Official Assignee v Pearson
[2021] NZHC 1892
•26 July 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-2384
[2021] NZHC 1892
UNDER Part 21 of the High Court Rules 2016 IN THE MATTER
of a case stated from the District Court at Auckland
BETWEEN
OFFICIAL ASSIGNEE
Applicant
AND
ANDREA REBECCA PEARSON
Respondent
Hearing: 27 April 2021 Appearances:
G Neil and S Farnell for the Applicant
F Pilditch QC as counsel assisting the Respondent
Judgment:
26 July 2021
JUDGMENT OF HARLAND J
This judgment was delivered by me on 26 July 2021 at 3:00 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar Date:………………….
Counsel/Solicitors:
G Neil, Meredith Connell, Auckland
S Farnell, Meredith Connell, Auckland F Pilditch QC, Barrister, Auckland
Copy to the Respondent
Introduction
[1] This judgment determines a case stated brought pursuant to s 93 of the District Court Act 2016 (the DC Act) and rr 21.4 and 21.9 of the High Court Rules 2016. It concerns the jurisdiction of the District Court to issue a warrant for the recovery of land to enforce a possession order validly granted by it under s 152 of the Insolvency Act 2006 (the Insolvency Act), in circumstances where the value of the land exceeds the District Court limit of $500,000 provided for under s 79(1) of the DC Act.
[2]The specific questions of law I am asked to resolve are:
(a)Is an order granted under s 152 of the Insolvency Act a judgment or an order for the recovery of land that may be enforced by the issuance of a warrant for the recovery of land pursuant to r 19.65 of the District Court Rules 2014 (the DC Rules)? (Question One)
(b)If not, may the Court enforce an order under s 152 as if it were a judgment or order for recovery of land by issuance of a warrant for the recovery of land pursuant to r 19.65 of the DC Rules, in accordance with the jurisdiction conferred on the District Court by r 1.11 of the DC Rules? (Question Two)
(c)If not, does the District Court have an implied statutory jurisdiction to enforce an order made under s 152 of the Insolvency Act, and pursuant to that implied statutory jurisdiction, [to] enforce the order by issuance of a warrant for the recovery of land in Form 64 of Schedule 2 of the DC Rules? (Question Three)
(d)If none of the above questions are answered in the affirmative, what enforcement remedy (if any) is available to the District Court to enforce an order made under s 152 of the Insolvency Act? (Question Four)
[3] I have decided that a warrant for the recovery of land may be issued in the District Court pursuant to r 19.65 of the DC Rules, therefore I am not required to answer the remaining questions posed in the case stated.
[4]This judgment sets out my reasons for reaching that decision.
Background
[5] On 10 November 2016, Andrea Pearson was adjudicated bankrupt on the application of the Commissioner of Inland Revenue.
[6] At the time of her adjudication, Ms Pearson was the registered proprietor of the property at 31 Baddeley Avenue, Kohimarama, Auckland (the property).
[7] Upon adjudication, the property vested absolutely in the Official Assignee (the Assignee).
[8] I was advised at the hearing that the rating value of the property is $1.4 million, with the land value comprising $1.26 million and improvements amounting to
$140,000. There is a mortgage secured over the property which I was advised is relatively low, such that if the property is sold, there will be sufficient funds available to discharge the mortgage, to discharge Ms Pearson’s debts in the bankruptcy as well as the administration costs in relation to it, and return a sum to her as well.
[9] On 14 March 2018, the Assignee gave notice to Ms Pearson requiring her to vacate the property. She refused to do so.
[10] On 25 May 2018, the Assignee applied to the District Court for an order under s 152(2) of the Insolvency Act granting him possession of the property.
[11] On 15 November 2018, Judge Sinclair heard the Assignee’s application for a possession order and on 20 November 2018 issued her reserved judgment granting it. Ms Pearson appealed this decision to the High Court, but later abandoned the appeal.
[12] On 2 April 2019, the Assignee took transmission of the property, which means he is the named registered proprietor on the certificate of title.
[13] In the context of Ms Pearson abandoning her appeal, the Assignee agreed not to enforce the possession order for period of three months to allow Ms Pearson to
vacate the property. Ms Pearson provided an irrevocable undertaking to deliver vacant possession to the Assignee by 5:00 pm on 4 September 2019.
[14]Ms Pearson did not vacate the property and remains in occupation of it.
[15] On 16 June 2020, the Assignee, relying on the possession order, applied to the District Court for a warrant for the recovery of the land. A hearing was allocated on 15 October 2020. Ms Pearson did not appear at the hearing, either in person or by counsel.
[16] The jurisdiction of the District Court to grant the application for warrant arose at this hearing, resulting in this case stated.
The legislation
[17] Almost all the powers and functions exercised by a Court under the Insolvency Act are conferred on the High Court. These include adjudicating a debtor bankrupt,1 appointing the Assignee as receiver,2 and on application, discharging a bankrupt.3 However, there are some provisions in the Insolvency Act that confer jurisdiction on the District Court to enable it to exercise certain powers.4 Section 152 is one such provision. It provides:
152 Bankrupt must vacate land or buildings if required to do so
(1)The Assignee may require the bankrupt and any of his or her relatives to vacate any land or building that is part of the property vested in the Assignee under the bankruptcy.
(2)If the Assignee’s demand is not complied with, the Assignee may apply to the District Court for an order for possession of the land or building.
1 Sections 11 and 36.
2 Section 50.
3 Section 298.
4 There are other provisions in the Insolvency Act which confer jurisdiction on the District Court in relation to bankruptcy processes, including the power to conduct examinations under Part 3 Subpart 5 and creditor’s claims for sums not more than $350,000 under s 241. There are also other situations where a District Court Judge may exercise the powers and jurisdiction of the High Court (see s 413), albeit a District Court Judge in doing so does not have certain powers, for example committing for contempt of court.
[18] In this case the Assignee has sought to enforce the possession order granted pursuant to s 152 by making further application to the District Court for a warrant under ss 136 and 194 of the DC Act. These provisions appear in Part 10 of the DC Act, which deals with the enforcement of judgments.
Sections 136 and 194 of the DC Act provide:
Judgment or order for recovery of land
A judgment or an order for the recovery of land may be enforced under a warrant for the recovery of land.
194 Warrant for recovery of land
(1)The court may issue a warrant (a warrant for the recovery of land) authorising the bailiff or the constable to whom it is directed to give possession of the land to the person named in the warrant.
(2)In executing the warrant, the bailiff or constable—
(a)may take possession of the land; and
(b)may use force if necessary in obtaining entry; and
(c)may be assisted by others as the bailiff or constable thinks necessary; and
(d)may give possession to the person named in the warrant; but
(e)is not required to remove goods or chattels from premises on the land.
[20] Rule 19.65 of the DC Rules outlines the process to be followed when a warrant to recover land is sought. It provides:
19.65 Warrant to recover land
(1)A plaintiff or judgment creditor who has obtained a judgment or order for the recovery of land may apply to a Registrar in form 63 for a warrant to recover the land.
(2)The Registrar may issue a warrant in form 64 for the recovery of land after the expiry of the day on which the defendant is required, by the judgment, to give possession of the land.
(3)An amount due under a judgment given in the proceeding for rent, mesne profits, damages, or costs may be recovered under a warrant in form 64 or by a warrant to seize property.
[21] When r 19.65 is set alongside s 194, it is not entirely clear who is authorised to issue the warrant to recover land. I deal with this issue later in this judgment, when it most logically arises.
[22] Because the District Court is a creature of statute with its jurisdiction limited accordingly, ss 74, 78 and 79 of the DC Act are also relevant. These sections appear under Part 4 of the DC Act which deals with the civil jurisdiction of the District Court. The relevant parts of ss 74, 78 and 79 provide:
74 General civil jurisdiction
(1)The court has jurisdiction to hear and determine a proceeding—
(a)in which the amount claimed or the value of the property in dispute does not exceed $350,000:
(b)that, under any enactment other than this Act, may be heard and determined in the court.
(2)The amount claimed in a proceeding under subsection (1) may be for the balance, not exceeding $350,000, of an amount owing after a set- off of any claim by the defendant that is admitted by the claimant.
78Exceptions
(1)The court does not have jurisdiction to hear and determine the following classes of proceeding:
(a)proceedings for the recovery of land (but see section 79(1)(a)):
…
(d)proceedings or applications that under any enactment must be heard and determined by a court other than the District Court.
79Jurisdiction to recover land in certain cases
(1)Despite section 78(1)(a), the court has jurisdiction to hear and determine a proceeding for the recovery of land in the situations specified in subsection (2) if—
…
(b)the value of the land does not exceed $500,000.
(2)The situations are—
…
(c)a person without right, title, or licence is in possession of the land.
[23] Therefore, it seems, at least on the face of it, that although the District Court has jurisdiction to hear and determine applications for the recovery of land, it can only do so if the value of the land does not exceed $500,000 unless another enactment specifically enables this to occur.
[24] As the Insolvency Act specifically provides the District Court with the jurisdiction to make an order for the possession of land under s 152(2), such an order would not offend ss 78 and 79, because s 74(1)(b) provides for this to occur. This means that the District Court has the jurisdiction to make a possession order for land regardless of its value.
[25] But it does not necessarily mean that the District Court can enforce such an order by issuing a warrant for recovery of land where the value of the land is over
$500,000, because the jurisdiction for this is not specifically provided for under the Insolvency Act. Rather it is provided for under the DC Act and DC Rules, and potentially therefore limited by the value prescribed in s 79(1)(a). If this is correct, it would mean that although the District Court has the power to make a possession order under the Insolvency Act in relation to land of any value, if the land were valued at over $500,000, any warrant for its recovery would need to be obtained from the High Court.
[26] Plainly, the issue here is one of statutory interpretation. To adopt Mr Pilditch’s analogy, the question is whether there is a sufficiently clear “map” of statutory language and implication to demonstrate that Parliament intended the District Court to have jurisdiction to issue warrants for the recovery of land in these circumstances. Although the Assignee referred to the cost and inconvenience of having to resort to the High Court to enforce an order obtained in the District Court, this is not a consideration that is determinative: Parliament’s substantive intent cannot be displaced by procedural convenience.
Analysis
[27] The Assignee submits that the jurisdictional limitations imposed by ss 78 and 79 of the DC Act do not restrict the District Court’s jurisdiction to issue a warrant for recovery of land in this case, because the Court is enforcing an order made under s 152 of the Insolvency Act. The Assignee raises two key arguments in support of this:
(a)first, enforcement is a procedural step taken following the determination of the substantive proceeding, and therefore ss 78 and 79 are not engaged; and
(b)in any event, s 152 is an ancillary jurisdiction which necessarily includes the ability to enforce an order made under it; therefore ss 78 and 79 do not apply.
[28]I deal with these submissions in turn.
Is enforcement of a possession order a procedural step in this case?
[29] Mr Neil submitted that the enforcement of a possession order is not a “proceeding” for the purposes of s 78, but rather a procedural step. “Proceeding” is defined under r 1.4 of the DC Rules as “any application to the court for the exercise of the civil jurisdiction of the court other than an interlocutory application”. Mr Neil submitted that while this definition appears at first glance to cover an application for a warrant for the recovery of land, that is not the case because the issuing of the warrant is a procedural step, the substantive right to possession having already been determined. Therefore, he argued that neither s 78 nor the s 79(1)(b) jurisdictional limit in relation to the value of the land are engaged. Mr Neil submitted that in this case “the proceeding” was the application for a possession order under s 152 of the Insolvency Act, which makes no distinction based on property value.
[30] In support of his argument Mr Neil referred to several cases including Lay v Commissioner of Inland Revenue,5 National Westminster Bank plc v Powney,6 and
5 Lay v Commissioner of Inland Revenue [2015] NZHC 2962, [2016] NZFLR 603.
6 National Westminster Bank plc v Powney [1991] Ch 339 (CA).
Re Riddiford, ex parte The New Zealand Law Society and the Wellington District Law Society,7 where the Courts have determined that the execution of an order is a matter of procedure not substance. These cases are helpful; however, I emphasise that each case depends on its facts and the specific statutory provisions engaged.
[31] In Lay v Commissioner of Inland Revenue, the appellant had been assessed to pay child support, but had failed to meet his obligations and was in arrears with his payments.8 The Commissioner filed an application for a warrant to seize property under s 183 of the Child Support Act 1991. The warrant was issued and executed by seizing the appellant’s motor vehicle. Mr Lay appealed the decision to grant the warrant. The issue on appeal was whether there was a right to appeal that decision. Brown J held that there was no right of appeal, one of his reasons being:
… the action of a District Court Judge in issuing a warrant of distress is in the nature of an administrative step taken in a course of the post-adjudication phase. It is the equivalent of the process under s 85 of the District Courts Act 1947 and r 19.47 of the District Courts Rules 2014. No rights of appeal are conferred in respect of the enforcement of District Court judgments.
[32] In National Westminster Bank plc v Powney, the defendants had fallen into arrears under a mortgage.9 The bank applied for a warrant of possession based on a consent order that had been entered into recording the arrears agreed to be paid. Although some time later, the Court issued a judgment on the application and set aside the warrant, deciding that it was time-barred under s 38 of the relevant Limitation Act, which barred the bringing of an “action” on a judgment more than six years after the date on which the judgment became enforceable. The bank appealed.
[33] The English Court of Appeal determined that an application for leave to issue execution of a judgment was not an “action” within the meaning of s 38. It rejected a submission that the execution of the judgment was a “proceeding in a court of law”, agreeing with the reasoning of Scott LJ in WT Lamb & Sons v Rider that:10
7 Re Riddiford, ex parte The New Zealand Law Society and the Wellington District Law Society HC Wellington CIV-2005-485-879, 15 December 2005 at [16] and [18].
8 Lay v Commissioner of Inland Revenue, above n 5.
9 National Westminster Bank plc v Powney, above n 6.
10 WT Lamb & Sons v Rider [1948] 2 KB 331 at 337 as cited in Powney, above n 6, at 355.
[e]xecution is essentially a matter of procedure—machinery which the court can, subject to the rules from time to time in force, operate for the purpose of enforcing its judgments or orders. …
[34] In Re Riddiford, the High Court considered an application for the review of an Associate Judge’s decision to dismiss Mr Riddiford’s application to set aside a bankruptcy notice.11 The bankruptcy notice was based on an order requiring Mr Riddiford to pay costs and expenses to the New Zealand Law Society and the Wellington District Law Society, which had been confirmed almost 10 years previously. Limitation Act issues were pleaded and the judgment largely concerned those issues.
[35] In considering whether issuing a bankruptcy notice was a form of execution of judgment or an action upon a judgment, and after referring to Powney, Miller J observed:12
… the right to sue on a judgment has always been regarded as a matter quite distinct from right to issue execution under it. Execution is a matter of procedure and is governed by the Rules, which establish mechanisms under which the Court can enforce its judgment or orders.
[36] Although making this observation, Miller J found that a creditor’s petition is more than just machinery by which the Court enforces its orders, given that bankruptcy requires a judicial decision made after a hearing and proof of an act of bankruptcy, with a right of appeal. In other words, issuing a bankruptcy notice was not a method of enforcement that was simply procedural, because of the substantive decisions required to be made under the Insolvency Act and Part 16 of the High Court Rules.
[37] Having regard to these cases, and particularly Re Riddiford, I am satisfied that the issuing of a warrant for the recovery of land is a procedural step, rather than a proceeding. While it is unclear whether there is a right of appeal against this process (and I did not receive submissions on this point),13 unlike the bankruptcy processes referred to by Miller J, the issuing of the warrant for the recovery of land in these
11 Re Riddiford, above n 7.
12 Re Riddiford, above n 7, at [16].
13 I do not place significant weight on Brown J’s comment in Lay v Commissioner of Inland Revenue, above n 5, that “No rights of appeal are conferred in respect of the enforcement of District Court judgments”, as this proposition was not developed in any detail in the judgment.
circumstances is more akin to machinery by which the Court enforces a possession order. Furthermore, Ms Pearson has had many opportunities to participate in the bankruptcy process as provided by the Insolvency Act. She also had the opportunity to participate in the proceedings relating to the possession order, including the right to appeal that order, which she initially exercised but later abandoned. In these circumstances, the application for a warrant can be seen as a final, procedural step after a long series of processes in which Ms Pearson had the opportunity to exercise her rights.
[38] This means that ss 78 and 79 of the DC Act are not engaged. If I am wrong about this, I now turn to consider whether s 152 is an ancillary jurisdiction which necessarily includes the ability to enforce an order under it, and therefore ss 78 and 79 do not apply.
Does s 152 include the ability to enforce an order made under it?
[39] Mr Neil further submitted that the jurisdiction conferred by s 152 of the Insolvency Act is separate, distinct and not limited or restricted by ss 78 and 79 of the DC Act, and that it necessarily applies to the enforcement of such an order. He drew support for this submission from three cases: Māori Trustee v Hooper,14 O’Donnell v O’Donnell15 and Laywood v Holmes Construction Wellington Ltd.16 I agree with Mr Pilditch that the most relevant case is the Court of Appeal decision in Laywood.
[40] In Laywood, the Court of Appeal considered the ability to register and enforce an adjudicator’s determination under the Construction Contracts Act 2002 (the CCA) by entry of judgment in the District Court, when the determination exceeded the monetary limit provided for in the District Courts Act 1947. The relevant section of the CCA on enforcement, s 73, provided that an adjudicator’s determination may be enforced by entry as a judgment in accordance with the sub-part, and that the application may be made to a District Court in a manner provided by the rules of that Court.17 However, s 5 defined “Court” (other than the High Court) as meaning:
14 Māori Trustee v Hooper [2017] NZDC 10975, [2018] DCR 353.
15 O’Donnell v O’Donnell [2020] NZFC 3041, [2020] NZFLR 469.
16 Laywood v Holmes Construction Wellington Ltd [2009] NZCA 35, [2009] 2 NZLR 243.
17 Construction Contracts Act 2002, s 73.
... the District Court in any proceeding in which the amount claimed or in issue does not exceed the amount to which the jurisdiction of the District Court is limited in civil cases.
[41] Counsel therefore submitted that as a result of s 29 of the District Courts Act 1947 (the predecessor to s 78 of the DC Act), and s 5 of the CCA, the District Court’s jurisdiction was limited.18 The Court of Appeal rejected that submission, and found as a matter of statutory interpretation:19
We consider that Parliament created a special regime for the enforcement of adjudicators’ determinations in ss 73 and 74 and conferred jurisdiction on the District Court in respect of it. The District Court’s jurisdiction under s 73 is not limited to claims of $200,000 or less. …
[42] A distinguishing feature in this case is that the Insolvency Act does not explicitly provide the District Court with the ability to enforce orders under s 152. However, what Laywood demonstrates is that in certain cases, depending on the statute concerned, the District Court may have the jurisdiction to make certain orders even though the value limit in s 79 is exceeded if the jurisdiction conferred is ancillary.
[43] Despite the lack of specific reference in the Insolvency Act to enforcement of possession orders in the District Court, Mr Pilditch submitted, and I agree, that there are other signposts within the DC Act that favour the Assignee’s argument.
[44] The first is s 74 of the DC Act, which creates two ways in which the Court’s civil jurisdiction “to hear and determine a proceeding” is established. One way is based on value (a statutory limit) and the other is based on a right being conferred by “any enactment” other than the DC Act. Clearly, the Insolvency Act is another enactment that explicitly confers jurisdiction on the District Court such that there can be no doubt that s 152 is part of the District Court’s civil jurisdiction contemplated by s 74(1)(b). Arguably, as ss 74(1)(b) confers jurisdiction for “a proceeding” under s 152 and because I have found that applications for warrants to enforce to recover land are in fact procedural in nature, that is the end of the matter.
18 Laywood v Holmes Construction Wellington Ltd, above n 16, at [17].
19 At [24].
[45] However, there is also merit in the argument that the land recovery proceedings contemplated by ss 78(1)(a) and 79 are proceedings for the recovery of land other than those dealt with by an enactment which specifically confers jurisdiction on the District Court under s 74(1)(b).
[46] When one considers s 84 of the DC Act, this argument is further reinforced. Section 84 states that a District Court Judge may:
in the same way as a Judge of the High Court in the same or a similar proceeding … grant remedies, redress or relief … dispose of the proceeding
…
[47] This means that once seized of a proceeding, the Court can do justice to that proceeding in all the ways that the High Court can. Logically, as the Assignee contends, this could extend through to the provision of enforcement remedies where a statute has conferred jurisdiction on the District Court as contemplated by s 74(1)(b).
[48] I am therefore persuaded that although not as explicit as the statutory provision in Laywood, there are sufficient indications in s 152 of the Insolvency Act and in the DC Act to infer that Parliament intended that the District Court should be seized of jurisdiction not only to make orders for the possession of land, but also to enforce such orders.
[49] I therefore find that s 74(1)(b) of the DC Act confers jurisdiction under s 152 of the Insolvency Act for the District Court not only to hear and determine applications by the Assignee for possession orders but also to enforce them, irrespective of the value of the land.
[50] Given this conclusion, the next question is whether possession orders may be enforced through the enforcement mechanism provided for in the DC Act – the issuing of a warrant for the recovery of land under s 136. This depends on whether a possession order made under s 152 is a “judgment or order for the recovery of land” for the purposes of s 136.
[51] There is no definition of “judgment or order for the recovery of land” in the DC Act; however, Mr Neil referred me to s 4 of the Limitation Act 2010 which defines
a “claim to recover land” as including “a claim to exercise a right to enter into possession of the land”. He also submitted that the term “judgment or order for the recovery of land” has its origins in the action for the recovery of land, formerly known as an action for ejectment, which protects a possession interest when an action for trespass is inappropriate.20
[52] I agree with Mr Neil that the substantive effect of a possession order made under s 152 of the Insolvency Act is the same as a judgment or order made under the DC Act and Part 13 of the DC Rules.21 This is because it determines a right of occupation and requires the unlawful occupant to yield possession of the property. I find therefore that an order made under s 152 is in substance “a judgment or an order for the recovery of land”.
[53] It follows that the Assignee can enforce a s 152 order under s 194 of the DC Act and r 19.65 of the DC Rules by way of a warrant for recovery of land.
[54] There is one remaining issue to determine: who is authorised to issue a warrant for the recovery of land? There is a difference between the wording of s 194(1) and that of r 19.65. Section 194(1) provides that “[t]he court may issue a warrant... for the recovery of land... authorising a bailiff or the constable to whom it is directed to give possession of the land to the person named in the warrant.”22 Rule 19.65 however refers to “the Registrar” receiving an application for a warrant to recover land and having the discretion to issue it under and in accordance with r 19.65(2).23
[55] Mr Neil proposed that the application for the warrant should be made to a Judge of the District Court with the warrant being issued by the Registrar once the order for
20 An action for trespass requires possession at the time of the trespass, whereas ejectment requires only an entitlement to possession. See Bill Atkin “Trespassing on Land” in Stephen Todd The Law of Torts in New Zealand (online ed, Thomson Reuters) at [59.9.3.01].
21 Part 13 of the DC Rules deals with District Court processes for the recovery of land where there is unlawful occupation of it.
22 Emphasis added.
23 Emphasis added.
the warrant has been made. Mr Pilditch submitted that this approach appears to be correct, especially when regard is had to s 199 of the DC Act. That section provides:
199 Immunity of Judge, etc, when warrant illegally obtained
No proceeding or action may be taken against any of the following persons by reason only that a warrant for the recovery of land was issued on the application of a person who at the date of issue was not lawfully entitled to possession of the land:
(a)the Judge who made the order for the issue of the warrant:
(b)the Registrar who issued the warrant:
(c)the bailiff or the constable who executed the warrant.
[56] I agree that the suggested approach is the correct one, especially given that s 199 specifically contemplates the order for the warrant being made by the Judge and the warrant being issued by the Registrar.
[57] I note that Question One of the case stated refers only to the issuing of the warrant pursuant to r 19.65; it does not mention s 194. In my view, it can reasonably be inferred that the reference to r 19.65 also encompasses s 194 (as that is the section to which the rule relates).
Result
[58]Question One of the case stated is answered as follows:
Question: Is an order granted under s 152 of the Insolvency Act 2006 a judgment or an order for the recovery of land that may be enforced by the issuance of a warrant for the recovery of land pursuant to r 19.65 of the District Court Rules 2014?
Answer: Yes.
[59] Having reached this conclusion, it is not necessary to answer Questions Two to Four.
Harland J
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