Heeni v Commissioner of Inland Revenue [2021] NZCA 430 (2 September 2021)

Last Updated: 10 September 2021

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA250/2021 [2021] NZCA 430

	BETWEEN	AROHA HEENI Applicant
	AND	COMMISSIONER OF INLAND REVENUE Respondent

Court:	Courtney and Goddard JJ
Counsel:	Applicant in Person M J Mortimer and O L Wilkinson for Respondent
Judgment: (On the papers)	2 September 2021 at 11.30 am

JUDGMENT OF THE COURT

The application for an extension of time to appeal is declined.
____________________________________________________________________

REASONS OF THE COURT

(Given by Courtney J)

Introduction

• [1] Associate Judge Gardiner adjudicated Aroha Heeni bankrupt on 9 March 2021.^[1] Time for appealing the decision expired on 8 April 2021. Ms Heeni filed a notice of appeal on 3 May 2021, 17 working days out of time. She applies for an extension of time under r 29A of the Court of Appeal (Civil) Rules 2005 (the Rules) to bring the appeal. The Commissioner of Inland Revenue (the Commissioner) opposes the application.
• [2] The ultimate issue when considering whether an extension of time should be granted is whether the interests of justice require an extension.^[2] The circumstances of each case must be assessed. Generally, the relevant considerations include:^[3]

(a) the length of the delay;

(b) the reasons for the delay;

(c) the conduct of the parties, particularly of the applicant;

(d) any prejudice or hardship to the respondent or to others with a legitimate interest in the outcome; and

(e) the significance of the issues raised by the proposed appeal, both to the parties and more generally.

• [3] In principle, the merits of the proposed appeal may also be relevant.^[4] That is because there will be occasions on which a court will risk facilitating unjustifiable delaying tactics by the parties if the merits of an appeal are not addressed. Consideration of the merits is, necessarily, relatively superficial.^[5]

Background

• [4] Ms Heeni operated a book-keeping service through her company, Bookkeeper Express Ltd, which is now in liquidation. In 2011, the Inland Revenue Department (IRD) began investigating her affairs. The Commissioner filed proceedings in the District Court to recover unpaid taxes and on 5 November 2018 obtained judgment by default for $330,462 after deductions for payments/credit offsets. Ms Heeni did not appeal that judgment, nor apply for a stay of execution.
• [5] On 14 May 2020, Associate Judge Bell granted the Commissioner’s application that Ms Heeni be adjudicated bankrupt, following attempts by Ms Heeni to have the bankruptcy notice set aside. The bankruptcy was, however, annulled by Associate Judge Smith on 21 October 2020, on the basis that a lack of prior written notice of the hearing may have prevented Ms Heeni from having a “fair opportunity to put her case before the C[ourt]”.^[6] A rehearing was directed.^[7]
• [6] As at 31 August 2020, Ms Heeni was said by the Commissioner to owe $835,631.24, comprising the judgment debt, penalties and interest.
• [7] Associate Judge Gardiner recorded Ms Heeni’s grounds of opposition to the Commissioner’s application in the following way: ^[8]

[3] Ms Heeni’s main basis for opposing the Commissioner’s application is that she does not recognise Parliamentary sovereignty and does not cede to its “legislative jurisdiction”. Ms Heeni maintains that the application should be “settled” based on equity and trust law, rather than the Insolvency Act 2006. A secondary basis of opposition is that Ms Heeni says she does not understand or accept the assessments made by the Commissioner that led to default judgment against her in the Waitākere District Court and these adjudication proceedings.

• [8] Associate Judge Gardiner did not accept these arguments. She referred to decisions of this Court and the Supreme Court determining that all persons are subject to the laws of the New Zealand Parliament.^[9] The Associate Judge rejected outright the suggestion of a constructive trust, given that Ms Heeni was unable to explain why such a trust should exist.^[10] Nor did the Associate Judge accept that Ms Heeni did not understand the assessments; she had had the opportunity to engage with the Commissioner but had not done so, concluding that “it is not so much that Ms Heeni does not understand the tax assessments, it is rather that she does not accept them”.^[11]
• [9] Although Ms Heeni had not addressed any other potential grounds as to why the Court should refuse to make an order of adjudication under s 37 of the Insolvency Act 2006, the Associate Judge nevertheless considered the possibility that circumstances might exist that would justify the Court exercising its discretion not to adjudicate Ms Heeni bankrupt.^[12] Section 37 provides:

37 Court may refuse adjudication

The court may, at its discretion, refuse to adjudicate the debtor bankrupt if—

(a) the applicant creditor has not established the requirements set out in section 13; or

(b) the debtor is able to pay his or her debts; or

(c) it is just and equitable that the court does not make an order of adjudication; or

(d) for any other reason an order of adjudication should not be made.

• [10] The Associate Judge concluded that Ms Heeni was not able to pay her debts.^[13] She noted that Ms Heeni has no dependent children; to the contrary all her children are adults and in stable financial circumstances.^[14] The Associate Judge did not consider that it would be just and equitable to refuse the Commissioner’s application.^[15] Nor was there any other reason to justify a refusal to grant the order sought.^[16]

Application for an extension of time

• [11] Ms Heeni’s application is in the form of a document titled “Notice Of Requirement For An Extension Of Time To File An Appeal”. She raises the fact that, in error, the appeal was filed in the High Court on 23 March 2021, which would have been within time if filed in this Court. Otherwise, the numerous grounds identified may be summarised as being that (1) Ms Heeni is not subject to the jurisdiction of the courts; (2) the matter ought to be determined in accordance with equitable principles; and (3) the Associate Judge did not have jurisdiction to determine the Commissioner’s application for Ms Heeni’s bankruptcy.
• [12] In an affidavit in support of her application, Ms Heeni deposes that she is a “private, sentient, breathing, living woman of flesh, blood and bone” who does not surrender her inherent jurisdiction and is not a New Zealand citizen.
• [13] In her submissions, filed in the form of a document titled “Further Notice of Response Supporting Extension of Time to File an Appeal”, Ms Heeni essentially repeats the same grounds, claiming that this Court is obliged to take into account her “overriding claim” to equity jurisdiction aligned with trust law, and the Associate Judge lacked lawful discretion. She claims the Associate Judge “dishonourably and unlawfully created a presumption at law of statutory jurisdiction” and imposed a “gratuitous and uncalled‑for adversarial penalty” in adjudicating her bankrupt. Finally, she alleges there is no reason why her application should be declined, because as the Associate Judge’s decision is “void”, time has not started. Accordingly, she claims the notice of appeal could not have been filed out of time.
• [14] The Commissioner accepts that the Almond v Read factors largely favour granting the application. The delay was short, Ms Heeni originally filed her appeal in the wrong court, and some latitude should be given to lay litigants. Putting the merits of the appeal to one side, Ms Heeni’s conduct is not impugned, and the Commissioner has suffered no specific prejudice from the delay.
• [15] Nevertheless, the Commissioner opposes Ms Heeni’s application. She asserts that the proposed appeal is wholly without merit, and Ms Heeni has chosen, in the High Court and in this Court, not to engage with the slim legal avenues that were open to her and has mounted no challenge to the Associate Judge’s substantive reasoning. The Commissioner also submits Ms Heeni has not provided adequate reasons for the delay.
• [16] We agree that the real issue in this application is whether Ms Heeni’s proposed appeal lacks merit. While an application for an extension of time will rarely be declined on the merits alone, there is no point granting an extension to allow a hopeless appeal to proceed.^[17]
• [17] In our view, Ms Heeni’s appeal is clearly hopeless. The Associate Judge comprehensively addressed the submission that Ms Heeni is not bound by, or subject to, the Insolvency Act. There is no prospect of a different view being taken on appeal. As this Court recognised in Fabian v Attorney-General, personal sovereignty arguments have no realistic prospect of success.^[18]
• [18] The argument that unpaid tax ought to be dealt with by reference to equitable principles rather than under the Insolvency Act is untenable. The Commissioner’s claim fell within the Insolvency Act and the Associate Judge had the jurisdiction to determined it.
• [19] Ms Heeni does not seek to challenge the Associate Judge’s findings that she was unable to pay her debts or that it would not be just and equitable to refuse to make the adjudication order.
• [20] The proposed appeal does not raise any legitimate basis on which this Court might reverse the Associate Judge’s decision. The Commissioner should not be put to the trouble and expense of defending a hopeless appeal.

Result

• [21] The application for an extension of time to appeal is declined.

Solicitors:
Crown Law Office, Wellington for Respondent

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^[1] Commissioner of Inland Revenue v Heeni [2021] NZHC 435 [High Court judgment].

^[2] Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].

^[3] At [38].

^[4] At [39].

^[5] At [39(c)].

^[6] Heeni v Commissioner of Inland Revenue [2020] NZHC 2764 at [61].

^[7] At [62].

^[8] High Court judgment, above n 1.

^[9] At [27]–[28], citing Mitchell v R CA68/04, 23 August 2004 at [14]; and Wallace v R [2011] NZSC 10 at [1]–[2].

^[10] At [29].

^[11] At [34].

^[12] At [37]–[46].

^[13] At [39].

^[14] At [40].

^[15] At [45]–[46].

^[16] At [46].

^[17] See for example Terry v McLellan [2014] NZCA 270 at [12]; Chen v Dilworth Trust Board [2015] NZCA 117 at [15]; Dowden v Commissioner of Inland Revenue [2020] NZCA 630, (2020) 29 NZTC 24-085 at [10]; Rachelle v Cadogan [2021] NZCA 69 at [16]–[19]; and Baker v Seven Seas Ltd [2021] NZCA 150 at [17].

^[18] Fabian v Attorney-General [2014] NZCA 90 at [5]. See also Niwa v Commissioner of Inland Revenue [2019] NZHC 853, [2019] NZAR 1104 at [16].