Banks v Grey District Council [2017] NZCA 216 (26 May 2017)

Last Updated: 15 June 2017

IN THE COURT OF APPEAL OF NEW ZEALAND
CA81/2017 [2017] NZCA 216
BETWEEN	DOUGLAS BANKS AND CHRISTINE SANDRA BANKS Appellants
AND	GREY DISTRICT COUNCIL Respondent

Counsel:	Appellants in person J Shackleton and N A Taylor for Respondent
Judgment: (On the papers)	26 May 2017 at 10.00 am

JUDGMENT OF FRENCH J
(Review of Registrar’s Decision)

1. The application for review of the Registrar’s decision dispensing with payment of security for costs is granted.
2. The appellants are ordered to pay security for costs in the sum of $6,600 within 20 working days.

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REASONS

Introduction

[1] Mr and Mrs Banks have filed an appeal against a decision of Associate Judge Matthews adjudicating them bankrupt.^[1] Security for costs on the appeal was set at $6,600 but on application by Mr and Mrs Banks, the Registrar dispensed with payment of security.
[2] The respondent, the Grey District Council, now applies for a review of the Registrar’s decision. Mr and Mrs Banks oppose the review and have filed submissions seeking to uphold the decision.

Background

[3] In the course of protracted litigation between the Banks and the Council over a lease, six different costs orders were made against the Banks. The costs totalling approximately $84,000 were not paid and on 5 August 2016 the Council served bankruptcy notices on Mr and Mrs Banks, relying on one of the costs orders. Mr and Mrs Banks applied to have the bankruptcy notices set aside but were unsuccessful.^[2] The Council then applied to have both Mr and Mrs Banks adjudicated bankrupt.
[4] Following a hearing on 3 February 2017, Associate Judge Matthews made orders adjudicating Mr and Mrs Banks bankrupt. The Council wanted the orders to be effective immediately. The Banks wanted more time to be able to pay all of the money owing to the Council. They told the Judge they had so far organised approximately $44,000 to be made available on 16 February 2017. The Judge considered some recognition was warranted for the fact the Banks had, albeit belatedly, made a realistic attempt to meet a major part of the total indebtedness. He therefore directed that the adjudication orders were to lie in Court until 1 pm on Friday 17 February 2017 to allow the Banks a final opportunity to clear up their indebtedness to the Council in full.
[5] Mr and Mrs Banks failed to make payment of the total amount outstanding by the due date and accordingly the orders took effect.^[3]
[6] The time for appealing all of the costs orders that comprise the underlying debt has expired.

Decision under review

[7] In her decision, the Registrar found that Mr and Mrs Banks are impecunious. She also found the appeal had merit and that the benefits to be obtained from the appeal appeared to outweigh the potential costs, if only slightly. Taken together those matters amounted to exceptional circumstances warranting dispensation of payment of security for costs.

Analysis

[8] The Registrar’s finding that Mr and Mrs Banks are impecunious is plainly correct and is not challenged. However, as the Registrar acknowledged, it is well established that impecuniosity is not of itself sufficient to justify dispensing with security. The appeal must be one which a solvent appellant would reasonably wish to pursue.^[4]
[9] Turning to the merits of the appeal, I am satisfied that the Registrar’s merits assessment was based on a mistake.
[10] The Registrar considered it was arguable that in requiring the Banks on 3 February 2017 to pay all of their indebtedness to the Council, Associate Judge Matthews had effectively amended the bankruptcy notice, something he could not do when more than three months had passed since the acts of bankruptcy.^[5] That reasoning might have some force were it correct that the date on which the acts of bankruptcy occurred was 20 August 2016 as the Registrar assumed.^[6] However, by virtue of r 24.10 of the High Court Rules, the act of bankruptcy did not take place until the Banks’ application to set aside the bankruptcy notices was determined by the High Court. That date was 8 November 2016 which in turn means that any amendment of the bankruptcy notice on 3 February 2017 was within time and the Registrar’s reliance on the decision of Lane v Questnet Ltd misplaced.^[7]
[11] In my view, the appeal has little or no prospect of success. None of the other arguments advanced by the Banks in their submissions can overcome the indisputable facts that they are insolvent and that an act of bankruptcy occurred. Further, even if they succeeded in their appeal (which I consider a very remote possibility) they would still owe money to the Council and would still be insolvent and thus vulnerable to being adjudicated bankrupt again.
[12] I am satisfied this is not an appeal which a solvent appellant would reasonably pursue. I am also satisfied the appeal does not involve any significant public interest. It follows that it is not in my view just to require the Council to defend the appeal without security for its costs.
[13] The Registrar’s decision is therefore quashed.

Outcome

[14] The application for review of the Registrar’s decision dispensing with payment of security for costs is granted.
[15] The appellants must pay security for costs in the sum of $6,600 within 20 working days.

Solicitors:
Simpson Grierson, Wellington for Respondent

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^[1] Grey District Council v Banks HC Greymouth CIV-2016-418-22, 3 February 2017.

^[2] Grey District Council v Banks [2016] NZHC 2663.

^[3] Grey District Council v Banks [2017] NZHC 190.

^[4] Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737 at [20] and [35].

^[5] See Insolvency Act 2006, ss 16 and 17.

^[6] 20 August 2016 being 10 working days after 5 August 2016, the day the bankruptcy notice was served: see [3] above and ss 17(1) and 17(4)(a) of the Insolvency Act.

^[7] Lane v Questnet Ltd HC Auckland CIV-2007-404-6164, 5 November 2008.