Prasad v Indiana Publications (NZ) Limited HC Auckland CIV-2010-404-3333
[2011] NZHC 1316
•20 July 2011
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-3333
UNDER section 13 of the Insolvency Act 2006
IN THE MATTER OF the bankruptcy of Rajendra Prasad
BETWEEN RAJENDRA PRASAD Applicant
ANDINDIANA PUBLICATIONS (NZ) LIMITED
First Respondent
ANDTHE OFFICIAL ASSIGNEE Second Respondent
Hearing: 18 July 2011
Counsel: Applicant in person
G M Harrison for first respondent
No appearance for second respondent
Judgment: 20 July 2011
RESERVED JUDGMENT OF DOBSON J
This judgment was delivered by me on 20 July 2011 at 3pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
R Prasad, Auckland ([email protected])
Parshotam & Co, Mt Roskill, Auckland ([email protected])
Copy to:
G M Harrison, Barrister, Auckland ([email protected])
Official Assignee at Auckland
PRASAD V INDIANA PUBLICATIONS (NZ) LIMITED HC AK CIV-2010-404-3333 20 July 2011
[1] The immediate context of these proceedings is an application by Mr Prasad seeking review of the decision of Associate Judge Sargisson which declined an application he had brought to annul an earlier order adjudicating him bankrupt.
[2] Antecedent proceedings have an extraordinarily long history. The litigious initiatives began in 2003 when Mr Prasad, initially via a company of which he was the alter ego, pursued claims to copyright in forms of commercial publication said to be of particular interest to the Indian business community.
[3] Mr Prasad’s company established copyright but was unable to make out any breach by Indiana Publications (NZ) Limited. I was informed by Mr Harrison that costs orders against Mr Prasad’s company were not met, and eventually it was wound up.
[4] Subsequently, Mr Prasad commenced a separate set of proceedings in which he claimed that he owned the copyright in works that he had claimed, in affidavits in the earlier set of proceedings, were owned by his company. Mr Prasad attempted to discontinue that second set of proceedings in the District Court shortly before they were due to be called. The District Court Judge took the view that discontinuance had not occurred and entered judgment against him with costs.
[5] Mr Prasad appealed against the District Court orders and Wylie J found that he had effectively discontinued, but nonetheless ordered costs against him on an indemnity basis. Non-payment of that costs order has been relied on to have Mr Prasad adjudicated bankrupt.
[6] Mr Prasad was adjudicated bankrupt in November 2010. After applying unsuccessfully to Faire AJ to recall the judgment in which he was declared bankrupt, Mr Prasad then applied under s 309 of the Insolvency Act 2006 to have his adjudication annulled. Mr Prasad now seeks to review Sargisson AJ’s decision declining that application to annul.
Scope of Court’s jurisdiction
[7] On behalf of the first respondent, Mr Harrison contested the Court’s jurisdiction to review the Associate Judge’s decision. He argued that a decision under s 309 of the Insolvency Act constitutes an exercise of the power of the Court by the Associate Judge under s 26I of the Judicature Act 1908. Accordingly, it falls outside the scope of Associate Judges’ jurisdiction under s 26J of that Act and High Court Rule 2.1 in relation to matters dealt with in chambers. It is only chambers
orders made by Associate Judges that may be reviewed in this Court.[1] Orders made
in Court are subject to appeal to the Court of Appeal.[2]
[1] Judicature Act 1908, s 26P(1).
[2] Judicature Act 1908, s 26P(2).
[8] Mr Harrison did not file any notice of opposition, or submissions in support
of his client’s opposition. Instead, he wrote to the Registry by letter dated 5 July
2011, taking the point that this Court did not have jurisdiction to hear a review, and advising that when it was called he would seek to have it struck out. Mr Harrison’s letter was copied to Mr Prasad, and Mr Prasad did not complain that he had not been warned of the approach being adopted on behalf of the first respondent.
[9] Mr Harrison also advised that he had been authorised by the solicitor for the Official Assignee to indicate that the Official Assignee would abide the decision of the Court. That solicitor had recently become unavailable to appear on the day.
[10] Mr Prasad stated that he had pursued an appeal to the Court of Appeal from Sargisson AJ’s decision, but that he had had his papers returned to him, together with a refund of filing fees he had paid, on the apparent basis that the appropriate course was for this Court to conduct a review of her Honour’s decision, subject to the prospect of an appeal to the Court of Appeal from a decision of a Judge of this Court.
[11] Mr Prasad had no record in writing of any such appeal to the Court of
Appeal, or any document from that Court acknowledging that he had attempted such an initiative, and had had it rejected by the Court of Appeal Registry.
[12] Mr Harrison indicated that neither he nor, to the best of his knowledge, his instructing solicitors, had received any documents indicating such an initiative had been taken by Mr Prasad.
[13] At one point, Mr Prasad sought a further adjournment to enable him to locate papers he said he had at home, that could establish the initiative he described taking with the Court of Appeal. Mr Prasad’s present application had previously been adjourned for a one hour fixture on the date of hearing, and ultimately a matter going to jurisdiction should not be determined on the basis of an apparently unrecorded indication from the Court of Appeal as to how the issue should be pursued.
[14] Regrettably for Mr Prasad, assuming he did receive some form of indication as he describes from the Registry at the Court of Appeal, if such indication is in error, then it cannot do anything to create jurisdiction for a review in this Court, if that jurisdiction does not exist on the terms of the relevant statutes.
[15] The issue of whether an Associate Judge exercising insolvency jurisdiction can be reviewed by this Court was considered in the decision in Balzat v Zhang.3[3] In that case, the Associate Judge’s decision in question was one to dismiss an application to set aside a bankruptcy notice. The Associate Judge’s jurisdiction in that case is distinguishable because such an application could be dealt with in chambers, whereas an application for annulment of a bankruptcy is one of only three insolvency matters that cannot be dealt with by an Associate Judge in chambers.[4] It follows that the power created for an Associate Judge to hear such applications under s 26I(2)(ha) of the Judicature Act is a power that is to be exercised in open Court.[5]
The consequence is that such a decision cannot be reviewed by this Court under s 26P(1) of the Judicature Act.
[3] Balzat v Zhang HC Auckland CIV-2008-404-6062, 22 September 2009.
[4] See Insolvency Act 2006, s 411(2).
[5] See also commentary in Heath and Whale on Insolvency (looseleaf ed, LexisNexis) at [3.10(g)].
[16] There is a discretionary jurisdiction to review any decision of the Court under s 414(1) of the Insolvency Act. That section provides:
414 Rehearings and appeals
(1) The Court may review, rescind, or vary any decision of the Court or a Judge under this Act.
(2) An aggrieved person may appeal to the Court of Appeal from a decision of the Court or a Judge under this Act.
[17] I agree with the approach of Heath J in Balzat v Zhang that the jurisdiction to review under s 414(1) will arise where matters have been dealt with relatively summarily, or without notice, or where the Court has been misled on matters of fact or law.[6] In contrast, Sargisson AJ’s decision in this case was a thoroughly considered decision, reserved for a month after argument, with counsel appearing for both parties.
[6] At [59].
[18] Accordingly, had Mr Prasad asked that his application be treated as one under s 414(1), I am satisfied that it is not the type of decision that ought to be considered by a review under that section.
[19] Against the contingency that I may be wrong on this matter of jurisdiction, and having heard all that Mr Prasad wanted to advance in relation to his challenge to Sargisson AJ’s judgment, it is appropriate to address those arguments, and record my views in relation to them.
Mr Prasad’s substantive arguments
[20] First, Mr Prasad argued that the costs order made against him by Wylie J included GST on the extent of costs, which ought to have been excluded. He submitted that, at the very least, there ought to be an amended sealed order quantifying his liability under that costs judgment. Because that requirement was outstanding, he argued that Sargisson AJ ought to have annulled the earlier order for his bankruptcy.
[21] This was a new point, taken for the first time before Sargisson AJ. For the respondent, Mr Harrison had apparently conceded the error in adding GST to the
costs order made by Wylie J.
[22] Sargisson AJ treated the inclusion of GST in the costs order made by Wylie J as a mistake, but not one that could justify an order to annul Mr Prasad’s adjudication in bankruptcy. She reasoned that to do so would have placed Mr Prasad in a better position than he would have been in, had he raised the challenge to the inclusion of GST at some earlier point up to the hearing at which he had previously been adjudicated bankrupt. Further, the costs order made by Wylie J was only one of a number of orders for costs against Mr Prasad which he had declined to pay, and there was accordingly no substance in the argument that, but for the costs judgment, other costs orders would not have been made.
[23] I can find no reviewable error in the approach Sargisson AJ adopted to the incorrect inclusion of GST in the costs order made by Wylie J. Mr Prasad was insistent that he was materially prejudiced by the existence of a costs order against him, which was in error by the extent of the GST on the items included in it.
[24] However, as the creditor entitled to payment of that costs order, Mr Harrison’s client has consistently acknowledged that it would not press for recovery of the GST element. That fact was acknowledged by Sargisson AJ, and remains the case. The history of the matter gives Mr Prasad a clear basis for denying liability for the GST component of the costs order made by Wylie J. In those circumstances, there can be no prejudice that might warrant the prospect of annulling the adjudication, particularly when taken together with the other factors identified by Sargisson AJ as counting against that outcome.
[25] Mr Prasad also argued that the quantum of costs ordered reflected separate cost entitlements for six respondents to the relevant proceedings he had pursued in the High Court. He argued that because Indiana Publications (NZ) Limited was the only entity he had pursued, that there ought only to be one costs order, not six.
[26] However, that characterisation of the costs order is misconceived. Wylie J had made a single order for indemnity costs, in favour of all the respondents. Its quantum would have been the same whether made in favour of only one, or all six of those parties. There is no indication that the number of parties affected the quantum
of the single costs order made in favour of all of them, and there is therefore nothing in the complaint that the quantum was wrongly inflated.
[27] Mr Prasad also argued that if the excessive elements of the costs order were formally removed, then he would pay the balance and there would be no justification for an adjudication of bankruptcy.
[28] In response to this point, Mr Harrison indicated that an opportunity for Mr Prasad to do this had been offered by Faire AJ, who gave Mr Prasad 21 days to do so. Mr Prasad had failed to pay the balance, and it was only after the expiry of the 21 day period that he had been declared bankrupt. Mr Harrison stated that Mr Prasad had steadfastly refused to pay in reacting to all attempts to recover the numerous costs orders outstanding against him.
[29] In these circumstances, if the Court had jurisdiction, I would be satisfied that there was no reviewable error in the decision of Sargisson AJ, and that grounds had not been made out on which an order annulling the bankruptcy could occur.
Dobson J
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