Goodwin v Copland [2014] NZCA 33 (25 February 2014)

Last Updated: 5 March 2014

IN THE COURT OF APPEAL OF NEW ZEALAND
CA195/2013 [2014] NZCA 33
BETWEEN	WAYNE ERNEST GOODWIN Appellant
AND	BRIAN STEWART COPLAND Respondent

Counsel:	A Beck for Appellant JCD Guest for Respondent
Judgment (On the Papers):	25 February 2014 at 2.15 pm

JUDGMENT OF MILLER J
(Review of Registrar’s decision)

1. The application to review the Registrar’s decision refusing to dispense with security for costs is dismissed.
2. The applicant is to pay the sum of $5,880 by way of security for costs within 20 working days of the date of this judgment.

____________________________________________________________________

REASONS

Introduction

[1] Mr Goodwin has filed an appeal from a decision of Associate Judge Matthews that adjudicated him bankrupt.^[1] He owes money as a judgment debtor to Mr Copland, the respondent in these proceedings and the judgment creditor.

Background

[2] In May 2006, the parties and an associated company settled a proceeding that had been issued in the High Court at Dunedin. The terms of that settlement required Mr Goodwin to pay Mr Copland USD 495,000, 30,000 of which was for costs. The bulk of the payment was due on 29 September 2006 and the costs component a month later.
[3] Neither payment was made so in October 2006 Mr Copland obtained a judgment in his favour ordering payment as required by the settlement agreement. With no payment forthcoming, Mr Copland on 23 July 2012 applied for the issue of a bankruptcy notice and substituted service orders. The bankruptcy notice was served by substituted means on 31 July 2012. On 15 August of that year Mr Copland applied to adjudicate Mr Goodwin bankrupt.
[4] Mr Goodwin opposed the bankruptcy on the basis that there was an application before the High Court to set aside the judgment on which it was based. That application was dismissed by Associate Judge Osborne on 30 November 2012.^[2] Following two adjournments, a defended hearing occurred on 19 March 2013. Mr Goodwin opposed the adjudication on three grounds:

• (a) The bankruptcy notice was not served properly.
• (b) He had a live counterclaim that was not able to be raised in the judgment ordering payment.
• (c) It was an abuse of process for Mr Copland to proceed with a bankruptcy application knowing he was in breach of the agreement on which the debt was based.

[5] Associate Judge Matthews found that the substituted service order should not have been made as the required evidentiary foundation was not established.^[3] The other two grounds failed. The Judge went on to consider whether, in his discretion, the Court should refuse to adjudicate Mr Goodwin bankrupt.^[4] The Judge decided the discretion should not be exercised in Mr Goodwin’s favour.^[5]
[6] Mr Goodwin filed a notice of appeal on 4 April 2013 detailing six grounds. These grounds were that the Court was wrong to hold:

• (a) a bankruptcy notice was a document required to be served under the High Court Rules and that there was jurisdiction to order substituted service;
• (b) Mr Copland had established the requirements in s 17 of the Insolvency Act 2006 regarding a failure to comply with a bankruptcy notice;
• (c) the substituted service order did not prejudice Mr Goodwin;
• (d) Mr Goodwin’s cross-claim had no substance;
• (e) there was no basis for the exercise of the discretion to refuse adjudication under s 37 of the Insolvency Act; and
• (f) Mr Goodwin ought to be adjudicated bankrupt.

The Registrar’s decision

[7] On 23 December 2013 the Registrar of the Court of Appeal declined an application to dispense with security for costs in respect of his appeal. The decision records that Mr Goodwin was unsuccessful in obtaining legal aid in his appeal. Mr Goodwin sought to dispense, or reduce, security because he is an undischarged bankrupt and should not be denied access to the courts. The respondent opposed the application because he believed Mr Goodwin could afford counsel as he has other live appeals and his status as an undischarged bankrupt does not prevent him acquiring money.
[8] The Registrar recorded that impecuniosity alone is not a sufficient reason to dispense with security. Exceptional circumstances and the interests of justice must justify such a course. The decision also records no financial information has been provided in support of the application. The Registrar did not accept the case raised exceptional circumstances nor was it an appeal of public importance or significance. It was also necessary to protect Mr Copland in case costs were awarded against Mr Goodwin.

The review

[9] On 14 January 2014 Mr Goodwin sent a letter to the Court objecting to the Registrar’s decision. By way of minute on 7 February O’Regan P recorded, amongst other administrative matters, this constituted an application for review of the Registrar’s decision.^[6] The file was referred to me for determination. Mr Goodwin’s letter details various grounds for review including: malicious prejudice; Mr Copland’s alleged association with a man convicted of fraud; impecuniosity; considerable public and private interest; false claims made by Mr Copland; and the interests of justice.

General principles of security for costs

[10] Security for costs is waived where it is in the interests of justice to do so. To justify waiver there must be exceptional circumstances. As set out in Jong v Yang:^[7]

[8] In the normal course, appellants in civil proceedings in this Court are required to pay security for costs.^[8] If an appellant wishes to apply to the Registrar for a waiver of security, he or she must do so within 20 days of filing the appeal.^[9] The Registrar may vary or waive security “if satisfied that the circumstances warrant it”.^[10] A party who is dissatisfied with the Registrar's decision may apply to a Judge for a review of the Registrar's decision. Such an application must be made within 10 working days after the decision,^[11] although a Judge may extend that time limit.^[12]

[9] Security for costs will be waived where it is in the interests of justice to do so. Given that the normal rule is that security must be provided, there will need to be some exceptional circumstance to justify waiver.^[13] The circumstances of the appeal are relevant, in the sense that the appellant must honestly intend to pursue it and it must be arguable – respondents should not face the threat of hopeless appeals without provision for security. The importance of the issues raised in the appeal will be significant, as will the question whether there is any public interest in having them determined.^[14] Impecuniousity alone is not usually sufficient to justify a waiver, but may be reason to reduce the quantum of security.^[15]

Discussion

[11] The criteria for waiver of filing fee and dispensing for security for costs are different. The filing fee was waived for want of income, but that alone does not justify dispensing with security for costs. It is but one factor, albeit an important one. The respondent’s interests are relevant, because the security protects his costs. Further, the respondent suggests that Mr Goodwin may have resources accessible to him. He has adverted to the possibility that he may be able to borrow from family.
[12] The points Mr Goodwin addresses in his letter of 14 January 2014 do not sufficiently justify dispensing with security. The appeal is arguable, but the issue is not one of general or public importance. It concerns an adjudication in bankruptcy where, as Mr Goodwin has noted, the only creditor is Mr Copland and the prospects of challenging the underlying debt do not appear strong.
[13] In such circumstances it would not be in the interests of justice to dispense with security.
[14] Counsel for Mr Goodwin in a letter dated 4 December 2013 referred to a decision of Arnold J that reduced security by 75 per cent.^[16] This decision was not referred to in the Registrar’s decision. However, that case concerned a judicial review of a refusal to grant a residence visa to an Ethiopian man whose wife was a New Zealand citizen. Costs might well not be awarded in such a case.

Result

[15] The application to review the Registrar’s decision refusing to dispense with security for costs is dismissed. Mr Goodwin must pay the sum of $5,880 by way of security for costs within 20 working days of the date of this judgment.

Solicitors:
Downie Stewart, Dunedin for Respondent

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^[1] Copland v Goodwin [2013] NZHC 652.

^[2] Copland v Goodwin [2012] NZHC 3211.

^[3] At [53].

^[4] Insolvency Act 2006, s 37.

^[5] At [59].

^[6] Minute of O’Regan P dated 7 February 2014.

^[7] Jong v Yang [2010] NZCA 343.

^[8] Court of Appeal (Civil) Rules 2005, r 35(2).

^[9] Rule 35(3) and (6).

^[10] Rule 35(6).

^[11] Rule 7(3).

^[12] Rule 5(2).

^[13] Fava v Zaghloul [2007] NZCA 498, (2008) PRNZ 943 at [9].

^[14] Creser v Official Assignee CA196/05, 12 June 2006 at [29].

^[15] Fava v Zaghloul, above n 13, at [9]; Easton v Broadcasting Commission [2009] NZCA 252 at [5].

^[16] Ibrahim v Associate Minister of Immigration [2012] NZCA 229.