Musuku v Commissioner of Inland Revenue
[2017] NZCA 509
•13 November 2017 at 12.00 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA631/2016 [2017] NZCA 509 |
| BETWEEN | JAWAHAR BHASKAR MUSUKU |
| AND | COMMISSIONER OF INLAND REVENUE |
| Hearing: | 30 October 2017 |
Court: | French, Winkelmann and Asher JJ |
Counsel: | G J Thwaite for Appellant |
Judgment: | 13 November 2017 at 12.00 pm |
JUDGMENT OF THE COURT
AThe respondent’s application to strike out the appeal is granted.
BThe appellant must pay the respondent costs for a standard application on a band A basis and usual disbursements.
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REASONS OF THE COURT
(Given by French J)
Mr Musuku filed an appeal in this Court against a decision of Associate Judge Doogue adjudicating him bankrupt.[1] Mr Musuku was ordered to pay security for costs on the appeal in the sum of $6,600. He applied for payment to be dispensed with, but that application was declined first by the Deputy Registrar and then on review by Brown J who also declined an application to recall his judgment.[2] Mr Musuku then sought leave to appeal to the Supreme Court against Brown J’s decision, but that too was unsuccessful.[3] Payment of the $6,600 was required to be made by 29 June 2017. It has never been paid.
[1]Commissioner of Inland Revenue v Musuku [2016] NZHC 2773, (2016) 27 NZTC 22-078 [HC decision].
[2]Musuku v Commissioner of Inland Revenue [2017] NZCA 144; and Musuku v Commissioner of Inland Revenue [2017] NZCA 255.
[3]Musuku v Commissioner of Inland Revenue [2017] NZSC 140.
The Commissioner of Inland Revenue now applies under r 37(1) of the Court of Appeal (Civil) Rules 2005 for the appeal to be struck out because of the failure to pay security.[4]
[4]The Commissioner of Inland Revenue also sought in the alternative an order that the appeal be treated as abandoned because of a failure to apply for a hearing date in accordance with the Court of Appeal (Civil) Rules 2005, rr 37(2) and 43. However, this submission was not pursued at the hearing.
Mr Musuku opposes the application for strike out on three main grounds.
The first is that being bankrupt he is by definition impecunious and it is a violation of fundamental common law rights, and the rule of law, that he should be denied a hearing by virtue of his property status.
We do not accept that submission. The fact that Mr Musuku is bankrupt does not of itself mean he is impecunious for the purposes of being exempted from paying security for costs.[5] If he wanted to advance that argument, it was incumbent on him to provide this Court with a detailed statement of his financial position including his income and his ability to access other resources.[6] He has never done so. We were told that in the High Court Mr Musuku unsuccessfully attempted to adduce evidence about his financial position through an affidavit from his brother. Why he did not wish to provide an affidavit himself was not explained.
[5]Harrison v Harrison [2017] NZCA 67 at [12].
[6]Rabson v Judicial Conduct Commissioner [2017] NZCA 349 at [4].
The second argument advanced was that a pragmatic approach should be adopted and that security for costs Mr Musuku has paid in relation to another appeal also involving the Commissioner (CA262/2016) should be transferred to this appeal. However, that is neither appropriate nor legally possible. Apart from anything else, because Mr Musuku is now bankrupt any rights he had in the security for costs are now held by the Official Assignee.[7]
[7]Insolvency Act 2006, s 101.
The third ground argued by Mr Musuku is that the Deputy Registrar and Brown J were wrong to hold this appeal lacks merit.
The underlying debt on which the bankruptcy is founded is a tax debt owing by Mr Musuku to Inland Revenue. Mr Musuku does not dispute the debt is owing, but argues the Associate Judge should have exercised his residual discretion not to bankrupt him. At the time he was adjudicated bankrupt, Mr Musuku had litigation still on foot against the Commissioner in relation to other tax years, including the other appeal in this Court that we have already mentioned. The bankruptcy means he is prevented from being able to pursue the other cases, which Mr Musuku says is unjust.
This was an argument raised before the Associate Judge and rejected by him on the basis that even if Mr Musuku was successful in the other proceedings, his financial position would not improve. At best he would be limiting the extent of any additional debt.[8] The information before the Associate Judge supported that conclusion. We were not provided with any new verifiable information to suggest the contrary, only a tentatively worded submission from counsel that success in the other proceedings “could” maximise Mr Musuku’s chances of reducing the bankruptcy debt.
[8]HC decision, above n 1, at [26].
The Associate Judge’s decision was comprehensive and detailed and the merits of the appeal have been examined by both the Deputy Registrar and Brown J. Like them, we have been unable to identify any arguable error in the way the Associate Judge exercised his discretion. We are satisfied the appeal has no realistic prospect of success.
There is in our view no reason why the appeal should not be struck out for failing to pay security for costs. We so order.
Result
The respondent’s application to strike out the appeal is granted.
The appellant must pay the respondent costs for a standard application on a band A basis and usual disbursements.
Solicitors:
Crown Law Office, Wellington for Respondent
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