said he had never been anything other than self- employed.
[27] By letter dated 7 February 2017, the Assignee declined the request, noting Mr Meder’s disregard for his responsibilities under the Insolvency Act and his failure to comply with existing self-employment restrictions under the Act.
Mr Meder’s application
[28] On 12 June 2017 Mr Meder filed an originating application for orders modifying the Assignee’s decisions imposing conditions for Mr Meder to meet before the Assignee would agree to assign the right to apply to set the bankruptcy judgment aside, and refusing Mr Meder’s application for consent to be self-employed. The application also sought an extension of time if that was required.
The Assignee’s application
[29] On 19 June 2017, the Assignee filed the current application to stay Mr Meder’s application until such time as the Preservation Orders have been complied with. The stated grounds of the application are that the Assignee does not have an effective remedy in the District Court for compelling compliance with the Preservation Orders, that other available penalties of fine and sequestration are ineffective, and that staying Mr Meder’s application offers the best prospects of compelling such compliance. In support of his application, the Assignee says the High Court has the power under its inherent jurisdiction to protect the processes of the inferior courts by punishing contempt in an inferior court.
Discussion
[30]Rule 15.1 of the High Court Rules states:
15.1 Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
…
(3)Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4)This rule does not affect the court’s inherent jurisdiction.
[31] The Assignee does not, however, base his case on r. 15.1 but on the inherent jurisdiction of the High Court. He says the jurisdiction includes the power to stay to its own proceeding and to do so for the purpose of punishing a contempt of the District Court. It is necessary, therefore, to assess whether the Court has the jurisdiction and power sought and, if so, whether the jurisdiction and power should be exercised.
The inherent jurisdiction of the High Court regarding contempt of the District Court
[32] Under the Senior Courts Act 2016, the High Court continues to have the jurisdiction it held prior to that Act coming into force and the judicial jurisdiction that may be necessary to administer the laws of New Zealand.1 This is the same wording as was found in s 16 of the Judicature Act 1908 prior to its repeal by the Senior Courts Act and is statutory affirmation of the Court’s inherent jurisdiction.
[33] The jurisdiction derives from the Court’s nature and its role in the administration of justice. In R v Moke, Thomas J observed for the Court of Appeal:2
1 Senior Courts Act 2016, s 12.
2 R v Moke [1996] 1 NZLR 263 (CA) at 267.
Indeed, it is both unwise and unnecessary to seek to define the scope of the Court's inherent jurisdiction. Broad principles governing its exercise is all that is required. The Court may invoke its inherent jurisdiction whenever the justice of the case so demands. It is a power which may be exercised even in respect of matters which are regulated by statute or by rules of Court providing, of course, that the exercise of the power does not contravene any statutory provision. The need to do justice is paramount.
[34] Thomas J cited as authority for those propositions an article by Master Jacob, a Master of the High Court of England and Wales.3 Because the article has become the standard reference on the inherent jurisdiction, it is useful to record passages that bear on the Assignee’s application.
[35] In the article, Master Jacob discussed the nature of the Court’s inherent jurisdiction in the following terms:4
Moreover, the term “inherent jurisdiction of the court” is not used in contradistinction to the jurisdiction conferred on the court by statute. The contrast is not between the common law jurisdiction of the court on the one hand and its statutory jurisdiction on the other, for the court may exercise its inherent jurisdiction even in respect of matters which are regulated by statute or by rule of court, so long as it can do so without contravening any statutory provision. There is, nevertheless, an important difference between the nature of the inherent jurisdiction of the court and its statutory jurisdiction. The source of the statutory jurisdiction of the court is of course the statute itself, which will define the limits within which such jurisdiction is to be exercises, whereas the source of the inherent jurisdiction of the court is derived from its nature as a court of law, so that the limits of such jurisdiction are not easy to define, and indeed appear to elude definition.
[36] Master Jacob said the inherent jurisdiction “is part of procedural law, both civil and criminal, and not of substantive law; it is invoked in relation to the process of litigation”5 and it “may be exercised in any given case, notwithstanding that there are Rules of Court governing the circumstances of such case. The powers conferred by Rules of Court are, generally speaking, additional to, and not in substitution of, powers arising out of the inherent jurisdiction.”6
3 IH Jacob “The Inherent Jurisdiction of the Court” 23 (1970) CLP 23.
4 At 24.
5 At 24 (footnote omitted).
6 At 25.
[37] When considering the powers of the Court under the inherent jurisdiction, Master Jacob said:7
… in the exercise of its inherent jurisdiction, the court may employ two main powers, both coercive in their nature, namely:
(1)in the case of contempt of court, to punish the offender, and
(2)in the case if abuse of process, to stay or dismiss the action or to give judgment or impose terms as it thinks fit.
These powers are cumulative, so that in a proper case the court may not only strike out a frivolous or vexatious claim or defence but also punish for contempt of court. On the other hand, the trend of authority has been to discourage proceedings in contempt, except in serious and extreme cases, for the exercise by the court of its inherent jurisdiction to punish for contempt “involves in most cases an exceptional interference with the liberty of the subject, and that too, by a method or process which would in no other case be permissible or even tolerated.”
[38] In classifying the cases in which the inherent jurisdiction has been exercised, Master Jacob recognised three categories, the last of which is “Control over Powers of Inferior Courts and Tribunals”.8 On that topic he said:9
Under its inherent jurisdiction, the High Court has power by summary process to prevent any person from interfering with the due course of justice in any inferior court and to punish any such misconduct as a contempt of court, i.e., of the High Court. The basis of the exercise of this jurisdiction is that the inferior courts have not the power to protect themselves.
But the High Court also has power under its inherent jurisdiction to render assistance to inferior courts to enable them to administer justice fully and effectively …
[39] Master Jacob’s formulation of the inherent jurisdiction has been relied on extensively by the Senior Courts of New Zealand when considering the origin and scope of the jurisdictions. For example, citing Jacob, three judges of the Supreme Court stated in Mafart v Television New Zealand Ltd:10
7 At 28.
8 At 32.
9 At 48 (footnote omitted).
10 Mafart v Television New Zealand Ltd [2006] NZSC 33, [2006] 3 NZLR 18 at [16] per Elias CJ, Blanchard and McGrath JJ. Other examples include Siemer v Solicitor-General [2010] NZSC 54, [2010] 3 NZLR 767 at [29] per Elias CJ and McGrath J; Siemer v Solicitor-General [2013] NZSC 68, [2013] 3 NZLR 441 at [113] and fn 113 per McGrath, William Young and Glazebrook JJ; Taylor v Attorney-General [1975] 2 NZLR 675 (CA) at 680 per Wild CJ, at 682 per Richardson J and at 689 per Woodhouse J; Commissioner of Inland Revenue v Wilson [2017] NZCA 100, (2017) 28 NZTC 23,009 at [38] (Wild, French and Brown JJ); Minhas v Immigration Officer [2016]
[27] The adjectival jurisdiction and powers of the High Court, which enable it to give effect to its substantive jurisdiction, are part of the general jurisdiction recognised by s 16 of the Judicature Act. They are derived from the practice of the superior Courts of England as at 1860, based on their inherent jurisdiction. Except to the extent modified by statute and rules, the Court continues to have inherent jurisdiction and powers to determine its own procedure. The inherent jurisdiction is not ousted by the adoption of rules, but is regulated by the rules, to the extent they extend. To the extent that the rules do not cover a situation, the inherent rules supply the deficiency.
[40] It is apparent from the passage from Master Jacob cited at [37] that the inherent jurisdiction includes the power to stay a High Court proceeding, at least for abuse of process. In Shafik v Makary,11 a case referred to by Mr Neil for the Assignee, Mander J held that the inherent jurisdiction also includes the power to stay a proceeding in a lower court. In his decision, Mander J cited a passage from a decision of the Supreme Court of New South Wales in Ex parte Farren; Re Austin in which Macfarlan J stated the power to stay proceedings in wide terms:12
I am inclined to think, and this may be perhaps stating the matter a little further than is required for the purposes of this case, that the power [to stay proceedings] extends to whatever extent may be necessary to prevent any injustice occurring with matters which come within its cognizance. I think, in particular that the general power to stay proceedings extends to matters which are proceedings even in another court if the exercise of that power to stay is necessary in order for the Supreme Court to exercise its complete powers either by way of appeal or by way of supervision with respect to the proceedings of that other court.
[41] The above passage is consistent with the observation of Master Jacob quoted at [37] that the High Court has power under its inherent jurisdiction to render assistance to inferior courts to enable them to administer justice fully and effectively.
NZCA 435, [2016] NZAR 1419 at [30] (Kos P, Winkelmann and Brown JJ); R v Bublitz [2017] NZHC 1059 at [33] (Woolford J); Heron v Wallace [2016] NZHC 2426 at [17]–[18] (Faire J);
Shafik v Makary [2015] NZHC 2194, [2015] NZAR 1596 at [16] (Mander J); Carrington v
Carrington [2014] NZHC 869, [2014] NZFLR 571 at [92] (Katz J); Walker v Gibbston Water
Services Ltd [2014] NZHC 494 at [32] (Dunningham J); Burgess v Monk [2017] NZHC 2424 at
[58] (Heath J); Bannock v Monaco Management Ltd [2015] NZHC 640 at [13] (Associate Judge Matthews); Chief Executive, Ministry of Social Development v S (2009) 28 FRNZ 236 (HC) at
[49] (Heath J); Meenken v District Court at Masterton (2008) 23 NZTC 21,999 (HC) at [18] (Dobson J); Society of St Vincent de Paul v Wanganui Ozanam Villa Trust [2007] NZAR 77 (HC) (Allan J).
11 Shafik v Makary [2015] NZHC 2194, [2015] NZAR 1596.
12 Ex parte Farren; Re Austin (1960) 77 WN (NSW) 743 (NSWSC), at 744–745.
[42] I am satisfied, therefore, that the power to stay proceedings under the Court’s inherent jurisdiction is a general power not limited to cases of abuse of process and that the Court may call on it where appropriate and in the interests of justice. However, while Mr Neil referred me to decisions in which High Court has, under the inherent jurisdiction, acted to protect a lower court from contempt, he was not able to refer me to any decision in which the power to stay its own proceeding was used to punish a contempt in a lower court.
[43] In Quality Pizzas Ltd v Canterbury Hotel Employees Industrial Union,13 Roper J in the High Court ordered a writ of sequestration against a company which had refused twice to comply with an order of the Arbitration Court. The Court of Appeal overturned the writ of sequestration and substituted a fine. In commenting on whether the High Court had the jurisdiction to issue a writ (or make an order), Richardson J for the Court of Appeal said:14
Section 16 [of the Judicature Act 1908] may be viewed as a statutory affirmation of the inherent jurisdiction of the High Court which it may exercise as “may be necessary to administer the laws of New Zealand”. And it is well established that the High Court has inherent jurisdiction to make any order necessary to enable it to act effectively even in respect of matters regulated by rules of Court so long as it does not contravene those rules (Taylor v Attorney-General [1975] 2 NZLR 675; Donselaar v Mosen [1976] 2 NZLR
191; Champtaloup v Northern Districts Aero Club Inc [1980] 1 NZLR 673). Under that inherent jurisdiction (and except as qualified by statute or statutory rule – see for example s 56C as to contempt in the face of the Court) the High Court has power to punish for contempt of its processes in order to enable it to act effectively as a Court. That the jurisdiction extends to the protection of the processes of inferior Courts is also well settled and it is sufficient for present purposes to refer to Attorney-General v Blundell [1942] NZLR 287.
… Myers CJ, delivering judgment for the Full Court, affirmed the general power of the (then) Supreme Court to protect inferior Courts from contempt committed out of Court over which the inferior Court had no jurisdiction. He emphasised that the inherent jurisdiction of the Supreme Court could only be taken away by statute by express language or necessary implication; and, rejecting the argument that the effect of the various provisions relating to contempt was to form a code on the subject, he concluded that they left untouched “the inherent jurisdiction of this Court to protect the Arbitration Court from a contempt of the nature now under consideration” (p 290).
[44] That decision confirms that the High Court’s inherent jurisdiction includes the power to punish a contempt of an inferior court. This must include a contempt of the
13 Quality Pizzas Ltd v Canterbury Hotel Employees Industrial Union [1983] NZLR 612 (CA).
14 At 615.
District Court, even though, unlike their predecessor Acts, neither the District Court Act 2016 nor the Senior Courts Act 2016 define the District Court as an “inferior court”.15 However, the question for the Courts in Quality Pizzas was whether a sequestration order or fine – i.e. not a stay of proceedings – was an appropriate punishment for contempt of the lower Court’s orders.
[45] Mr Neil referred to Ballantyne Trustees Ltd v Papprill Hadfield & Aldous Solicitors Nominee Co Ltd, in which Associate Judge Osborne granted the respondents a stay of proceedings until the applicants had met a costs order against them earlier.16 Mr Neil said that case confirmed the power of the Court to order a stay on failure to meet payment on an interlocutory order. However, in Ballantyne, the non-compliance was a failure to pay costs ordered by the High Court itself, and r 7.48(2)(c) of the High Court Rules expressly contemplates a judge staying proceedings until an earlier order has been complied with. This case is rather different.
[46] In the absence of authority, therefore, the Court would be venturing into new ground if it stays its own proceeding in order to punish a failure to comply with a District Court order, even if it is accepted that the Court’s inherent jurisdiction includes a power to stay its own proceeding and the power to punish a contempt of the District Court. I have concluded, nonetheless, that the Court does have the power to stay a proceeding in such circumstances provided it is satisfied that it is appropriate in the circumstances and that it is in the interests of justice to do so. I reach that conclusion bearing in mind Macfarlan J’s statement in Ex parte Ferren; Re Austin that the power to stay proceedings “… extends to whatever extent may be necessary to prevent any injustice occurring with matters which come within its cognizance”17 and, in particular the words of Thomas J in R v Moke that in considering the exercise of the Court’s inherent jurisdiction, “The need to do justice is paramount.”18
15 See definitions of “inferior court” in s 2 of the Inferior Courts Procedure Act 1909 and in s 2 of the Judicature Act 1908.
16 Ballantyne Trustees Ltd v Papprill Hadfield & Aldous Solicitors Nominee Co Ltd [2016] NZHC 713.
17 Ex parte Farren; Re Austin (1960) 77 WN (NSW) 734, at 744.
18 R v Moke [1996] 1 NZLR 263 (CA) at 267; see [33] above.
Enforcement of District Court orders
[47] Before deciding whether the Court should stay Mr Meder’s application to punish his contempt of the District Court’s orders, it is appropriate to consider what steps are available to the District Court itself in relation to the contempt. Mr Neil submitted the District Court has no effective coercive power to enforce the Preservation Orders. He said that while the District Court may order detention of a person, it may not do so when the order breached relates to the payment of money.
[48]Section 134 of the District Court Act 2016 states:
134 Judgment or order in nature of injunction, etc
(1)This section—
(a)applies to a judgment or an order in the nature of an injunction; and
(b)applies to a judgment or an order within the competence of the court that, if it were given or made in the High Court, could be enforced in the High Court by a writ of arrest; but
(c)does not apply to an order for the recovery of land.
(2)A judgment or an order to which this section applies may be enforced, by order or warrant of a Judge, by detention for a term not exceeding 3 months.
(Emphasis added)
[49] The Preservation Orders are in the nature of a mandatory injunction in that they require Mr Meder to pay a sum of money but they are not orders that could be enforced by a writ of arrest if made in the High Court. Under r. 17.84 of the High Court Rules, only “a court order to do or abstain from doing something that is not paying a sum of money” may be enforced by a writ of arrest.19
[50] I agree, therefore, with Mr Neil that the District Court appears not to have a power of arrest to enforce the Preservation Orders. There is, in any event, an outstanding warrant for Mr Meder’s arrest for his failure to appear on a summons for his examination before the District Court in relation to his property and to surrender
19 High Court Rules 2016, r 17.84.
documents in his possession. While that warrant was not issued to enforce the Preservation Orders, it relates to the same general matter and appears not to have been effective. That means that even if the District Court did have the power to order Mr Meder’s arrest, it may not have made much practical difference.
Should jurisdiction be exercised?
[51] Since I am satisfied that the Court has the power to grant a stay to punish contempt of a lower court, the question for the Court is whether a stay of Mr Meder’s application would be an appropriate response to his failure to comply with the Preservation Orders. In that regard, the Assignee’s application raises two important considerations. One is that Court orders should be complied with, and wilful disobedience of any court order should not be tolerated. The other is the right of an individual, including a bankrupt, to have determinations affecting his or her interests by tribunals and other public bodies reviewed judicially.
[52] There is authority supporting both propositions. As to the first, the Law Commission said in its Report on Reforming the Law on Contempt of Court, in a passage referred to by Mr Neil:20
5.1It is fundamental to the administration of justice and the rule of law that court judgments and orders will be enforced against anyone who fails or refuses to comply with them. The absence of an effective and efficient enforcement regime would ultimately lead to anarchy, with unsuccessful parties simply disregarding a judgment or order against them.
5.2As Elias CJ and McGrath J put it in the first Siemer case:21
Effective administration of justice under our constitution requires that the orders of the courts are obeyed unless properly challenged or set aside. Public confidence in the administration of the law, also necessary for its effective administration, requires that there is a strong expectation that those who ignore court orders are quickly brought to account.
(Footnote retained)
[53]As to the second, s 27 (2) of the New Zealand Bill of Rights Act 1990 provides:
20 Law Commission Reforming the Law of Contempt of Court: A Modern Statute (NZCLC R140, 2017).
21 Siemer v Solicitor-General [2010] NZSC 54, [2010] 3 NZLR 767 at [26].
27 Right to justice
(1) …
(2) Every person whose rights, obligations, or interests protected or recognised by law have been affected by a determination of any tribunal or other public authority has the right to apply, in accordance with law, for judicial review of that determination.
[54] The Assignee says, in effect, that enforcing compliance with court orders is the more important consideration. Mr Neil submitted that the proposed stay would not circumvent Mr Meder’s rights under s 27 as it would bring only a temporary halt to the progression of Mr Meder’s application. He also said that even if Mr Meder did not purge his contempt by complying with the Preservation Orders, the stay could be brought to an end by further application to this Court. Mr Neil also said that, in any event, the imposition of a stay is a justified limitation of Mr Meder’s s 27 rights in terms of s 5 of the New Zealand Bill of Rights Act. Mr Neil also acknowledged that the Assignee’s purpose is to use the stay as “leverage” to coerce Mr Meder into complying with the Preservation Orders.
[55] While I understand the logic of that argument, I find it unappealing and inconsistent with the paramount need to do justice in the exercise of the Court’s inherent jurisdiction. My reasons are as follows.
[56] First, at the heart of the dispute between Mr Meder and the Assignee is the bankruptcy judgment against Mr Meder. Mr Meder seeks to challenge that judgment and have it set aside. The Assignee says only he has the right to bring that challenge but he will not exercise that right himself and he will assign it to Mr Meder only on conditions that Mr Meder says are unreasonable and which he cannot meet. Mr Meder has applied to review those conditions so he can proceed with his challenge to the bankruptcy. The Assignee asks the Court to stay that application until Mr Meder has complied with the Preservation Orders that were made to enforce the bankruptcy judgment that Mr Meder seeks to challenge. That is, the Assignee asks the Court to prevent Mr Meder from embarking on a process to set aside the bankruptcy judgment on which the Preservation Orders are based until Mr Meder has complied with the Orders.
[57] The Assignee’s contentions are inherently circular and have an appearance of administrative coercion that does not sit easily with one of the fundamental purposes of the judicial system: to provide access to justice for individuals. That is, the Assignee is looking to the Court to use its power to stay a proceeding which would mean an individual, in this case, Mr Meder, would be prevented from having heard his lawful challenge to conditions imposed by the Assignee.
[58] Secondly, access to justice is a right enjoyed by everyone, even bankrupts who have not complied with District Court orders. Indeed, access to justice for bankrupts might be said to take on even greater importance given the serious restrictions in the Insolvency Act that circumscribe the activities of bankrupts. It would, in my view, be a significant departure from the traditions of this Court for the Court to allow its processes to be used as “leverage” where the leverage being exercised is to prevent a person from having his or her right to challenge a decision of a public authority – in this case, the Assignee – from being heard. To do so would, in my view, be inconsistent with that fundamental purpose of the Court as well as with s 27(2) of the New Zealand Bill of Rights Act.
[59] In that regard, I do not accept Mr Neil’s submission that limiting Mr Meder’s right in the manner proposed would be a justified limit of Mr Meder’s s 27 rights in accordance with s 5 of the Act. Section 5 limitations are “… such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” The limitation proposed by the Assignee – the grant of a stay – is a power provided by law. That is, it arises under the Court’s inherent jurisdiction, but it is not a power required to be exercised regardless of circumstance. In any event, I do not consider the use of the power in the current circumstances would be a justifiable limitation of Mr Meder’s rights, bearing in mind the profound effects on Mr Meder of the bankruptcy judgment that Mr Meder seeks to challenge.
[60] Thirdly, there is another aspect of the Assignee’s argument that I consider to be logically inconsistent and at odds with the paramount need of the Court to do justice when exercising its powers under the inherent jurisdiction. On the one hand, the Assignee does not base his application on standard grounds; for example, that Mr Meder’s application discloses no reasonably arguable case or is frivolous and
vexatious. On the other hand, Mr Neil submitted that Mr Meder’s application has only “nominal” prospects of success but went on to say that the Assignee would prefer Mr Meder’s application to be stayed rather than dismissed because, if the application were dismissed, the Assignee would lose the leverage offered by the proposed stay and there would be no incentive for Mr Meder to purge his contempt. What the Assignee seems to be saying is that granting the stay would not seriously prejudice Mr Meder because his chances of success on his application are low, but at the same time, the Assignee wants to keep Mr Meder’s application on foot and stayed because this will incentivise Mr Meder to comply with the Preservation Orders and purge his contempt.
[61] The Assignee cannot have it both ways. If Mr Meder’s case is weak, the leverage that would be gained by staying the proceeding would also be weak as would the incentive for Mr Meder to comply with the Preservation Orders and purge his contempt. The risk of injustice to Mr Meder from his being unable to have his application considered would also be low and the case for the stay would be unconvincing. The appropriate course in those circumstances would be for Mr Meder’s application to be considered on its merits and, if appropriate, dismissed.
[62] On the other hand, if the Mr Meder’s application is at least arguable, then the Assignee’s leverage would be greater and the incentive on Mr Meder to comply with the Preservation Orders would also be greater. But so too would the risk of doing an injustice to Mr Meder in denying or at least delaying Mr Meder’s opportunity to have the bankruptcy judgment reconsidered and, if appropriate, set aside. The case for the stay in those circumstances, however, would also be far from compelling because the greater leverage that the Assignee would have would be offset by the greater risk of injustice to Mr Meder.
[63] It is not an adequate answer to say that the remedy to the potential injustice would be in Mr Meder’s own hands because he could always comply with the Preservation Orders. The actions of the Court in staying Mr Meder’s application would be a contributing factor to the risk of injustice and that not something the Court should take on lightly, if at all.
[64] Fourthly, it is important to remember that this is not a situation where Mr Meder has asked to have the bankruptcy judgment and the Preservation Orders stayed pending the determination of his application. The judgment and the Orders remain in full effect and Mr Meder has a continuing obligation to comply with them, unless and until he succeeds in his efforts to have the judgment set aside and the bankruptcy annulled. In that sense, Mr Meder’s application is quite separate from implementation of the judgment and the Preservation Orders.
[65] For these reasons, I am not persuaded that this is an appropriate case for the Court to use its inherent jurisdiction to stay Mr Meder’s application until he has purged his contempt of the District Court and complied with the Preservation Orders.
[66] For completeness, I record that I asked Mr Neil during the hearing whether he considered there was scope for the Court to make orders requiring Mr Meder to comply with the Preservation Orders as a condition of the grant of Mr Meder’s application if the Court were minded to grant Mr Meder’s application. I am grateful to Mr Neil for the comprehensive supplementary submissions he filed on this point, both on the jurisdiction to make and the merits of making such a condition. I accept Mr Neil submission that it would not be appropriate for the Court to predicate its decision on the Assignee’s application on the possibility that Mr Meder’s application might be granted subject to such a condition.
Result
[67] For the reasons given above, I dismiss the Assignee’s application for a stay of the High Court proceedings brought by Mr Meder.
van Bohemen J
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