Official Assignee in Bankruptcy v Haenga

[2022] NZHC 177

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1100

[2022] NZHC 177

UNDER

the Property Law Act 2007, section 339

BETWEEN

OFFICIAL ASSIGNEE IN BANKRUPTCY OF THE PROPERTY OF PAREHE NIKAU

(also known as POLLY PAREHE HAENGA)

Plaintiff

AND

NGAIRE HAENGA

Defendant

Hearing:	8 December 2021
Appearances:	Gareth Neil / Sarah Farnell for the Plaintiff No appearance for the Defendant
Judgment:	21 February 2022
Reissued:	12 April 2022

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

This judgment was delivered by me on  21 February 2022  at 3:00pm

pursuant to Rule 11.5 of the High Court Rules and

Re-issued on 12 April 2022

(redacting the residential addresses)

…………………………. Registrar/Deputy Registrar

Solicitors:

Meredith Connell (G Neil / S Farnell), Auckland, for the Plaintiff

OFFICIAL ASSIGNEE IN BANKRUPTCY v NGAIRE HAENGA [2022] NZHC 177 [21 February 2022]

Introduction

[1]    The Official Assignee in bankruptcy of Parehe Nikau1 seeks sale orders, by summary judgment, in respect of two properties under s 339 of the Property Law Act 2007. The properties are each held in half-shares by the defendant, the surviving partner of the bankrupt’s former deceased partner Mr Haenga at the time of his death, in her capacity as executor of Mr Haenga’s estate, and by the Assignee.

[2]    The Assignee seeks stepped sale orders. The Assignee seeks to give the defendant an opportunity to acquire the Assignee’s half share in the second property with her share in the sale proceeds of the first. The draft orders are annexed to the Assignee’s submissions dated 30 November 2021.

Background

The family2

[3]    Ms Nikau was married to Mr Hone Haenga3 until their separation sometime in 1985. They had four children together: Jack; Lance; Anne; and Sharon.

[4]    Mr Haenga died on or about 15 April 2016. At the time of his death, he was in a relationship with Ngaire Haenga.

[5]Ms Nikau died on or about 23 September 2019.

The properties

[6]    The properties subject to the summary judgment application are: Property A4 and Property B.5

1      Also known as Polly Haenga.

2      As many of the relevant people share family names, I shall refer to them by their given names.   I mean no disrespect.

3      Also known as John Haenga.

4      NA59D/373 – Lot 45 DP 107190.

5      NA3B/958  –  Lot 329 DP 51196.

[7]    Property A was originally owned by Jack. He died intestate in 2007. Because he had no children, Property A passed to his parents. Mr Haenga was appointed administrator of Jack’s estate and Property A was registered in Mr Haenga’s name. When Mr Haenga died, his office as administrator of Jack’s estate did not automatically pass to Ngaire in her capacity as executor of Mr Haenga’s estate. This took place when the Assignee applied to the High Court for a vesting order. Now, Property A is registered in Ngaire’s name (as executor of Mr Haenga’s estate) and in the name of the Assignee as to one half share each. The property is occupied by Anne and her family.

[8]    Property B was originally Ms Nikau and Mr Haenga’s family home. After various changes in the nature of the ownership of the property, it was eventually vested in Ms Nikau and Mr Haenga as tenants in common in equal shares. Since Mr Haenga’s death, his half interest has been held by Ngaire, in her capacity as executor of his estate. Since Ms Nikau’s death, Ms Nikau’s half interest has been held by the Assignee.6 Property B was  occupied  by  one  of  Ms  Nikau’s  grandchildren  (Joseph Puailiu) until mid-2017, from which point it has been occupied by Lance and his family.

[9]    An updating affidavit of Susanna Maria Wewege records updated valuations of the properties. Their value has substantially increased since the last valuation evidence was provided.

Bankruptcy

[10]   On 14 December 2010, the Human Rights Review Tribunal found against  Ms Nikau on allegations of financial exploitation of a vulnerable person in her care. When she did not pay the judgment sum of $107,500 to the Health and Disability Commissioner and the Commissioner of Inland Revenue, she was adjudicated bankrupt.7

6      The Assignee became registered proprietor of the half share in Property B on 25 October 2019.

7      On 4 August 2011.

[11]   Ms Nikau did not provide a “statement of  affairs”  to  the Assignee  until May 2019. Then she died on or about 23 September 2019, at which point she remained an undischarged bankrupt. Her bankruptcy continues despite her death.8

Attempts by the Assignee to sell the properties

[12]   Counsel for the Assignee describes how, in consideration of the interests of Ms Nikau and her family, comparative to the total debts of Ms Nikau’s bankrupt estate, the Assignee sought to sell one of his half share interests in the properties to the wider family. His submissions detail negotiations between 2015–2019 as various family members attempted to obtain finance to meet Ms Nikau’s debts. Counsel submits the Assignee has gone to great lengths to find a way for the wider family to retain one or both of the properties, but that this has been unsuccessful as the family was unable to secure finance. He concludes with the submission that the only way for the Assignee to realise Ms Nikau’s interest in the properties, for the benefit of her creditors, is through a forced sale.

Proceedings

[13]The procedural history of the application for summary judgment is as follows:

3 June 2021              Assignee filed summary judgment application with a
without notice application for directions as to service.

20 July 2021             Ngaire  personally  served  with  summary judgment

application, supporting documents and sealed orders of Associate Judge Andrew as to service.

19 August 2021         Deadline for Ngaire to file any notice and affidavits

in opposition (not less than three working days before 24 August 2021)

24 August 2021         Gault J directed notice and affidavits of opposition to

be filed by 3 September 2021. The notice was to be signed and filed by Ngaire personally or by a barrister and solicitor authorised to represent her.

6 September 2021 Anne emailed the Court indicating she had replaced

Ngaire as executor and sought further time to instruct solicitors.

8      Insolvency Act 2006, s 78.

7 September 2021 Lang J allocated a one-day hearing on 8 December

2021 to hear the summary judgment application and directed that any documents in opposition were to be filed and served no later than 22 October 2021.

21 October 2021        Anne emailed the Court a notice of application for

High Court administrative settlement conference and a supporting “voluntary declaration”.

26 October 2021        Venning J confirmed that the fixture would proceed

on 8 December 2021; extended the time for Ngaire to file  and  serve  any  documents  in  opposition   to 12 November 2021; and declined the request for an administrative settlement conference.

12 November 2021 Deadline for Ngaire to file and serve documents in

opposition passes without her filing or serving anything.

[14]   The summary judgment application is therefore unopposed. Rule 12.9(3) of the High Court Rules 2016 provides:

If an opposing party does not file and serve [a notice of opposition and an affidavit in support], the party may not be heard in opposition to the application without the leave of the court.

[15]   Ngaire could not be heard in opposition without the leave of the Court. No leave of the Court to be heard in opposition was sought by Ngaire prior to the hearing.

The Māori Land Court proceeding

[16]   On Wednesday, 8 December 2021, the day of the hearing, Vernon Ruwhiu (Vernon) and Anne as applicants filed an application for an injunction in the Māori Land Court seeking to prevent the  Assignee  from  “making  application  to  the High Court for enforcement orders against the respondent in respect of the land held in trust”.

[17]   Following the hearing, I issued a minute dated 16 December 2021 and sought from the parties, by 28 January 2022:9

9      Official Assignee v Haenga HC Auckland CIV-2021-404-1100, 16 December 2021 (Minute of Associate Judge Taylor) at [3].

(a)if available, information on when the injunction will be heard in the Māori Land Court; and

(b)submissions from the parties as to the implications of the injunction in relation to the Assignee’s application for orders for the sale of the two properties.

[18]   In response to the minute, counsel for the Assignee filed a memorandum dated 17 December 2021 in which counsel advised:

(a)As at the date of counsel’s submission the injunction was not properly before the Māori Land Court as the filing fee has not been paid. The injunction application is therefore held in abeyance pending payment of the filing fee.

(b)Even if the injunction application was properly before the Māori Land Court (which it is not) it could have no impact on the Assignee’s application for orders for the sale of the two properties.

[19]   Counsel submitted that the Māori Land Court has no jurisdiction to interfere with or prevent proceedings in the High Court, and relied  on  decisions  of  the Māori Land Court in Te Rongomau v Nikau10 and Ruwhiu v The Commissioner of Inland Revenue.11

[20]   In Te Rongomau v Nikau, Judge Milroy of the Māori Land Court, commenting on the procedural background, stated:

[7]The trustees sought an urgent hearing because of their fears for the marae in relation to the High Court proceedings regarding building contracts entered into by Ms Nikau and Te Aira Moana.

[8]As this Court had no ability to interfere or stop the proceedings in the High Court the urgent hearing was denied. The trustees were advised to seek legal advice in relation to the High Court proceedings.

(emphasis added).

10     Te Rongomau v Nikau – Whangape Parish Lot 23B (Horahora Marae) (2011) 23B Waikato Maniapoto MB 3 (23 WMN 3).

11     Ruwhiu v Commissioner of Inland Revenue (2016) 143 Taitokerau MB 159 (143 TTK 159).

[21]   In Ruwhiu v Commissioner of Inland  Revenue,  Judge  Ambler  of  the  Māori Land Court considered an application to injunct the Commissioner of Inland Revenue from enforcing a High Court judgment. His Honour found:

[42]I agree with Counsel for the Crown that the s 280 proceedings will not have any bearing on the SSK proceedings before the Commissioner and High Court. It is unclear to me how I can grant an injunction against the Commissioner preventing her from enforcing the High Court judgment. This Court does not have the jurisdiction to review a decision of the Authority or the High Court.

(emphasis added).

[22]   Counsel also submitted that the injunction was an abuse of process and a device to delay the Assignee’s application to the High Court.

[23]   Nothing was filed by Ngaire or by any counsel representing Ngaire, in response to my minute of 16 December 2021, by 28 January 2022. On 26 January 2022, Vernon purported to file a memorandum on behalf of Anne. This memorandum is not properly before the Court as:

(a)Anne is not a party to this proceeding and is not the executor of     Ms Nikau’s estate, that executor being Ngaire. No orders under either the Administration Act 1969 or the Trusts Act 201912 have been made substituting Anne as executor and accordingly she has no standing before the Court; and

(b)Vernon has no standing before the Court.

[24]   The Assignee’s application for orders for sale of the properties therefore remains unopposed.

[25]   On 27 January 2022, Judge Mullins of the Māori Land Court issued a minute which advised as to the status of the injunction. Relevantly, that minute recorded:

12     Applicant’s submissions dated 30 November 2021 at [4.3], n 22.

(a)on 24 December 2021 the Deputy Registrar wrote to Vernon to advise that he declined to accept the injunction application on the basis that the subject land blocks are general land and the Māori Land Court does not have jurisdiction to make an injunction order in respect of such lands;

(b)on 12 January 2022, Vernon sought a review of the Deputy Registrar’s decision pursuant to r 4.10(3) of the Māori Land Court Rules 2011; and

(c)the matter is now before Judge Mullins for determination.

[26]   In conclusion, in relation to the impact of the injunction on this proceeding,   I accept the submissions of counsel for the Assignee, regardless of whether the injunction is properly before the Māori Land Court or not, and regardless of whether it can be heard and its outcome, it has no ability to affect the High Court in the current proceeding.

The hearing

[27]   As submitted by counsel for the Assignee at the hearing, no notice of opposition or affidavits in support of opposition have been filed as required by Venning J’s minute of 26 October 2021. Therefore, the application remained unopposed at the hearing.

[28]   With leave of the Court, Anne and Vernon were permitted to address the Court. While their addresses were received by the Court, these addresses did not constitute any submission in opposition to the orders sought by the Assignee.

Legal principles

Plaintiff ’s application for summary judgment

[29]Rule 12.2(1) of the High Court Rules provides:

The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.

[30]   The relevant principles governing a summary judgment application are well established:13

The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

[31]The wording of r 12.2 (“may give judgment”) indicates a residual discretion.

Having regard to the various authorities, the position appears to be as follows:14

(a)The discretion implied by the use of the word “may” is to be restrictively applied. In a great majority of cases, once the court is satisfied the defendant has no defence, there is no room for the exercise of discretion.

(b)The residual discretion may be invoked to avoid oppression or injustice to the defendant where:

(i)The proceeding involves the actions or possible liability of a third party which is not before the court;

(ii)The proceedings are such that the opportunity should be given to allow discovery or other interlocutory applications to be concluded;

(iii)The circumstances of the case disclose very unusual features, the presence of which leads the court to conclude that the entry of summary judgment would be oppressive or unjust; or

(iv)The combination of complex issues of fact and law justify the dismissal of the application for summary judgment, either as

13     Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

14     Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.11].

a matter of discretion or because the court cannot be satisfied that the defendant has no defence.

(c)Even where the court is not satisfied that a defence has been made out, in exceptional circumstances the application may be adjourned to allow for other processes to be followed.

Forced sale under s 339 of the Property Law Act

[32]Section 339 of the Property Law Act relevantly provides:

339     Court may order division of property

(1)A court may make, in respect of property owned by co-owners,15 an order—

(a)for the sale of the property and the division of the proceedings among the co-owners;

…

(2)An order under subsection (1) … may be made—

(a)despite anything to the contrary in the Land Transfer Act 2017;

(b)only if it does not contravene section 340(1); and

(c)only on an application made and served in the manner required by or under section 341; and

(d)only after having regard to the matters specified in section 342.

[33]   Section 340(1) pertains to orders requiring subdivision of the land and is accordingly not relevant to this application. Section 341(2) specifies service requirements:

341     Application for order under section 339(1)

…

(2)Every person who is one of the following must, if not already a party to the proceeding on that application, be served with a copy of that application:

(a)a co-owner of the property:

(b)a person who has an estate or interest in the property that may be affected by the granting of the application:

15     Section 4 defines “co-owner” as “a tenant in common or a joint tenant”.

(c)a person claiming to be a party to, or entitled to a benefit under, an instrument relating to the property.

Counsel for the Assignee note that they have duly served the application on Ngaire as she has a half-share in each of the properties as executor of Mr Haenga’s estate.

[34]   Section 342 sets out relevant considerations to which a court considering whether to make an order under s 399(1) must have regard. They are:

(a)the extent of the share in the property of any co-owner by whom, or in respect of whose estate or interest, the application for the order is made:

(b)the nature and location of the property:

(c)the number of other co-owners and the extent of their shares:

(d)the hardship that would be caused to the applicant by the refusal of the order, in comparison with the hardship that would be caused to any other person by the making of the order:

(e)the value of any contribution made by any co-owner to the cost of improvements to, or the maintenance of, the property:

(f)any other matters the court considers relevant.

[35]   In relation to the words “must have regard to” in the context of s 342 of the Property Law Act, in Bayly v Hicks Wylie J stated:16

The words … are not synonymous with “shall take into account”, nor do they mean “give effect to”. The Court cannot ignore listed factors. They must give genuine thought and consideration and such weight as the Court considers appropriate. However, they will not necessarily be decisive in determining whether an order shall be made.

[36]   Counsel for the Assignee in his submissions has discussed each of the matters specified in s 342.17

[37]   No validly filed and served opposition to the orders sought by the Assignee has been put before the Court by Ngaire, despite ample opportunity to do. In unsworn material supplied by Anne, she asserts a cultural attachment to the property. She says that she has lived in Property B since 1964 and states that Property A has been

16     Bayly v Hicks [2011] NZHC 920, [2011] 13 NZCPR 568 at [33].

17     Applicant’s submissions, above n 12, at [9.6]–[9.26].

occupied by her whanau since the late 1980s. She says that the properties are seen as more than a house, but as “whanau papakainga”.

[38]   In relation to this issue, I accept the submissions of counsel for the Assignee, that the properties are not Māori land but are general land and accordingly are not afforded the same protections of Māori land under the Te Ture Whenua Māori Act 1992.

[39]   I also accept counsel’s submission18 to the extent that tikanga may be sought to be relied upon, it must be established by evidence. No such evidence is before the Court.

Similar cases

[40]   Two recent cases in which the Assignee was unopposed in his application for s 339 orders for sale are Official Assignee v Vedder and Official Assignee v Truong.19 Jagose J  and Associate  Judge Johnston  respectively  issued  very short  judgments. I reproduce them below.

Official Assignee v Vedder

[1]In this proceeding the plaintiff, the Official Assignee at Palmerston North, seeks orders pursuant to s 339(1) of the Property Law Act 2007 for the sale of a property formerly owned by Mr Russell and Mrs Deborah Vedder in Horowhenua. Mr Vedder was adjudicated bankrupt by this Court on 13 October 2016. Since then the Official Assignee and Mrs Vedder have been the owners of the property.

[2]This proceeding was commenced in February 2019. Along with the originating documentation — notice of proceeding and statement of claim — the plaintiff filed and served an application for summary judgment and affidavit evidence in support of the same.

[3]The Court has evidence as to service of the proceeding on the defendant.

[4]The defendant, Mrs Vedder, has not entered a defence or taken any other step in the proceeding.

18     At [9.24].

19     Official Assignee v Vedder [2019] NZHC 1340; and Official Assignee v Truong [2019] NZHC 1286.

[5]Accordingly, the proceeding was placed in the Palmerston North commercial list for call today.

[6]Having reviewed the originating documentation and the other material already referred to, and having considered the matters to which the Court must have regard pursuant to s 442 before making an order under s 339(1), and the affidavit evidence relating to those matters, and having heard Mr Kerr in support, I am satisfied that the plaintiff has established that the defendant has no defence to this claim and that the Official Assignee is entitled to the orders sought.

[7]Accordingly, I enter judgment for the plaintiff in terms of the prayer for relief set out in the statement of claim, together with costs of $14,160.50 and disbursements of $2,172.10.

Associate Judge Johnston

Official Assignee v Truong

[1]The Official Assignee seeks summary judgment of its claim to sale orders of a property at 23(A2) Cotesmore Way in Auckland’s Parnell.20

[2]The property is co-owned by the Official Assignee with the defendant, after her husband’s adjudication as bankrupt meant his joint tenancy interest in the property with the defendant vested in the Official Assignee.21 The property is presently valued at $285,000, is not subject to any material charge, and is tenanted to third parties. If sold, the net proceeds are to be divided between the parties.

[3]Although abundant representations have been made to the Court by her husband, the defendant has not filed any opposition, despite extended opportunity to do so, and therefore is not to be heard on this application.22 I disregard her husband’s representations.

[4]I may make such sale orders, having regard to specified factors.23 Although such broad discretion means the summary judgment procedure “is not [as] well-suited” as was its more confined predecessor,24 regard to those factors nonetheless is achievable here.

[5]Having regard to those factors in the present context, I am satisfied there is no good reason not to make the sale orders sought. In particular, it would materially be harder on the Official Assignee – with obligations to realise the bankrupt’s property for payment of creditors, presently exceeding $1.65 million in unpaid taxes alone – to remain as joint tenant in the property with the defendant than it would be on the defendant also to realise her share in their apparent investment property (acquired notwithstanding the bankrupt’s non-

20     Property Law Act 2007, s 339.

21     Insolvency Act, s 101.

22     High Court Rules 2016, r 12.9(3).

23     Property Law Act, s 342.

24     Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [31].

payment of taxes). Nonetheless the sale orders are sought on terms giving the defendant a final opportunity to acquire the property outright from the Official Assignee if she can.

[6]I therefore make the orders sought at paragraphs A. to C. inclusive of the statement of claim, paragraph A.(i) as amended at paragraph 5 of counsel’s memorandum dated 7 June 2019, and additionally order the defendant is liable to pay the plaintiff 2B costs in respect of each step taken in the proceeding plus disbursements as certified by the Registrar.

Jagose J.

Result

[41]   Having regard to the factors set out in s 342, the originating documentation, the affidavit evidence and having heard counsel for the Assignee in support, I am satisfied that the defendant has no defence to the application and it is appropriate that the orders sought are made. In particular, it is appropriate that the orders be made, having regard to:

(a)the lengthy delays the Assignee has experienced in dealing with the bankrupt’s estate;

(b)the extensive efforts the Assignee has undertaken to give the wider family of the bankrupt opportunities to purchase the Assignee’s interest in one or both of the properties;

(c)the long delay to the party in favour of whom the Human Rights Review Tribunal award was made in receiving any recompense.

[42]   I therefore make the orders sought by the plaintiff in (a) to (f) of the “Draft Orders” attached to counsel’s submissions.

[43]Costs are awarded on a Schedule 2B basis to the plaintiff.

…………………………….. Associate Judge Taylor