Ward v Ward

[2021] NZCA 115

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA160/2021
 [2021] NZCA 115

BETWEEN	RUSSELL STUART WARD Appellant
AND	CHRISTOPHER ALLAN WARD AND DIANE LORRAINE JAMES Respondents

Hearing:	1 April 2021
Court:	Courtney and Goddard JJ
Counsel:	Appellant in person A M Kalinowski for Respondents
Judgment:	14 April 2021 at 2.00 pm

JUDGMENT OF THE COURT

AThe application for an order suspending the appellant’s adjudication as a bankrupt is declined.

BThe appellant must pay costs to the respondents for a standard application on a band A basis, with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Goddard J)

Background

1. On 15 March 2021, Associate Judge Andrew made an order that if the appellant, Mr Russell Ward, did not pay to the respondents the sum of $13,145 together with costs of $2,084 (total $15,229) by 4.00 pm on 30 March 2021, then Mr Russell Ward would be adjudicated bankrupt (High Court bankruptcy judgment).[1]  In the event that payment was not made, the order of adjudication would take effect on 31 March 2021 at 3.00 pm.[2]  The sum of $13,145 referred to in that order was a judgment debt payable under an order for costs made in the High Court on 30 April 2020 (High Court costs judgment),[3] which Mr Russell Ward had not paid. 

   [1]Ward v Ward [2021] NZHC 510 [High Court bankruptcy judgment] at [32].

   [2]At [33].

   [3]Ward v Ward [2020] NZHC 844.

2. Mr Russell Ward did not make the required payment.  So with effect from 3.00 pm on 31 March 2021, he was adjudicated bankrupt.

Application for stay/suspension of adjudication

1. Mr Russell Ward has filed an appeal to this Court from the High Court bankruptcy judgment.[4]  He filed an application in the High Court for an order suspending his adjudication until the appeal is decided.  That application was declined.[5]  He then filed an application in this Court for a stay of the High Court bankruptcy judgment, pending the appeal of that judgment.  That application is opposed by the respondents.

   [4]This appeal has not yet been set down for hearing.

   [5]Ward v Ward [2021] NZHC 649.

2. Section 416 of the Insolvency Act 2006 governs the suspension of adjudication pending appeal.  It provides:

   416     Suspension of adjudication pending appeal

   (1)If an appeal has been filed against an order of adjudication, the bankrupt or any other interested person may apply to the court or the Court of Appeal for an order suspending the adjudication until the appeal is decided.

   (2)The court or Court of Appeal may suspend the adjudication on the conditions that it thinks appropriate, including conditions as to anything done or decided, or that ought to have been done or decided, by any person in the period between the adjudication and the order suspending adjudication.

   (3)The court or the Court of Appeal may at any time make an order as it thinks appropriate as to anything done or decided, or that ought to have been done or decided, by any person in the period between the adjudication and the date when the appeal is decided if—

   (a)the adjudication has been suspended and the appeal fails; or

   (b)the adjudication has not been suspended and the appeal succeeds.

3. We will treat Mr Russell Ward’s application for a stay as an application for suspension of his adjudication under s 416, as that is the relevant statutory provision. 

Relevant principles

1. As this Court explained in Lindsay v Vaucluse Holdings Ltd a person who has been adjudicated bankrupt can pursue an appeal against the order of adjudication without any need for that order to be suspended in the meantime.[6]  An appeal can proceed even though there has been no suspension.  Indeed, as this Court said, it may often be contrary to the public interest and the interests of creditors to have a suspension of adjudication pending the hearing of the appeal.[7]

   [6]Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999 at [4].  See also Zhang v Westpac New Zealand Ltd [2019] NZCA 682 at [9].

   [7]Lindsay v Vaucluse Holdings Ltd, above n 6, at [4]; and Zhang v Westpac New Zealand Ltd, above n 6, at [11].

2. As this Court went on to explain, suspension of adjudication is not necessary to enable an appeal to be pursued against a judgment debt that led to the adjudication.  If an appeal against the relevant judgment has merit, the Official Assignee can pursue it in the name of the bankrupt.[8]  If there is a dispute as to whether that should be done, the assistance of the Court may be sought.

   [8]At [5].

3. The fact that the debtor will endure the consequences of bankruptcy pending an appeal is not of itself a basis to suspend adjudication.  Suspension of adjudication is not an automatic consequence of filing an appeal.  The debtor must identify some additional factors that would result in irreversible prejudice or unfairness to the debtor if the bankruptcy proceeds in the normal way pending determination of the appeal.[9]

Decision

[9]At [6]; and Zhang v Westpac New Zealand Ltd, above n 6, at [11].

1. A suspension of adjudication is not necessary to enable Mr Russell Ward to pursue his appeal against the High Court bankruptcy judgment.  Nor is a suspension necessary to enable an appeal to be pursued in relation to the High Court costs judgment that resulted in Mr Russell Ward’s adjudication.  We do however note that no such appeal has yet been filed, and the time for appeal has long expired.  Nor has a stay of that judgment been sought. 

2. In this case, Mr Russell Ward’s application for a stay and the affidavit he has filed in support of that application focus on the grounds for his challenge to the High Court bankruptcy judgment.  Those grounds include a claim that he has a set‑off against the judgment debt owed to the respondents, and various concerns he has expressed about the hearing of the bankruptcy proceedings before the Associate Judge.  Mr Russell Ward has not identified any special prejudice to him if a suspension is not granted, over and above the normal consequences of adjudication.  Nor has he identified any other factors supporting a suspension.  At the hearing of this application, we asked him if he could identify any such factors, but he was not able to do so, apart from reiterating his grounds for appealing against the High Court judgment.  As we explained at the hearing, he will have the opportunity to argue those points at the hearing of his substantive appeal.  But they are not grounds for suspending his adjudication pending the hearing of his appeal.

3. In the absence of any good reason for a suspension of Mr Russell Ward’s adjudication pending appeal, the application for a suspension must be declined.

Result

1. The application for an order suspending his adjudication as a bankrupt is declined.

2. The appellant must pay costs to the respondents for a standard application on a band A basis, with usual disbursements.

Solicitors:
Smith and Partners, Auckland for Respondents