Hampton [2019] NZHC 1774 (26 July 2019)

Last Updated: 6 August 2019

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2011-409-002055 [2019] NZHC 1774

IN THE MATTER AND	of s 292 Insolvency Act 2006
IN THE MATTER	of the bankruptcy of DAVID JOHN HAMPTON

	CIV-2015-409-000043
UNDER	the Companies Act 1993
BETWEEN	COMMISSIONER OF INLAND REVENUE Plaintiff
AND	CHESTERFIELDS PRESCHOOLS LIMITED (in interim liquidation) First Defendant
AND	THERESE ANNE SISSON Second Defendant

Hearing:	25 July 2019
Appearances:	D J Hampton (Bankrupt) in person – on -2055 proceeding T A Sisson in person (Second defendant in -43 proceeding) S J Kinsler and C Russell for Commissioner of Inland Revenue G J Slevin for Official Assignee J Wedlake for Chesterfields Preschools Ltd (in liquidation)
Judgment:	26 July 2019

RE HAMPTON [2019] NZHC 1774 [26 July 2019]

JUDGMENT OF OSBORNE J

(on stay applications)

This judgment was delivered by me on 26 July 2019 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

[1] For convenience, these proceedings were called together today, Mr Hampton and Ms Sisson relying on the same matters of background in support of closely-related applications.

The -43 proceeding

[2] In the -43 proceeding, this Court made an order putting Chesterfields Preschools Limited into liquidation.¹ Ms Sisson has filed a notice of appeal against that judgment.

[3] Ms Sisson had been previously joined as a second defendant in the -43 proceeding at a time when she wished to appeal a previous liquidation order (subsequently overturned on appeal). She remained a party to the proceeding.

[4] She has filed two interlocutory applications.

[5] First, there is an application for an order staying the liquidation judgment pending the hearing and determination of a misfeasance proceeding commenced in CIV-2008-409-995.

[6] Secondly, there are applications for removal of a freezing order and a caveat against the title to a property at 854 Colombo Street. Those applications are not dealt with here as they have been filed incorrectly in this proceeding. A Minute will issue with directions as to those matters.

1. Commissioner of Inland Revenue v Chesterfields Preschools Limited (in interim liquidation) [2019] NZHC 272 [26 February 2019] (reissued on 7 May 2019).

The -2055 proceeding

[7] Mr Hampton was adjudicated bankrupt on 5 June 2013, on the application of Minter Ellison Rudd Watts, the Commissioner of Inland Revenue appearing in support of the adjudication application.

[8] This Court in 2018 conducted a public examination of Mr Hampton under s 295 Insolvency Act 2006, the Official Assignee and the Commissioner opposing Mr Hampton’s unconditional discharge. The Court ordered that Mr Hampton be discharged from bankruptcy from 30 July 2018, and imposed prohibitions upon him from identified business activities for a four-year period.

[9] Mr Hampton filed a notice of appeal against that judgment. He appeals the judgment on the basis first that there should not have been business prohibitions and, secondly, that this Court failed to give consideration (under s 298(1)(c) Insolvency Act) to the making of an order suspending Mr Hampton’s discharge while a senior barrister conducted a review of a misfeasance claim.

The nature of these stay applications

[10] The history of the interactions between Ms Sisson, Mr Hampton and related taxpayers on the one hand and the Commissioner on the other has been well- documented through numerous judgments of this Court and on appeal. The taxpayers’ grievances have been identified and taken into account, where relevant, in numerous judgments. In the limited framework of these stay applications, it is unnecessary to recite the background of those grievances save to state that at present they are focused on the long-held desire of Ms Sisson and Mr Hampton to pursue the taxpayers’ misfeasance claim (stayed by the Court of Appeal in 2013, shortly before Mr Hampton’s bankruptcy).

[11] The purpose of the stays now sought is expressly to enable one or more parties to file and obtain the determination of an amended statement of claim asserting a cause of action in misfeasance.
[12] Neither Mr Hampton nor Ms Sisson invokes the Court’s power under r 12 Court of Appeal (Civil) Rules 2005, where an appeal is pending, to stay the proceeding in which a decision was given or to stay its execution.

[13] Rather, Ms Sisson and Mr Hampton invoke r 17.29 High Court Rules which provides:

17.29 Stay of enforcement

A liable party may apply to the court for a stay of enforcement or other relief against the judgment upon the ground that a substantial miscarriage of justice would be likely to result if the judgment were enforced, and the court may give relief on just terms..

[14] Ms Sisson and Mr Hampton have explained in their grounds of application and in their supporting affidavits their concern that a meritorious misfeasance claim may effectively die, with neither Mr Hampton nor Chesterfields recovering the benefit of any set-off or payment from the Commissioner, if Chesterfields remains in liquidation and Mr Hampton is discharged from bankruptcy before someone actively pursues the misfeasance claim.

Position of others

[15] The Commissioner and the liquidators of Chesterfields have each taken the position that any interim protection of the Sisson/Hampton interests should be dealt with in the context of pending appeals by appropriate arrangements or undertakings. Hence they have explained through counsel that notices of opposition have not been filed to the stay applications.

[16] For their part, the liquidators have undertaken that, pending the outcome of Ms Sisson’s appeal against the Chesterfields liquidation, they will not dispose of the property held in Chesterfields’ name at 854 Colombo Street (which was the subject of Ms Sisson’s purported caveat application referred to at [6] above). Similarly, the Commissioner does not look to the liquidators to take any steps in the liquidation pending the outcome of the appeal. Both these positions are adopted upon the basis that the appeal will be diligently pursued.
[17] From the Assignee’s perspective, there is no need for a response to the bankruptcy appeal. If there is to be a stay which operated to withhold the coming into force of Mr Hampton’s discharge for the time being and therefore to stay the effect of the specific business prohibition orders, Mr Hampton will then be for the time being bankrupt with the statutory prohibitions upon him.

Stay of Mr Hampton’s 2013 adjudication?

[18] Mr Hampton sought, in addition to a stay on the discharge judgment, a stay of the original adjudication order (made in 2013). That was plainly misconceived in the context of interim relief, and could not be granted whether opposed or not. As matters stand Mr Hampton was adjudicated bankrupt, remained bankrupt for five years and, in terms of the discharge judgment, has been ordered discharged from bankruptcy clearly upon the basis that the adjudication order was valid. It was Mr Hampton around the same time as the Assignee opposed his unconditional discharge who sought discharge from bankruptcy. Mr Hampton obtained what he wanted, namely his discharge from bankruptcy, albeit with conditions. Those conditions are now an aspect of his appeal.

Discussion

[19] This left the Court yesterday to deal with stay applications which by their nature are a precursor to attacking the liquidation of Chesterfields and the discharge from bankruptcy of Mr Hampton, both of which are under appeal.

[20] Mr Hampton’s and Ms Sisson’s reliance upon r 17.29 for a stay of enforcement is misconceived. Both of the judgments appealed from are concerned with status (that is the status of Chesterfields and the status of Mr Hampton) rather than a judgment creating a civil debt or other liability. Part 17 of the High Court Rules is concerned with the enforcement of judgment debts where under one party (the “liable party”) is liable to another party (“the entitled party”). This is not such a case.

[21] The appropriate procedure for Mr Hampton and Ms Sisson lay in r 12 Court of Appeal (Civil) Rules. It is the approach which this Court adopts in relation to applications under r 12 that should guide the Court in a situation such as the present.
[22] As Ms Sisson and Mr Hampton (although legally qualified) are not practising lawyers, it is appropriate to allow some indulgence for the fact that they chose (apparently deliberately) not to invoke r 12.

[23] Had they invoked r 12, I would have been satisfied that so long as they diligently pursue their appeals, there ought to be interim protection to ensure that appeal rights are not rendered nugatory. In turn, if that provides an avenue for Ms Sisson and/or Mr Hampton to endeavour to resuscitate the misfeasance claim, that outcome is also protected by a stay for the time being. I take into account the fact that other parties have not entered formal appearances in relation to these interlocutory applications and that the time for any opposition (without leave) therefore expired. I take into account also the fact that, in the case of the Commissioner and the liquidators, informal arrangements (outside these particular interlocutory applications) have already been offered, with those arrangements in my assessment being of the nature appropriate to protect the value of appeal rights, and to protect any benefit that would accrue to Mr Hampton and/or Ms Sisson should the appeals be successful.

[24] In the circumstances I consider it appropriate that the Court make orders under r 12 so that there can be a revisiting if either appeal is not diligently prosecuted.

Orders – CIV-2011-409-2055 proceeding

[25] I direct:

(a) There is, pending the determination of Mr Hampton’s appeal against the discharge judgment, a stay of proceeding CIV-2011-409-2055. In particular Mr Hampton’s discharge from bankruptcy is stayed.

(b) The proceeding is stayed on condition that Mr Hampton diligently prosecute his appeal.

(c) Leave is reserved to the Official Assignee and to the Commissioner of Inland Revenue on 48 hours’ notice to have the proceeding called before the Court for review of the stay in the event the appeal is not diligently pursued.

Orders – CIV-2015-409-43 proceeding

[26] I direct:

(a) There is a stay on any step by the liquidators of Chesterfields Preschools Ltd (in liq) which would involve a dealing with the property at 854 Colombo Street, pending the determination of Ms Sisson’s appeal against the judgment putting Chesterfields Preschools Ltd into liquidation.

(b) Such steps are stayed on condition that Ms Sisson diligently prosecute her appeal.

(c) Leave is reserved to Chesterfields Preschools Ltd (in liq) and to the Commissioner of Inland Revenue on 48 hours’ notice to have the proceeding called before the Court for review of the stay in the event the appeal is not diligently pursued.

Osborne J

Solicitors:

Meredith Connell, Wellington Lane Neave, Christchurch Copy to:

D J Hampton, Christchurch T A Sisson, Christchurch