Payne v New Zealand National Party HC Timaru CIV 2009-476-571

[2010] NZHC 1544

IN THE HIGH COURT OF NEW ZEALAND TIMARU REGISTRY

CIV 2009-476-000571

BETWEEN  ROGER JOHN PAYNE Judgment Debtor

ANDNEW ZEALAND NATIONAL PARTY Judgment Creditor

CIV 2009-476-000618

AND BETWEEN            ROGER JOHN PAYNE Judgment Debtor

ANDAMY ADAMS, JUDITH MARY KIRK, ROGER FRANCIS ALBION BRIDGE AND JOHN SKINNER

Judgment Creditors

Hearing:         19 July 2010

Appearances: R J Payne (In Person)

M van den Bergh for Judgment Creditors

Judgment:      26 July 2010

JUDGMENT OF FOGARTY J

Introduction

[1]      The New Zealand National Party seeks an order bankrupting Mr Roger Payne to recover a judgment debt of $9,356.69 plus costs.  Likewise Mesdames Adams and Kirk and Messrs  Bridge and Skinner, members of the National Party,  pursue a

judgment debt against Mr Payne in the sum of $27,814.22 plus costs.

PAYNE  V NEW ZEALAND NATIONAL PARTY  HC TIM CIV 2009-476-000571  26 July 2010

[2]      Mr Payne has sworn an affidavit in opposition setting out his assets and liabilities.  The affidavit declares ownership of two properties (a farm, and a home in Wellington) and various house contents and chattels.  It discloses two liabilities, a loan from the BNZ secured over the home in Wellington, and a very minor VISA debit.  The balance of assets over liabilities is a surplus of several million dollars. Mr Payne has not disclosed his income.  He says that is subject to a confidentiality agreement with neighbours.   This affidavit was filed in support of his principal ground of opposition to petition for bankruptcy, namely, that he is not insolvent.

[3]      This case was set down for hearing to consider two applications:

•    An application by Mr Payne for an adjournment

•    The applications by the judgment creditors for bankruptcy

[4]      The application for adjournment was on three grounds:

(a)       More time is required for the active challenge of the alleged creditor debt and related matters, filed 20 April 2010 under Parliamentary provisions with the Judicial Conduct Commissioner after direction from the Attorney General – a challenge involving judicial misconduct by at least 14 judges at all court levels in a case gone horribly wrong over 14 years.

(b)As I am not insolvent I can arrange to pay any debt shown to be fair and reasonable in the major inquiry process in (a).

(c)       Further  court  involvement  with  this  alleged  insolvency  is  not envisaged as the matter can be resolved between the parties outside of court procedure in due course.  Assistance with procedural steps to bring this about has been requested in writing from the Deputy Prime Minister.

[5]      Mr Payne’s opposition to the application for bankruptcy relies essentially on the same arguments.  The first argument is that he is not insolvent.  The second is that the cost claims against him are under formal challenge with the Judicial Conduct Commissioner and internally within the National Party.

[6]      By reason of the overlap of these grounds the two applications before me today coalesce.

[7]      The Insolvency Act 2006 ss 36, 37 and 13 provide:

36       Court may adjudicate debtor bankrupt

The  Court  may,  at  its  discretion,  adjudicate  the  debtor  bankrupt  if  the creditor has established the requirements set out in section 13.

37       Court may refuse adjudication

The Court may, at its discretion, refuse to adjudicate the debtor bankrupt if - (a)     the applicant creditor has not established the requirements

set out in section 13; or

(b)      the debtor is able to pay his or her debts; or

(c)it is just and equitable that the Court does not make an order of adjudication; or

(d)for any other reason an order of adjudication should not be made.

13       When creditor may apply for debtor's adjudication

A creditor may apply for a debtor to be adjudicated bankrupt if—

(a)the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of

$1,000 or more to those creditors between them; and

(b)the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and

(c)      the debt is a certain amount; and

(d)      the debt is payable either immediately or at a date in the future that is certain.

[8]      Turning to s 37(a) there is no doubt that s 13 is satisfied.  As to s 37(b) the Court has the power to adjudicate Mr Payne bankrupt relying on s 36.  Ms van den Bergh argued that on the evidence Mr Payne is not able to pay these judgment debts “as they have fallen due”.  The concept of insolvency on the basis of not being able to pay debts as not falling due is not contained in the Insolvency Act.  It is a judicial gloss.   It is one of the common criteria of judging whether or not someone is insolvent.   However, when the issue is whether to exercise the power in s 37, the

Court can consider the ability of the debtor to pay by realising assets within a reasonable period of time.  I have no doubt that Mr Payne can pay these judgment debts without being forced to sell either the farm or the house in Wellington.  I am satisfied that he is able to pay his debts.

[9]      The question then is whether or not s 37(c) or (d) apply to this case, to justify this Court refusing to adjudicate him bankrupt.

[10]     The  reserve  power  granted  by  s  37  is  not  readily  exercised.    This  is particularly so in the case of judgment debts, for in addition to the importance of debts being paid promptly there is a distinct and added social interest in judgments of the Court being honoured.  Accordingly, my starting perspective is that the Court has the power to refuse these petitions, including within it the power to adjourn the petitions for a period of time.  Second, that the power to refuse will not be lightly exercised.   The power to adjourn the application might be exercised a little more readily particularly if it gives the debtor time to be able to pay his debts.

[11]     Mr Payne’s argument essentially falls into two categories:

1.He is seeking an indefinite adjournment if not dismissal of the application/petition that he be bankrupted based on his pending complaints with the Judicial Conduct Commissioner and potential actions of the Attorney-General should the complaints be successful; and

2.He is seeking a shorter period of time based on his pending internal application  for  reconsideration  of  the  enforcement  of  these  debts within the National Party.

I deal with these two matters separately.

[12]     Mr Payne argues that at the first and root cause of his liability to pay these judgment debts is an injustice he suffered 14 years ago concerning his home in Wellington.  He says that he received an adverse decision in the District Court.  He took it on appeal to the High Court but did not receive a fair hearing.  He complains about the refusal of the Court of Appeal to grant him leave to appeal from that judgment.  He took the case to the newly constituted Supreme Court, where the same Judges refused leave.  He complains about being adjudicated bankrupt in 2005 upon the application of the Attorney-General on behalf of a Family Court Judge which bankruptcy was annulled a few weeks later after costs were paid.   He complains about the handling of an application for an injunction made by him against the National Party prior to the last elections in respect of the selection of candidates by the National Party to stand for the party in the Selwyn seat.  He says the link between the Wellington litigation and the Selwyn litigation is that he was turned down as a candidate for the Selwyn electorate because the party officials knew that he had been adjudicated bankrupt.  He says, however, that because that bankruptcy was annulled it was, at the very least, an incident which was used unfairly.  Second, the use of that fact of bankruptcy has  also caused  him damage when it came ultimately to be reported to Parliament following the outcome of his failed petition to set aside the electoral result.

[13]     I have not seen the complaints.  I make no judgment on their merits.  I am satisfied that they have not been brought just to avoid paying these judgment debts. I am satisfied Mr Payne believes that he has a number of serious grievances which should be heard by the Judicial Conduct Commissioner.

[14]     The purpose of the Judicial Conduct Commissioner and Judicial Conduct

Panel Act 2004 (JCC and JCPA) is set out in s 4 which provides:

4        Purpose

The purpose of this Act is to enhance public confidence in, and to protect the impartiality and integrity of, the judicial system by -

(a)providing a robust investigation process to enable informed decisions  to  be  made  about  the  removal  of  Judges from office:

(b)establishing an office for the receipt and assessment of complaints about the conduct of Judges:

(c)providing a fair process that recognises and protects the requirements of judicial independence and natural justice.

[15]     Section 8 of the Act sets out the functions and powers of the Commissioner and provides inter alia:

8         Functions and powers of Commissioner

(1)       The functions of the Commissioner are—

(a)to receive complaints about Judges and to deal with the complaints in the manner required by this Act:

(b)      to conduct preliminary examinations of complaints:

(c)in appropriate cases, to recommend that a Judicial Conduct Panel be appointed to inquire into any matter or matters concerning the conduct of a Judge.

…

(2)      It is not a function of the Commissioner to challenge or call into question the legality or correctness of any instruction, direction, order, judgment, or other decision given or made by a Judge in relation to any legal proceedings.

…

[16]     The  functions  of  the  Judicial  Conduct  Panel  are  set  out  in  s  24  which provides:

24       Functions of Panel

(1)       A Judicial Conduct Panel must inquire into, and report on, the matter or matters of judicial conduct referred to it by the Attorney-General on the recommendation of the Commissioner.

(2)       The Panel must conduct a hearing into the matter or matters referred to it by the Attorney-General.

(3)       The Panel may also inquire into, and report on, any other matters concerning the conduct of the Judge that arise in the course of its dealing with the referral from the Attorney-General.

(4)       The Panel must give the Attorney-General a report in accordance with section 32.

[17]     The powers of the Attorney-General are set out in s 33 which provides:

33       Attorney-General has discretion to initiate removal of Judge on receipt of report

(1)       If  a  Judicial  Conduct  Panel  concludes  that  consideration  of  the removal of a Judge is justified, the Attorney-General must determine, at his or her absolute discretion, whether to take steps to initiate the removal of that Judge from office.

(2)       A Judge must not be removed from office unless a Judicial Conduct Panel has reported to the Attorney-General that it is of the opinion that consideration of the removal of the Judge is justified.

…

[18]     There is no statutory provision which provides that the making of a complaint to the Judicial Conduct Commission operates a stay on Court proceedings.  Rather, to the contrary, s 8(2) reinforces that it is not the function of the Commissioner to examine the legality or correctness of any judgments.  It follows that the functions of the Commissioner is to examine the conduct of Judges.  That conduct may include procedural conduct of Judges.  Amidst Mr Payne’s complaints there is at least one complaint of procedural unfairness, that being the consideration of his appeal to the High Court from the District Court in respect of the Wellington property.

[19]     There is always the possibility that at the end of the process under the JCC and JCPA there may be a basis for applying to recall a judgment applying the third criterion in Horowhenua County v Nash (No. 2)[1]:

…  [W]here  for  some  other  very special  reason justice  requires that  the judgment be recalled.

[1] [1968] NZLR 632, 633

[20]     In my view it is important for constitutional reasons to avoid a situation where a judgment creditor is deprived of judgment because a complaint by the losing party has been made to the Judicial Conduct Commissioner.   The provision for appeals  is  the  institutional  process  for  correction  of  errors,  substantial  and procedural.  The JCC and JCPA provides a special statutory process directed to the

potential removal of Judges from office.   It is not directed to correcting errors in judgments.  That is why quite naturally we find s 8(2) in the statute.  The premise of that provision is to lay such a prospect at rest.

[21]     Section 37(c) and (d) of the Insolvency Act give a very broad discretion to the Court.  It is not the function of this or any Court to read down that discretion. However, I am satisfied it would take an extraordinary set of facts in respect of a pending hearing before the Judicial Conduct Commissioner, and/or subsequently before the Attorney-General, before the reserve powers of s 37 would be used.  This case does not raise such an extreme situation.   Mr Payne does, in fact, have the capacity  to  pay  these  debts.    If  he  did  pay  them  his  position  would  not  be irretrievable.  If he borrowed to pay them he would have a relatively small sum in interest to pay on a per annum basis, well below $10,000 a year.  Payment of these debts would not require him to make a forced sale of his major assets.

[22]     For these reasons I conclude that his pending complaints before the Judicial Conduct Commissioner are not grounds to adjourn the petitions nor for refusing to adjudicate him bankrupt.

Internal processes of the National Party

[23]     Mr Payne says he has two pending applications with two leaders of the National Party seeking an internal resolution of these debts.  One is a letter to the President, Mr Goodfellow, dated 7 October 2009.  He has not had a reply as yet but he says any reply is likely to have been complicated by the issue as to whether or not Mr Goodfellow would continue as President.  The second is an approach that he has made to the Deputy Prime Minister within the last month.

[24]     I am satisfied that although the larger debt is nominally to the benefit of Mesdames Adams and Kirk and Messrs Bridge and Skinner the probability is that the costs of the litigation were always borne by the New Zealand National Party who will be the beneficiary of any recovery of these judgment debts.

[25]     I am also satisfied that it is likely Mr Payne does not have sufficient liquidity to immediately write a cheque for the total of around $35,000 but would need to make some arrangements with his bankers or realise upon some personal property.

[26]     In  all  the  circumstances  I  think  there  is  no  significant  prejudice  to  the National Party in an adjournment.   This is not a case where there is insufficient assets to meet liabilities.  There is no risk of any deferment of other creditors to the disadvantage of the National Party.

[27]     I  am  satisfied  that  it  would  be  just  to  adjourn  the  judgment  creditors’

applications for bankruptcy for a period of three calendar months to 21 October

2010.

[28]     The petitions are so adjourned.  Costs are reserved.

Solicitors:

RSM Law, Timaru cc: R J Payne