Bioletti v Commissioner of Inland Revenue [2013] NZCA 465 (4 October 2013)

Last Updated: 9 October 2013

IN THE COURT OF APPEAL OF NEW ZEALAND
CA634/2013 [2013] NZCA 465
BETWEEN	JEREMY NEWLAND BIOLETTI Applicant
AND	THE COMMISSIONER OF INLAND REVENUE Respondent

Hearing:	2 October 2013
Court:	O’Regan P, Panckhurst and MacKenzie JJ
Counsel:	Applicant in person A Goosen for Respondent
Judgment:	4 October 2013 at 2.45 pm

JUDGMENT OF THE COURT

A The application for suspension of the order of adjudication is dismissed.

B Costs are reserved.
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REASONS OF THE COURT

(Given by O’Regan P)

[1] In a judgment dated 21 August 2013, Lang J made an order adjudicating the applicant, Mr Bioletti, bankrupt on the basis that he was insolvent and unable to pay his debts as they fell due.^[1] The order of adjudication was made on the application of the first respondent, the Commissioner of Inland Revenue. The applicant has amassed tax arrears of approximately $550,000.
[2] The applicant has filed an appeal against the judgment of Lang J and now seeks a suspension of his adjudication pending appeal. The application is made pursuant to s 416 of the Insolvency Act 2006. Section 416(1) provides that such applications may be made to the High Court or the Court of Appeal. The application should have been made to the High Court in the first instance, for the reasons given by this Court in the context of stay applications in Salem Ltd v Top End Homes Ltd.^[2] However, the matter is now before us and we have heard argument on it so we will deal with it.
[3] The application for suspension is similar in nature to an application for a stay, and it is convenient to deal with it by reference to the factors applicable to stay applications as set out in this Court’s decision in Keung v GBR Investment Ltd.^[3]
[4] The first factor is whether the applicant’s right of appeal will be rendered nugatory if no stay is given. In the present case the appeal right will not be rendered nugatory. Mr Bioletti said that his ability to practise law may be compromised, depending on a decision of the Practice Approval Committee of the New Zealand Law Society and a decision of the Official Assignee. It is not expected that the position will be known for another few weeks, so Mr Bioletti argued that it was premature to say his appeal rights had not been rendered nugatory. We disagree. His ability to practise is obviously very significant to him and we do not underestimate it as a factor. But his appeal right will remain extant whether he is permitted to practise on his own account or not.
[5] The second factor is the bona fides of the applicant as to the prosecution of the appeal. There is no suggestion that Mr Bioletti will not pursue his appeal in good faith.
[6] The third factor is whether the successful party will be injuriously affected by the stay. Mr Goosen, counsel for the Commissioner, argued that the Commissioner could be adversely affected if Mr Bioletti is allowed to continue to carry on his practice, free of the constraints imposed by bankruptcy, because of the possibility of a further increase in the debt owed to the Commissioner. He pointed out the significant increase in the debt owed to the Commissioner in the months leading up to the adjudication. We accept that there is some risk in that regard.
[7] The fourth factor is the effect on third parties. None is suggested in this case.
[8] The fifth factor is the novelty and importance of the questions involved. Mr Bioletti wishes to pursue an argument that the recent changes to the legal aid system, which have had a significant adverse effect on his practice and ability to earn income, was a significant cause of his bankruptcy and that it is therefore not appropriate that an adjudication be made on the petition of another organ of the Crown, namely the Commissioner. We accept that this is a novel argument, but it is one which is particular to Mr Bioletti’s own circumstances and it does not have any importance beyond the present case. In addition, there does not appear to be, at least at first blush, a significant prospect of the argument being accepted.
[9] The sixth factor is the public interest in the proceedings. We do not see this as a factor of particular significance.
[10] The seventh factor is the overall balance of convenience. We see this as weighted considerably towards the Commissioner. Mr Bioletti has not established any existing prejudice, apart from the unresolved issues in relation to his ability to practise. The amount of the debt to the Commissioner is considerable and the Commissioner is entitled to the benefit of the judgment of the High Court. The debt has increased in recent times, and the Commissioner should not be exposed to a further increase in this debt in the event that the bankruptcy does not take effect until after the appeal is resolved.
[11] The last factor is the strength of the appeal. We have commented on this above at [8].
[12] Weighing these factors, we consider the overall balance does not favour the grant of a suspension of the order of adjudication. The application is dismissed.
[13] Mr Bioletti should ask for his appeal to be placed on the fast track if he wishes to have it resolved quickly. In saying that, we do not prejudge the outcome of the application for entry on the fast track in the event that one is made.
[14] We reserve costs. These can be determined in the context of the applicant’s appeal.

Solicitors:
Crown Law Office, Wellington for Respondent

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^[1] Commissioner of Inland Revenue v Bioletti [2013] NZHC 2131.

^[2] Salem Ltd v Top End Homes Ltd (2005) 18 PRNZ 122 at [15].

^[3] Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11].