Shearing Services Kamupene Limited v Tarahau Farming Limited
[2020] NZHC 3352
•16 December 2020
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV 2019-488-000012
[2020] NZHC 3352
BETWEEN SHEARING SERVICES KAMUPENE
LIMITED (in liquidation) (formerly Shearing Services Limited and Te Whata Shearing Limited)
First Plaintiff
AND
CRAIG ALEXANDER SANSON and
DAVID JOHN BRIDGMAN (as liquidators of Shearing Services Kamupene Limited (in liquidation))
Second Plaintiffs
AND
TARAHAU FARMING LIMITED
Defendant
Hearing: 14 October 2020 Appearances:
G Neil for the Plaintiff
P Te Whata, lay representative for the Defendant
Judgment:
16 December 2020
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 16 December 2020 at 3.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Meredith Connell, Auckland Copy to:
Defendant
SHEARING SERVICES KAMUPENE LIMITED (in liquidation) v Tarahau Farming Limited [2020] NZHC 3352 [16 December 2020]
Introduction
[1] The plaintiffs, Shearing Services Kamupene Ltd (in liquidation), and Craig Sanson and David Bridgman, the liquidators of Shearing Services, apply to strike out an application by the defendant, Tarahau Farming Ltd, to set aside the judgment of Downs J given on 6 June 2019 holding that Tarahau Farming is liable to pay the liquidators the sum of $149,704.43 which Shearing Services is said to have advanced to Tarahau Farming.1
[2] The basis of the plaintiffs’ application is that Tarahau Farming has failed to appoint a solicitor or counsel to represent it, despite clear directions from the Court and ample opportunity to do so.
[3] Pessiman Pehimana Te Whata, a director of Tarahau Farming, applies to represent Tarahau Farming and a second defendant which Mr Te Whata added to the proceeding, namely Ngati Moerewa Hapu o Maunga Hikurangi Koporeihana Maori, and to give and call viva voce evidence in support of that application.
[4] The questions for decision at and following the hearing held on 14 October 2020 are:
(a)Should Mr Te Whata and others be permitted to give viva voce evidence?
(b)Should Mr Te Whata be permitted to represent the two defendants, Ngati Moerewa Hapu o Maunga Hikurangi Koporeihana Maori and Tarahau Farming?
(c)Should the application by Tarahau Farming to set aside Downs J’s decision of 6 June 2019 be struck out?
Relevant background
[5]There is a considerable history to the applications.
1 Shearing Services Kamupene Ltd (in liquidation) v Tarahau Farming Ltd [2019] NZHC 1280.
The companies and their shareholdings
[6] Mr Te Whata was a director and shareholder of Shearing Services and Tarahau Farming when those companies were first incorporated; Shearing Services in January 1996, initially as Te Whata Shearing Ltd, and Tarahau Farming in July 2003. Both companies were established by Mr Te Whata and others, apparently on behalf of whānau members in Northland. The whānau has been involved in farming land in Northland that Mr Te Whata says is ancestral land, although it is now general land held in freehold title. Through Shearing Services, the whānau has also provided shearing services to farms, particularly in Southland.
[7] In another proceeding, Bell AJ aptly described Tarahau Farming and the nature of its operations as follows:2
[2] As its name suggests, Tarahau Farming Limited runs a farm, a dry stock operation at Tautoro just south of Kaikohe. Its registered office is in Moerewa. The people behind the company are the Te Whata whānau. … The company's main asset is its farm. It also leases some land. There is a debt to the ANZ bank of about $300,000 secured by a mortgage. There are local authority rates of about $20,000. The family runs the farm along traditional lines relying on “mahi tahi” and “mahi aroha” where people pitch in to help as and where they can. …
[8]Later in his decision, Bell AJ stated:
[25] The company had been formed to buy back the land. The land had been owned by an earlier Te Whata family company, but it had been put in liquidation. The family had taken out the loan from the ANZ bank to finance the purchase.
…
[27] One matter came out strongly — [Mr Te Whata] would do anything to hold onto the land. The loss of the land when the earlier company was put into liquidation had been a bitter blow and the family had struggled to buy the land back again.
[9] At various times, the directorships, shareholdings and operating methods of the companies changed as those behind the companies apparently sought to incorporate principles of whānau ownership in accordance with tikanga Māori and the Te Ture Whenua Māori Act 1993. Thus, for a period the shareholding of Shearing Services
2 Commissioner of Inland Revenue v Tarahau Farming Ltd [2019] NZHC 1783.
was held largely by the Kaitiaki Ahu Whenua Trust and then by an entity known as Maunga Hikurangi Koporeihana Maori. Similarly, for a period the shares in Tarahau Farming were held by the Te Haahanga Waka Trust and Maunga Hikurangi Inc.
[10] In both cases, the shareholding of the companies reverted to Mr Te Whata in February 2013, although Mr Te Whata continues to assert that he holds the shares of Tarahau Farming on trust for Maunga Hikurangi Koporeihana Maori.
[11] Maunga Hikurangi Koporeihana Maori has no formal status under New Zealand law but Mr Te Whata asserts that it represents the collective interests of the Ngati Moerewa hapū.
Shearing Services put into liquidation
[12] In June 2016, Shearing Services was put into liquidation following non- payment of a statutory demand by the Commissioner of Inland Revenue for payment of $4,373,780.59 for outstanding assessed taxes, penalties and interest.3
[13] That demand followed an investigation by the Commissioner into the way Shearing Services accounted for PAYE for those who performed shearing and shed hand services for the company. That investigation, in turn, was followed by a report from the Commissioner’s Adjudication Unit, two decisions by the Taxation Review Authority, which partially and then fully struck out Shearing Services’ claim challenging the findings of the Adjudication Unit,4 and a decision by Mallon J declining an application for leave to extend time to appeal the decisions of the Taxation Review Authority.5
[14] In his decision appointing Mr Sanson and Mr Bridgman as liquidators for Shearing Services, Bell AJ accepted that Mr Te Whata could oppose the Commissioner’s application as a director of Shearing Services. However, Bell AJ also
3 Commissioner of Inland Revenue v Shearing Services Kamupene Ltd [2016] NZHC 1379.
4 Case 9 [2012] NZTRA 9, (2012) 25 NZTC 1-021 and Case 7 [2013] NZTRA 7, (2013) 26 NZTC
2-006.
5 Shearing Services Kamupene Ltd v Commissioner of Inland Revenue [2014] NZHC 3223.
held that, because Mr Te Whata was not a lawyer, he had no standing to act on behalf of the company in applications to set aside the statutory demand.6
Liquidators seek recovery of funds from Tarahau Farming
[15] After investigating the affairs of Shearing Services, the liquidators determined that Tarahau Farming was indebted to Shearing Services for $149,704.43.
[16] The investigation included obtaining Court orders requiring Mr Te Whata to give oral evidence and to produce company records. Me Te Whata was examined before Bell AJ on 8 February 2018.
[17] During that examination, Mr Te Whata agreed there was an informal loan agreement between Shearing Services and with Tarahau Farming which was “… to help the farm and then the farm can help the company back.” Mr Te Whata also said that some, if not all, of the loans had been paid back by mahi aroha through services provided to Shearing Services. Mr Te Whata also referred to the loans as koha.
Judgment by Downs J
[18] On 5 February 2019, Shearing Services issued a letter of demand to Tarahau Farming to repay the amount of the loans. When Tarahau Farming did not respond, Shearing Services brought the present proceeding, seeking judgment for the sum of
$149,704.43 on the basis of two alternative causes of action:
(a)The advances made by Shearing Services to Tarahau Farming were loans repayable at the dates advanced or on demand, and demand had been made; and
(b)To the extent the advances were not loans, they were transfers for inadequate consideration covered by s 298 of the Companies Act 1993 and which the liquidators could recover.
6 Above n 3, at [3]-[6].
[19] Tarahau Farming did not file a statement of defence or otherwise engage. Accordingly, the proceeding was set down for formal proof.
[20] Downs J heard the claim on 6 June 2019 and issued an oral judgment that day.7 The operative passages of the judgment were admirably brief:
[2] Mr Te Whata was examined on oath. He described the advances as loans, and inconsistently, as koha.
…
[4] Shearing Services contends its advances are repayable as a loan. So too interest. I agree. Absent the presumption of advancement, if A pays money to B then B must repay A. If B claims the money was a gift, B must prove as much. The presumption of advancement does not arise. Tarahau has not filed a statement of defence. Or evidence. The first cause of action is established.
[5] Shearing Services also contends the advances constitute transactions for inadequate consideration (under s 298 of the Companies Act 1993) as an alternative to the first cause of action. Although it is not necessary to determine this cause of action, I would have found it proved. Shearing Services disposed of property—money—to Tarahau. The dispositions occurred within the three- year period contemplated by the section. They were made to a person who falls within the section. And, value exceeds consideration. It follows the second cause of action would also be established.
(citations omitted)
Tarahau Farming appeal to Court of Appeal
[21] On 18 July 2019, Mr Te Whata lodged a notice of appeal on behalf of Tarahau Farming against Downs J’s decision.
[22] The grounds of appeal included that this was a matter of whānau hapū rights to ancestral land, property interests and tikanga Māori and that the respondent was unqualified to make assessments of the relationship between Tarahau Farming and Shearing Services. The application also referred to Tikanga Regulations, the exchange of kāwanatanga for the protection of rangatiratanga, and various other matters.
[23] Because the notice of appeal was served on the respondents after the expiry of the required period for service, Tarahau Farming applied for an extension of time
7 Shearing Services Kamupene Ltd (in liquidation) v Tarahau Farming Ltd, ave n 1..
under r 29A of the Court of Appeal (Civil) Rules 2005 (Court of Appeal Rules). That application was decided on the papers on 29 November 2019.8
[24] The Court of Appeal considered that the grounds of appeal were vague, not clearly articulated and did not inspire confidence in their prospects of success. It also noted that it was open to Tarahau Farming to apply to the High Court to set aside or vary the judgment under r 15.10 of the High Court Rules 2016.9
[25] The Court of Appeal referred to the rule in Re G J Mannix under which a lay person, even a director, may not represent a company in Court except with the leave of the Court,10 and noted that this rule extended to the filing of documents, including the notice of appeal which, under the Court of Appeal Rules, had to be signed by a lawyer.11
[26] The Court recorded it was “… troubled by the way in which the grounds of appeal advanced so far have been articulated,” and said Mr Te Whata may wish to consider the wisdom and desirability of seeking legal representation and, if so advised, filing amended grounds of appeal.12 The Court noted that that advice might extend to advice on the less costly option of applying to the High Court to set aside or vary the decision of Downs J.13
[27] The Court of Appeal granted the application for an extension of time on condition that an amended notice of appeal complying with r 30(1A) of the Court of Appeal Rules14 was filed and served by Tarahau Farming on the respondents by 14 February 2020.15 If no such notice was filed within that timeframe, the order extending time would be revoked.16 The Court reserved costs.17
8 Tarahau Farming Ltd v Shearing Services Kamupene Ltd [2019] NZCA 601.
9 At [20].
10 Re G J Mannix [1984] 1 NZLR 309 (CA).
11 At [23]-[24].
12 At [20].
13 At [25].
14 Rule 30(1A) of the Court of Appeal (Civil) Rules requires that a notice of appeal is signed by an appellant personally or by the appellant’s lawyer.
15 At [26].
16 At [27].
17 At [28].
[28] No notice of appeal complying with r 30(1A) of the Court of Appeal Rules was filed and served within the timeframe set by the Court of Appeal. Accordingly, the appeal could not proceed.
Application for costs
[29] In judgment dated 15 June 2020, the Court of Appeal granted costs in favour of Shearing Services and the liquidators.18 The Court agreed that the respondents were entitled to increased costs on the grounds that Tarahau Farming had acted unnecessarily in filing its notice of appeal and contributed unnecessarily to the time and expense of the appeal. The Court pointed in particular to Tarahau Farming’s conduct:19
… in filing the notice of appeal without having sought a rehearing in the High Court, the filing of prolix documents that contained significant irrelevant material, as well as its failure to comply with the Rules.
Application to set aside Downs J’s decision
[30] On 7 February 2020, Mr Te Whata, as director of Tarahau Farming, filed an application, without notice, to set aside Downs J’s decision.
[31]Among the grounds stated for the application were that:
(a)No consideration had been given by the liquidators to the owners’ rights in exercise of tikanga Māori customary laws, values and practices regarding their property interests and ancestral lands;
(b)The plaintiff was not qualified to assess matters of tikanga values and practices, interpreted testimony under European standards without knowledge of tikanga, and relied on annual accounts without knowledge of historical consideration given to Shearing Services.
[32] In addition, Tarahau Farming claimed set-off for services provided to Shearing Services as set out in a “Whaiwhakaaro Utu Account” containing unaccounted
18 Tarahau Farming Ltd v Shearing Services Kamupene Ltd (in liquidation) [2020] NZCA 238.
19 At [8].
consideration of “mahitahi, hangatanga, kaiwhaako, taonga, manaakitanga I te mahi atu” amounting to $1,341,640.
[33] In support of the application, Mr Te Whata filed an affidavit sworn on 7 February 2020, to which was attached the “Whaiwhakaaro Utu Account” also dated 7 February 2020.
Opposition by Shearing Services and liquidators
[34] By notice dated 21 February 2020, the plaintiffs opposed the orders sought by Tarahau Farming. The grounds of opposition included that the application was a nullity because it had not been signed by a solicitor and Mr Te Whata had no standing to act for Tarahau Farming.
Amended application by Tarahau Farming
[35] On 9 March 2020, Mr Te Whata filed an amended application on notice for orders setting aside Downs J’s judgment or, if that order was not granted, an order varying the judgment and transferring the case to the Māori Appellate Court pursuant to s 61 of the Te Ture Whenua Māori Act.
[36] The grounds for the application included some of those stated in the application of 7 February 2020 and also made reference to the Income Tax Act 2007, the Te Ture Whenua Māori Act 1995, Te Tiriti O Waitangi and customary law. Much of that material was of marginal, if any, relevance and was inappropriate in an application of this nature.
[37] Mr Te Whata affirmed a further affidavit dated 9 March 2020 in support of the amended application.
Directions by Brewer J
[38] Tarahau Farming’s application was called before Brewer J on 7 May 2020. In his minute of that date, Brewer J noted that the applicant was represented by Mr Te Whata, who was not a barrister and solicitor of the Court, and that there was no
solicitor on the record.20 Justice Brewer recorded that Mr Te Whata had ably taken him through the complexities of the application but noted that:21
The complexities are legal in nature and relate both to aspects of Tikanga Māori and their interaction with the statutes which govern the role of liquidators. Those are matters which require proper legal representation.
[39]Justice Brewer made the following directions:22
(a)The application is stayed until a solicitor can file an appearance and be the solicitor on the record responsible for the progression of the application.
(b)If there is no solicitor on the record by 4 June 2020, then the respondent can apply to have the application struck out.
Further amended application filed on behalf of Tarahau Farming
[40] By notice dated 19 June 2020 and signed by Mr Te Whata, Tarahau Farming filed an amended application to vary and set aside Downs J’s decision. The application named Ngati Moerewa Hapu o Maunga Hikurangi Koporeihana Maori as second defendant and stated that Tarahau Farming was to be represented by a named lawyer.
[41] The application sought various orders including an order recognising Mr Te Whata as “Native Assessor of Ngati Moerewa Hapu” as representative of the second defendant.
[42] The application contained a section on “representation” which referred to observations of the New Zealand Supreme Court and the Supreme Court of Canada concerning standing in relation to claims by collective groups of indigenous owners, as well as to other decisions and statutory provisions bearing on rights of representation. A section on judicial review referred to the Imperial Laws Application Act 1988, apparently for the purpose of demonstrating that powers exercised by liquidators under the Companies Act were ultra vires. A further section on the exchange of kāwanatanga for the protection of rangatiratanga referred to commentary
20 Tarahau Farming Ltd v Shearing Services Ltd (in liquidation) HC Auckland CIV-2019-488-12, 7 May 2020 (Minute No 1 of Brewer J).
21 At [3].
22 At [4].
on the conclusion of the Treaty of Waitangi, various authorities and the powers of the Māori Land Court.
[43] Again, much of the material was of marginal, if any, relevance to the application and was inappropriate in an application of this nature.
Application to strike out Tarahau Farming application
[44] By notice dated 13 July 2020, Shearing Services and the liquidators applied to strike out Tarahau Farming’s application to set aside Downs J’s decision. The grounds of the application included that:
(a)The applications to set aside Downs J’s decision had been signed by Mr Te Whata and so were a nullity because they had not been signed by a solicitor;
(b)Mr Te Whata had no standing to act for Tarahau Farming in the proceeding;
(c)Mr Te Whata had failed to comply with the directions made by Brewer J on 7 May 2020; and
(d)There would be no miscarriage of justice if Downs J’s decision were allowed to stand.
[45] In an affidavit sworn on 9 July 2020 and filed in support of the application, Mr Sanson noted that the liquidators had delayed filing their strike out application when it appeared that Tarahau Farming was in the process of engaging solicitors to act for the company, and had filed the application only after it learned that the solicitors that had been approached had not entered into an engagement to act for Mr Te Whata and Tarahau Farming.
[46] By notice dated 25 August 2020, the defendants opposed the application to strike out the proceedings.
Further directions by Brewer J
[47] On 27 August 2020 Tarahau Farming’s application was called again before Brewer J. In a minute of that date, Brewer J recalled his directions of 7 May 2020, noted that there was no solicitor on the record and that the plaintiffs had applied for strike out, and that Mr Te Whata had filed an application to represent the defendant at the hearing of its application.23 Justice Brewer also recorded that Mr Te Whata had told him that Tarahau Farming could not afford a lawyer and that applications had been made for legal aid.
[48] Justice Brewer set down the hearing of Mr Te Whata’s application for leave to represent the defendant and the application for strike out for 14 October 2020, and directed that:
[5] Mr Te Whata is to file an affidavit in which he explains the financial position of the defendant, sets out the details of the application for legal aid and the outcome of the application, and also addresses the ability otherwise of the defendant to find and instruct a lawyer. That affidavit is to be filed and served no later than 14 September 2020. The plaintiffs have to file a notice of opposition and this can be done by 21 September 2020.
Further steps prior to hearing
[49] Mr Te Whata did not file an affidavit as directed by Brewer J. Instead, on 14 September 2020, Mr Te Whata applied under r 9.17 of the High Court Rules for a viva voce hearing to testify to the evidence in support of representation and to call two witnesses.
[50] In an accompanying affidavit sworn on the same date, Mr Te Whata acknowledged that the Court had instructed him to seek legal representation but said Tarahau Farming had no funds to secure legal representation. The last paragraph of Mr Te Whata’s affidavit stated:
6.Regarding seeking legal representation, I did contact several lawyers in the Northland area. I attained the contacts from the Ministry of Justice website listings for Northland. I rang three law firms and although Henderson Reeve Law Firm Whangarei did prepare to represent [Tarahau Farming] I realised they were no longer covered
23 Tarahau Farming Ltd v Shearing Services Ltd (in liquidation) HC Auckland CIV-2019-488-12, 27 August 2020 (Minute No 2 of Brewer J).
by legal aid. Paula Wilson who worked for Henderson Reeve did prepare up to $7,000 billable hours, however she pulled out as we could not agree on issues pertaining to the case.
[51] By notice dated 21 September 2020, the plaintiffs opposed Tarahau Farming’s applications dated 19 June 2020 and 14 September 2020.
The hearing on 14 October 2020
[52] The purpose of the hearing on 14 October 2020 was to hear Mr Te Whata’s representation application and the plaintiffs’ strike out application. However, it was also necessary to hear Mr Te Whata’s application to give and to call viva voce evidence.
Application to give viva voce evidence
[53] I declined to grant Mr Te Whata’s application to give and call viva voce evidence, although I invited Mr Te Whata to address me on the issues to be decided.
[54]My reasons for declining the application were as follows.
[55] First, and as submitted by Mr Neil, counsel for the plaintiffs, Mr Te Whata had been directed by Brewer J to file and serve affidavit evidence and had failed to do so. That evidence was to address the financial position of the defendant, to set out the details of the application for legal aid and the outcome of the application, and also to address the ability or otherwise of the defendant to find and instruct a lawyer.
[56] While Mr Te Whata had proposed that his oral evidence should address the financial position of Tauhara Farming (as well as a range of broader issues), I did not consider it satisfactory to the Court or fair to the plaintiffs for Mr Te Whata to offer oral evidence on that question at a hearing when he had been directed to set out relevant matters in an affidavit to be filed and served one month before the hearing. As I said to Mr Te Whata, his failure to comply with Brewer J’s directions did not respect the Court’s processes or give the plaintiffs the opportunity to prepare appropriately for the hearing.
[57] Mr Te Whata assured the Court that he had meant no disrespect and said he was a shearer who had been required by his whānau to represent them in this and other proceedings. I also came to appreciate subsequently that Mr Te Whata had taken a similar approach in a separate liquidation proceeding concerning Tarahau Farming itself and Bell AJ had not only accepted Mr Te Whata’s evidence but found that his evidence was the better for the absence of formal preparation.24
[58] Be that as it may, it is apparent from the history of the litigation involving Shearing Services and Tarahau Farming that Mr Te Whata has experience of Court processes and should have been aware of the importance of complying with Brewer J’s directions.
[59] My second reason for declining Mr Te Whata’s application was that to do so would have compounded the difficulty already caused by Mr Te Whata purporting to represent Tarahau Farming in this proceeding when he is not a lawyer. Mr Te Whata proposed not only to give evidence himself but to call other witnesses as well.
[60] While Mr Te Whata did not formally give evidence, in his presentation to the Court he confirmed the history of the Te Whata whānau and Tarahau Farming in relation to the land as set out in Bell AJ’s decision cited at [7] and [8] above. In particular, Mr Te Whata emphasised the importance of the land to the whānau and the whānau’s determination not to lose again land that he said had first been taken by the Crown by compulsory acquisition and which had been lost again through liquidation proceedings. Mr Te Whata also explained the whānau’s reluctance to rely on lawyers because of that earlier experience.
Representation application
[61] The application of 19 June 2020 was for an order recognising Mr Te Whata “as Native Assessor of Ngati Moerewa Hapu” and as representative of the second defendant, Ngati Moerewa Hapu o Maunga Hikurangi Koporeihana Maori. At the time the application was filed, it was expected that Tarahau Farming would be represented by Henderson Reeves as stated in the application itself.
24 Above n 2 at [24].
[62] However, in his minute of 27 August 2020, Brewer J accepted that the application extended to Mr Te Whata representing Tarahau Farming, and Mr Neil and Mr Te Whata addressed the Court on that basis. Indeed, the application for Mr Te Whata to represent the second defendant was barely addressed.
Application to represent second defendant
[63] Mr Te Whata added the second defendant without obtaining an order in accordance with r 4.56 of the High Court Rules or leave in accordance with r 7.77(4). Accordingly, the second defendant is not properly a party to the proceeding.
[64] Mr Te Whata acknowledged that Maunga Hikurangi Koporeihana Maori is not a legal entity. Nor is the Ngati Moerewa Hapu. Rather, Mr Te Whata said that the shares in Tarahau Farming are held by himself on behalf of the hapū which is represented by Maunga Hikurangi Koporeihana Maori, not as a legal entity but in the arrangements the hapū has put in place.
[65] Given those acknowledgements, there is no basis for Ngati Moerewa Hapu or Maunga Hikurangi Koporeihana Maori to be a party in its own right to the proceeding. For that reason, no question arises as to whether Mr Te Whata should be recognised as the representative of the hapū or Maunga Hikurangi Koporeihana Maori, whether as Native Assessor or in his personal capacity.
[66] For these reasons, I dismiss Mr Te Whata’s application to be recognised as representative of Ngati Moerewa Hapu o Maunga Hikurangi Koporeihana Maori.
Application to represent Tarahau Farming
[67] The more significant question is whether Mr Te Whata should be recognised as a representative of Tarahau Farming.
[68] It is well established in New Zealand law that, apart from statutory exceptions, a company has no right to carry on proceedings in Court except by a solicitor. This rule was restated by the Court of Appeal in Re G J Mannix, where Cooke J reaffirmed that the rule includes the filing of documents, including the filing of applications
(writs), statements of defence and notices of appeal.25 Cooke J said the reason for the rule was that it ensures that the Courts will be served by counsel who are subject to the rules of their profession, are subject to a disciplinary code and are familiar with the methods and scope of advocacy followed in presenting arguments to the Court.26
[69] The approach set out by Cooke J in Re GJ Mannix was reaffirmed by the Court of Appeal in 2013 in Commissioner of Inland Revenue v Chesterfields Preschool Ltd, where, after citing the above paragraph, the Court of Appeal said:27
[27] We have no doubt that the rule remains in operation and to the extent described by Cooke J … . The rule provides an important mechanism by which judges may ensure that the bringing or carrying on of proceedings achieves justice and the appearance of justice for the parties.
[70] In Re G J Mannix, the Court of Appeal accepted that all Courts have a residual discretion to allow unqualified advocates to appear before them.28 The Court also accepted that such decisions should be left to the discretion of the individual judge but that the occasions for the exercise of that discretion would be likely to be the exception rather than the rule.29
[71]Cooke J stated:30
In general, and without attempting to work out hard-and-fast rules, discretionary audience should be regarded, in my opinion, as a reserve or occasional expedient, for use in emergency situations when counsel is not available or in straightforward matters where the assistance of counsel is not needed by the Court or where it would be unduly technical or burdensome to insist on counsel. Especially in minor matters, cost-saving could also be a relevant factor. A “one-man” company might be allowed to be to be represented by its owner if the Judge saw fit in a particular case. But it could not be right, for instance, to issue some sort of tacit continuing or general licence to an unqualified agent to appear in winding up or any other class of proceedings.
[72] Mr Neil submitted that the present case does not come within any of the exceptions contemplated in the above passage. I agree.
25 Above n 10, at 311.
26 At 311.
27 Commissioner of Inland Revenue v Chesterfields Preschool Ltd [2013] NZCA 53, [2013] 2 NZLR 679.
28 Above n 10, at 314 and 316.
29 At 316-317.
30 At 314.
[73] This proceeding is not an emergency situation. It began in February 2019. In addition, in November 2019 Mr Te Whata was given clear guidance from the Court of Appeal that he should seek legal representation. In May 2020, Brewer J stayed the proceeding until there was a solicitor on the record. Mr Te Whata has had plenty of prompts and plenty of time to respond to those prompts.
[74] The proceeding is not straightforward. The essence of the case for Tarahau Farming is that Shearing Services and Tarahau Farming were operated in accordance with tikanga and customary law, and that those considerations should have been taken into account when considering whether the advances made by Shearing Services to Tarahau Farming were loans or transactions to which s 298 of the Companies Act applies. As Brewer J observed in his minute of 27 August 2020, the application involves legal complexities relating to aspects of tikanga and their interaction with the statutes that govern the roles of liquidators and require proper legal representation.
[75] Because the issues are complex, cost-saving is of limited relevance. In addition, while I accept that cost is an issue for Tarahau Farming, it was not really the basis on which Mr Te Whata has sought to represent Tauhara Farming. While Mr Te Whata told the Court that Tarahau Farming had no funds to secure legal representation, the evidence in Mr Te Whata’s affidavit of 14 September 2020 falls short of establishing an inability to pay. Nor does it establish that Mr Te Whata ever made a serious effort to obtain legal aid. All it establishes is that Mr Te Whata had called three firms but had not followed up when he learned they “were not covered legal aid”, and a solicitor in another firm had ceased to act after she and Mr Te Whata “could not agree on issues pertaining to the case.”
[76] However, just because Tarahau Farming’s circumstances do not come within those contemplated by Cooke J in Re G J Mannix is not the end of the matter.
[77] Mr Te Whata told the Court on 14 October 2020 that he has been instructed by his whānau to represent its interests, and whānau members wanted him to continue in that role. Mr Te Whata explained that while he had made some effort to find a suitable lawyer, he knew that whānau members would not accept a lawyer who did not understand tikanga and the way the whānau operates. Mr Te Whata referred to the
liquidation of the company that had previously held the family land which, he said, had happened after the whānau had followed legal advice on the use of corporate structures to advance whānau interests. In other words, according to Mr Te Whata, the whānau members preferred Tarahau Farming to be represented by Mr Te Whata rather than by a lawyer.
[78] While a preference of whānau members cannot be a reason for departing from a well-established rule on the representation of companies in Court proceedings, the question that Mr Te Whata’s application raises is whether tikanga should have any bearing in deciding that application.
[79] The relevance or otherwise of tikanga was not a consideration in Re G J Mannix or in subsequent decisions such as Time Ticket International Ltd v Broughton,31 Pro-Pacific Ltd v Wilson,32 Commissioner of Inland Revenue v Chesterfields Preschools,33 and Oceanic Palms v Kiwi Rail Ltd.34 To that extent, the issue has not been considered. Nor was it addressed in the submissions of Mr Neil or, other than inferentially, in the presentation of Mr Te Whata.
[80] I have considered whether account should be taken of tikanga when weighing the applicability of the rule in Re G J Mannix to companies such as Tarahau Farming where the company is said, in effect, to be a proxy for collective ownership of assets by Māori interests who, for reasons associated with tikanga, are unwilling to be represented by lawyers. I have concluded, however, that while there may be an occasion for considering that question, this is not such an occasion. To the contrary, I am satisfied that in the present case there are strong practical reasons for not adding to the exceptions to the rule in Re G J Mannix.
[81] In Re G J Mannix, Cooke J, in further explanation of the rule, referred to the decision of Mihaka v Police where Hardie Boyes J observed that the rule:35
31 Time Ticket International Ltd v Broughton [1996] 2 NZLR 176 (HC).
32 Pro-Pacific Ltd v Wilson (1996) 9 PRNZ 687.
33 Commissioner of Inland Revenue v Chesterfields Preschools, above n 27.
34 Oceanic Palms v Kiwi Rail Ltd [2018] NZHC 679.
35 Mihaka v Police [1981] 1 NZLR 54 (HC) at 58.
… gives effect to the fact that an unqualified and inexperienced person may do more harm than good to the person he assists: if only because his ignorance of the law which may support that person’s cause.
[82] Cooke J also referred to the final report of the Royal Commission on Legal Services in England in 1979 where it was said, about litigants in person, that:
18.8 … In the great majority of cases, a litigant in person lacks the necessary knowledge to present his case properly and this adds appreciably to the difficulties of the court in ensuring that his case is properly brought out and that justice is done.
[83] The history of the current proceeding illustrates those difficulties. So far, Tarahau Farming:
(a)Did not file a defence to the plaintiffs’ original statement of claim with the consequence that Downs J entered judgment against Tarahau Farming by default;
(b)Did not file and serve the appeal against Downs J’s decision within the period prescribed in the Court of Appeal Rules;
(c)Filed grounds of appeal which the Court of Appeal considered vague, not clearly articulated and not inspiring confidence in their prospects of success, and documents which the Court of Appeal considered prolix and containing significant irrelevant material;
(d)Did not file an amended notice of appeal complying with r 30(1A) of the Court of Appeal Rules within the time period directed by the Court of Appeal;
(e)Filed the initial application to set aside Downs J’s decision on a without notice basis in circumstances where there was a proceeding on foot and counsel representing the other party and no urgency;
(f)Filed amended applications to set aside Downs J’s judgment, including during the period the proceeding had been stayed, that were also prolix
and contained similar material to that considered irrelevant by the Court of Appeal;
(g)Did not comply with the directions of Brewer J to file and serve an affidavit addressing the matters prescribed in those directions.
[84] Most of these errors or deficiencies are attributable to the fact that Mr Te Whata has no legal training, as he readily acknowledged. While I have no cause to doubt Mr Te Whata’s good faith, it can reasonably be said that in continuing to act on behalf of Tarahau Farming, Mr Te Whata has taken steps that have risked doing more harm than good to Tarahau Farming’s application and have added appreciably to the difficulties of the Court in ensuring that his case is properly brought out and that justice is done. In particular, he has jeopardised the prospects of the application because he has failed to comply with Court orders.
[85] In addition, the claim that Tarahau Farming wishes to make is both legally and factually complex and involves questions of customary Māori and constitutional law as well as company law. The claim is likely to need evidence, whether from Mr Te Whata or others, to establish the factual basis for the legal arguments. But it needs a lawyer to advance the case and the Court needs the assistance of counsel to understand the nature of those arguments.
[86] All of these reasons militate strongly in favour of requiring that Tarahau Farming be represented by a lawyer.
[87] For these reasons, I dismiss Mr Te Whata’s application to represent Tarahau Farming.
Should the application to set aside Downs J’s decision be struck out?
[88] In his minute of 7 May 2020, Brewer J invited the plaintiffs to apply to strike out Tarahau Farming’s application if there was no solicitor on the record by 4 June 2020. Responsibly, the plaintiffs delayed bringing their application until it was clear that solicitors had not been engaged to act for Tarahau Farming.
[89] Mr Neil refers to rr 1.5, 5.36 and 15.1 of the High Court Rules in support of the strike out application.
[90] Rule 1.5(2) provides that the Court may set aside a proceeding, wholly or in part, where there has been a failure to comply with the High Court Rules. Rule 5.36 sets out the requirements for solicitors to act. Under r 15.1(1), the Court may strike out all or part of a pleading if it discloses no reasonably arguable cause of action, is likely to cause prejudice or delay, is frivolous or vexatious, or is otherwise an abuse of the process of the Court.
[91] Mr Neil submits that Tarahau Farming has failed to comply with r 5.36 and refers to commentary on the rule in McGechan on Procedure, where it is said that it is implicit in the rule that a solicitor must act for a company in commencing and carrying on a proceeding, on the basis of Re G J Mannix and other decisions.36 Mr Neil also refers to Lynx Trustees Ltd v Body Corporate 68792 where (Francis) Cooke J also considered an application to strike out an application to set aside a statutory demand that had been made on behalf by a body corporate by a person who was not a solicitor.37
[92] As the Court of Appeal said in Commissioner of Inland Revenue v Chesterfields Preschools, in New Zealand, it is implicit rather than explicit in the High Court Rules that a company must be represented by a solicitor at all stages of the proceeding.38 The Court said:39
We are satisfied that the rule in New Zealand is that a solicitor must act for a company in commencing and carrying on a proceeding, subject to the discretion of the court.
[93] On that basis, Tarahau Farming is not in compliance with the High Court Rules. There is no solicitor acting and the Court has not exercised its discretion to allow an exception to that requirement.
[94] However, r 1.5(1) provides that a failure to comply with the requirements of the High Court Rules must be treated as an irregularity and does not nullify the
36 A C Beck and others McGechan on Procedure (online ed, Thomson Reuters) at HR 5.36.02.
37 Lynx Trustees Ltd v Body Corporate 68792 [2019] NZHC 945.
38 Above n Error! Bookmark not defined., at [33].
39 At [33].
proceeding or any step taken in the proceeding. As Cooke J said in Lynx Trustees, the consequence of non-compliance with the Rules is not that non-compliant actions are a nullity. Rather, once an error or deficiency has been identified, it is for the Court to decide what relief should be granted.40 In that case, as in this proceeding, the commencement of a proceeding by a person who is not a solicitor is treated as a valid and effective act unless and until it is set aside.41
[95] In Lynx Trustees, Cooke J decided not to strike out the proceeding because, among other reasons, the deficiency of commencing a proceeding in the name of a company without a solicitor had been largely rectified. By the time of the hearing the applicant had a solicitor on the record.42 Other considerations to which Cooke J had regard were the tight timeframes that apply to the setting aside of statutory demands and the fact that the respondent did not contend there was no substance to the application.43
[96] As Mr Neil submits, the situation in the present proceeding is rather different. The deficiency has not been remedied. It continues despite the clear guidance from the Court of Appeal in November 2019 that Mr Te Whata needed to instruct a lawyer and despite the directions given by Brewer J in May 2020. At the hearing on 14 October 2020, Mr Te Whata made it clear that he seeks to represent Tarahau Farming irrespective of that guidance and directions.
[97] Nor is there any issue of tight timeframes in this proceeding. There is no particular urgency in this proceeding.
[98] The much more difficult question is whether there is substance to the application to set aside Downs J’s decision.
[99] Mr Neil submits that Tarahau Farming’s application is unmeritorious and that no miscarriage of justice will occur if the application is struck out. He submits that Tarahau Farming has failed to identify any substantial ground of defence to the claim
40 Above n 37, at [7].
41 At [8].
42 At [16].
43 At [17]-[18].
upon which Downs J’s decision was entered, that decision was regularly obtained and was entered with regard to admissions by Mr Te Whata when being examined on oath.
[100] That submission does not address the essence of Tarahau Farming’s application.
[101] While the application and revised applications filed by Mr Te Whata have been lengthy and have contained irrelevant and inappropriate material, the essence of the Tarahau Farming’s application is clear enough. As I said at [74], it is that Downs J did not consider whether those involved in Shearing Services and Tarahau Farming managed those businesses in accordance with tikanga and customary law, and that those considerations should have been taken into account when considering whether the advances made by Shearing Services to Tarahau Farming were loans or transactions to which s 298 of the Companies Act applies.
[102] The factual basis for part of that position is apparent. Apart from the sceptical reference to koha, Downs J’s decision makes no reference to tikanga. That is not surprising because Tarahau Farming took no part in the hearing so the argument that Tarahau Farming seeks to make in its application was not made to Downs J.
[103] To that extent, I am satisfied that Tarahau Farming has put forward a reasonably arguable case, even if it has yet to be established, as a matter of fact, that Shearing Services and Tarahau Farming operated according to tikanga.44 Assuming that Tarahau Farming were able to establish the factual basis for the claim, the question that would then arise is whether that tikanga and related matters should be taken into consideration when assessing whether the advances made by Shearing Services to Tarahau Farming were loans or transactions to which s 298 of the Companies Act applies. That is not a straightforward question, as Brewer J acknowledged in his minutes of 7 May and 27 August 2020.
44 Just because Mr Te Whata asserts that Tarahau Farming and Shearing Services operated according to tikanga does not make it so. If Tarahau Farming wanted to advance that case, it would need to file evidence, possibly including expert evidence, to establish what practices were followed and that those practices were according to tikanga. Mere assertions about how the companies operated would be unlikely to be sufficient. The same would be likely to be the case with a “Whaiwhakaaro Utu Account” that was clearly put together well after the events to which it relates.
[104] In other words, Tarahau Farming would be likely to face substantial evidential and legal challenges in making the case that Downs J’s decision should be set aside. However, just because it would face those challenges does not make the case unmeritorious or frivolous. In my view, there may well be real issues that warrant the Court’s attention.
[105] However, the above considerations do not change the reality that Tarahau Farming has failed to appoint a lawyer to represent it in its application despite clear guidance from the Court of Appeal and direct instructions from the High Court that it must do so. Nor has Tarahau Farming established that it is unable to appoint a lawyer. As I have held, Mr Te Whata’s evidence falls short of establishing an inability to pay or that he made a serious effort to obtain legal aid. I understood from Mr Te Whata’s presentation to the Court that he and those he represents prefer Tarahau Farming to be represented by Mr Te Whata rather than a lawyer.
[106] In these circumstances, I am satisfied that the maintenance of the application by Tarahau Farming to set aside Downs J’s judgment in circumstances where Tarahau Farming has repeatedly failed to appoint a lawyer to represent its interests would cause delay and would be an abuse of the Court’s process and should be struck out.
[107] In reaching that conclusion, I am cognisant that the power to strike out proceedings should be exercised sparingly, particularly in a case in which the law may be developing.45 However, the consequence of not striking out the application would be to leave on foot an application by a company that has declined to appoint counsel despite a Court order to do. That would be a most unsatisfactory result.
Next steps
[108] The effect of striking out the application is to leave in place Downs J’s decision that Tarahau Farming owes a debt to the plaintiffs for the sum of $149,704.43 plus any interest that may be payable. What happens next has yet to be determined. I recognise, however, that if Tarahau Farming does not pay that amount, an application for liquidation is likely to follow.
45 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33].
[109] In that regard, it is appropriate to recall the observations of Bell AJ when he declined the earlier application to liquidate Tarahau Farming:46
[30] The effects of liquidation would be severe, as it is likely to separate the Te Whata whānau from their ancestral land. In a normal insolvency context, the sale of an asset ought not to matter. If a business has failed because of insolvency, assets should be liquidated so that they can be sold to someone else able to use them more profitably. That approach is inappropriate here. I do not need to refer this case to the Māori Appellate Court to understand the importance of this family's ties to their ancestral land. It goes to their sense of where they belong; their tūrangawaewae. The loss of land leads to a loss of identity. That is recognised in statute. Te Ture Whenua Māori Act makes that clear. It is intended to facilitate and promote the retention, use, development and control of Māori land as he taonga tuku iho by Māori. That is one piece of legislation where Parliament sought to give effect to the principles of the Treaty of Waitangi, especially Article 2. The tax legislation and the Companies Act say nothing about the Treaty, but that does not matter. In a case between the Crown and Māori where retention of land in the hands of Māori is in issue, it is appropriate to take Treaty principles into account, even if the legislation is silent. In Huakina Development Trust v Waikato Valley Authority Chilwell J gave the lead on taking the Treaty into account in the absence of express statutory provision. Other legislation with Treaty references could be considered to give guidance. In Barton -Prescott v Director-General of Social Welfare Gallen and Goddard JJ said:
“We are of the view that since the Treaty of Waitangi was designed to have general application, that general application must colour all matters to which it has relevance, whether public or private and that for the purposes of interpretation of statutes, it will have a direct bearing whether or not there is a reference to the treaty in the statute.”
[31] In exercising a discretion where the effects of the court's order may separate Māori from their ancestral land, it is appropriate to take into account the importance of keeping ancestral land in Māori ownership. If a liquidation order were made, the liquidator is likely to put the land up for sale, and the proceeds of sale would be applied to pay the mortgage debts, the local authority rates, the costs of the liquidation and creditors, before any surplus could be made available for the shareholders. That would not be an adequate substitute for the loss of the land. There is no assurance that the family would be able to buy the land back again. Given this dire consequence, it makes sense to give the company more time to save the situation.
(citations omitted)
[110] Given the severity of the consequences of liquidation, if liquidation proceedings are commenced I strongly urge the directors of Tarahau Farming not to persist in their practice of seeking to represent themselves.
46 Above n 2.
Result
[111]For the reasons given:
(a)I declined Mr Te Whata’s application to give and to call viva voce evidence at the hearing on 14 October 2020;
(b)I decline Mr Te Whata’s application to represent Tarahau Farming and Ngati Moerewa Hapu o Maunga Hikurangi Koporeihana Maori in this proceeding; and
(c)I strike out Tarahau Farming’s application to set aside Downs J’s decision of 6 June 2019.
Costs
[112]The plaintiffs are entitled to costs on a 2B basis.
G J van Bohemen J
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