Taylor v Bravo
[2021] NZCA 512
•6 October 2021 at 3 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA689/2020 [2021] NZCA 512 |
| BETWEEN | WARREN WILLIAM DENNIS TAYLOR |
| AND | PAUL HARRIS VICTOR BRAVO |
| Counsel: | Appellant in Person |
Judgment: | 6 October 2021 at 3 pm |
JUDGMENT OF COURTNEY J
(Review of Registrar’s decision)
The application for review of the Deputy Registrar’s decision is declined.
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REASONS
Introduction
Mr Taylor has appealed the decision of Downs J striking out his claim against Mr Bravo on the ground that it was time-barred.[1] Security for costs was set at $7,060. Mr Taylor applied to dispense with the security for costs requirement on the basis that he is impecunious and that he was bankrupted as a result of Mr Bravo’s actions.
[1]Taylor v Bravo [2020] NZHC 2565.
Mr Bravo opposes the application for dispensation. He denies any responsibility for Mr Taylor’s bankruptcy. Further, he points out that any claim Mr Taylor may have had vested in the Official Assignee upon bankruptcy and did not re-vest in him upon his discharge.[2] Mr Bravo also points out that he has not yet been paid the costs awarded to him of $9,104 following the High Court proceedings.
[2]Insolvency Act 2006, s 101; and Paul Heath and Mike J Whale (eds) Heath and Whale on Insolvency (online ed, LexisNexis) at [4.11].
The application was considered by a Deputy Registrar and declined. Mr Taylor has applied for a review of the Deputy Registrar’s decision.
The basis on which security for costs may be dispensed with
Security for costs is payable as a matter of course in respect of all civil appeals unless the appellant is legally aided.[3] The requirement may, however, be dispensed with.[4] The principles applying to a request for dispensation are set out in Reekie v Attorney-General.[5] They reflect the “conundrum” that the poorer the plaintiff the more exposed the defendant is as to costs, which justifies security being required, but on the other hand, a poorer plaintiff is less likely to be able to provide security, which can result in worthy appeals being stifled.[6]
[3]Court of Appeal (Civil) Rules 2005, rr 35 and 36.
[4]Rule 35(6)(c).
[5]Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737.
[6]At [2].
One of the grounds on which security for costs may be dispensed with is impecuniosity, but security should only be dispensed with on this ground if “it is right to require the respondent to defend the judgment under challenge without the usual protection as to costs provided by security”.[7] The purpose of exercising the discretion in cases of impecuniosity is two-fold: (1) to preserve access to this Court by an impecunious appellant in the case of an appeal that a solvent appellant would reasonably wish to prosecute; and (2) to prevent the use of impecuniosity to secure the advantage of being able to prosecute an appeal which would not sensibly be pursued by a solvent litigant.[8] This assessment involves consideration of whether the benefits (economic or otherwise) would be outweighed by the costs (economic or otherwise).
The Deputy Registrar’s decision
[7]At [21] and [31].
[8]At [35].
The Deputy Registrar’s decision dated 28 July 2021 contains a brief review of the grounds for Mr Taylor’s application and Mr Bravo’s opposition and then (correctly) sets out the relevant legal principles.
The Deputy-Registrar was satisfied on the information provided by Mr Taylor that he was impecunious. Mr Bravo does not suggest otherwise. Mr Taylor had not applied for legal aid but the Deputy Registrar accepted that he had a reasonable explanation for not doing so, having received legal advice that legal aid would not be available.
The Deputy Registrar’s decision turned on the assessment as to whether a reasonable and solvent litigant would proceed with this appeal. On the face of it there would be significant potential benefits that would outweigh the potential costs of the appeal given that the statement of claim seeks over $1.6 million. However, the Deputy Registrar was unable to see any realistic prospect for success by Mr Taylor in the proceedings.
The Deputy Registrar noted, first, that the claim had been struck out as having been barred by the Limitation Act 1950. She noted this Court’s earlier decision granting an extension of time to appeal, in which it expressed the view that the claim, as it was perceived by the High Court Judge, would have little merit.[9] The extension of time was granted on the basis that it was possible that the true nature of Mr Taylor’s claim had not been fully appreciated in the High Court, given his lack of legal representation.[10] However, that decision did no more than suggest that the proposed appeal could not be dismissed as entirely hopeless.
[9]Taylor v Bravo [2021] NZCA 162 at [11].
[10]At [11]–[12].
But in any event, the Deputy Registrar accepted that any claim arising from the circumstances that are the subject of the proceeding would have vested in the Official Assignee on bankruptcy and did not re-vest in him on discharge. In those circumstances she saw no realistic prospect of success and did not consider that a reasonable and solvent litigant would proceed with it.
Review of the decision
In his request for a review of the Deputy Registrar’s decision Mr Taylor repeated his assertion that his bankruptcy was the result of Mr Bravo’s actions. In relation to the effect on any claim of his bankruptcy Mr Taylor said:
It cannot be stated that my right to a claim was extinguished when it vested in the Official Assignee. This has not been tested in Court. Mr Bravo cannot assume the position of the Official Assignee without his verification. It is in the Official Assignee’s interest for my case to proceed without his cost. Mr Bravo had every opportunity to pursue the involvement of the Official Assignee but chose not to. With this complete lack of action by Mr Bravo the possible involvement of the Official Assignee cannot be a reason to reject my application to dispense with security for costs.
Mr Taylor does not accept that the test applied by the Deputy Registrar, as to whether a reasonable and solvent litigant would proceed with the appeal, is relevant.
In our view the Deputy Registrar did not make any error in her assessment of Mr Taylor’s application. It is apparent from the principles explained above that assessment was properly made against what a hypothetical reasonable and solvent litigant would do. If an appeal is one that is so lacking in merit that a reasonable and solvent litigant would not advance it then it is clearly unfair for a respondent to be required to defend the appeal, knowing that costs will be unlikely to be recovered.
The Deputy Registrar is correct regarding the effect of bankruptcy on any claim Mr Taylor may have had at the relevant time. As a matter of law a litigation right is property that vests in the Official Assignee upon bankruptcy.[11] It does not re-vest upon release from bankruptcy.[12] In essence, the claim is no longer Mr Taylor’s to advance. In these circumstances a reasonable and solvent appellant would certainly not pursue the appeal.
[11]Insolvency Act, ss 3 definition of “property” and 101; and Heath and Whale, above n 2, at [4.13] and [4.19].
[12]Heath and Whale, above n 2, at [4.11].
The application for a review of the Deputy Registrar’s decision is declined.
Solicitors:
Sanderson Weir, Auckland for Respondent
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