PEARSON v THE OFFICIAL ASSIGNEE [2022] NZCA 158

PEARSON v THE OFFICIAL ASSIGNEE [2022] NZCA 158 [4 May 2022]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA511/2021[2022] NZCA 158BETWEEN ANDREA REBECCA PEARSONAppellantAND THE OFFICIAL ASSIGNEERespondentCourt: Courtney and Dobson JJCounsel: R Marsich for AppellantGAD Neil and S P Farnell for RespondentJudgment:(On the papers)4 May 2022 at 2.30 pmJUDGMENT OF THE COURTThe application for strike out is granted.____________________________________________________________________REASONS OF THE COURT(Given by Dobson J)[1] The Official Assignee, who is the respondent in this appeal, has applied for itto be struck out under r 44A of the Court of Appeal (Civil) Rules 2005. The appealhas been brought by the appellant, Ms Pearson, from a decision of the High Court thatconfirmed the jurisdiction of the District Court to issue a warrant for the recovery ofland in order to enforce a possession order,1 in circumstances where the value of the1 Made by the District Court pursuant to s 152(2) of the Insolvency Act 2006.land exceeds $500,000.2 The strike out is sought on the basis that the appeal isfrivolous, vexatious, or otherwise an abuse of the process of the Court.3The background[2] Ms Pearson was adjudicated bankrupt in November 2016. She owned aresidential property in Auckland that vested in the Official Assignee (the Assignee).The Assignee gave notice to Ms Pearson in March 2018 to vacate the property, but sherefused to comply then and has consistently maintained her refusal since that time.[3] The Assignee obtained an order from the District Court under s 152(2) of theInsolvency Act 2006 granting the Assignee possession of the property.4 An agreementwas then reached that the Assignee would defer enforcing the District Court order, inreliance on an undertaking from Ms Pearson that she would deliver up vacantpossession of the property by 4 September 2019. The undertaking completed byMs Pearson on 30 May 2019 included the following: if I fail to deliver up vacant possession of the Property in accordance withmy undertaking at 1 above, I will not bring any proceeding, application,complaint or take any step or initiate any other process for the purpose of (orthat may have the effect of) delaying, hindering or abrogating the right of theOfficial Assignee to possession of the Property pursuant to the possessionorder of the District Court [4] In breach of the agreement, Ms Pearson continued in residence at the propertyafter the deadline of 4 September 2019. The Assignee therefore applied to theDistrict Court for a warrant to enforce recovery of the land. At the hearing of thatapplication on 15 October 2020, the question arose as to whether the District Courthad jurisdiction to grant an application for a warrant when the value of the landexceeded $500,000. Judge Sinclair stated a case for the High Court to answer thatjurisdictional question.[5] On 26 July 2021 Harland J confirmed the jurisdiction of the District Court toenforce the possession order by the issue of a warrant.5 Ms Pearson did not participate2 Official Assignee v Pearson [2021] NZHC 1892 [High Court judgment].3 Court of Appeal (Civil) Rules 2005, r 44A(1)(c).4 Official Assignee v Pearson [2018] NZDC 23932 [District Court judgment].5 High Court judgment, above n 2.in the argument on the case stated and the Court appointed counsel to assist it.Ms Pearson has now commenced the present appeal against that High Court decision,seeking to argue that the jurisdictional limit in s 79(1) of the District Court Act 2016prevents the District Court from issuing a warrant to enforce a judgment in respect ofan order for possession of a property that is valued at more than $500,000.[6] The Assignee seeks the strike out on four grounds. First, that thecommencement of the appeal is in breach of Ms Pearson's undertaking, which rendersit an abuse of process. Secondly, the Assignee contends that Ms Pearson has lost herright to pursue an appeal as a result of her conduct. Authorities are relied on for theproposition that relevant disentitling conduct can be held to deprive a litigant of whatwould otherwise be a right to pursue an appeal.6 A third ground is that Ms Pearson'sconduct gives rise to an estoppel precluding her pursuit of the appeal. It is argued thatMs Pearson has encouraged a belief on the part of the Assignee that she would notbring further proceedings and that she would leave the property within the agreed timelimit. The Assignee's reasonable reliance on those representations is said to havecaused detriment, such that it would now be unconscionable for Ms Pearson to departfrom the agreement.[7] Separately, the Assignee submits a fourth ground: that pursuit of the appeal andcontinued refusal to provide possession of the property constitute serious failures byMs Pearson to comply with her duties as a bankrupt,7 to the extent that the presentappeal is an abuse of process.[8] Mr Marsich's response on Ms Pearson's behalf denies that commencement ofthe appeal is in breach of Ms Pearson's undertaking, based on his characterisation ofthe appeal as a continuation of the District Court Judge's initiative in seeking acase stated. Mr Marsich submits that the matter of the District Court's jurisdiction toissue a warrant is by no means clear and that the High Court reasoning confirming thatjurisdiction is vulnerable to challenge.6 Lissenden v C A V Bosch Ltd [1940] AC 412, [1940] 1 All ER 425 (HL) at 430 and 437;Hitchcock v Cameron [1977] 1 NZLR 85 (SC) at 88; and Sterling Realty Ltd v Manning [1964]NZLR 1017 (SC) at 1019–1020.7 See Insolvency Act 2006, ss 138 and 140–141. Although Ms Pearson was discharged frombankruptcy in November 2019, she continues to be subject to a duty to assist the Assignee:per s 307.[9] Mr Marsich's submissions opposing the application included the contentionthat the District Court did not have jurisdiction to issue the possession order in the firstplace, and that accordingly the Assignee had no right to possession in reliance on it.In a later reply submission, he disavowed that argument, stating that the possessionorder itself was not challenged. That acknowledgement is inevitable, given thatMs Pearson abandoned her appeal from the original District Court decision granting apossession order.[10] Further, Mr Marsich submits that Ms Pearson has serious medical conditions,is in her early seventies and is without any reasonable alternative accommodation.Thus, the personal imperative for Ms Pearson to have to stay in the property absolvesher from criticism for remaining and any other conduct that might otherwise be treatedas a breach of her prior undertaking.Analysis[11] Commencement of the appeal is clearly in breach of Ms Pearson's undertaking.It is unnecessary for the Assignee to make out motive, given that the terms of theundertaking extend to taking steps that have the effect of delaying the Assignee'sdealing with the property. The Assignee has been entitled to possession sinceMs Pearson was declared bankrupt nearly six years ago, and the protracted delays areprejudicial to the creditors who have proved in the bankruptcy.[12] Ms Pearson cannot avoid responsibility for commencement of the appeal bytreating it as a mere continuation of a process begun by the District Court Judge'sinitiative in stating a case for the High Court. That court sought and received ananswer from the High Court, and would act on it but for the present appeal.[13] In some circumstances a promise not to pursue an appeal would not besufficient to have an appeal brought contrary to such a promise struck out. However,in the present circumstances it is an abuse of this Court's process for the appeal toremain on foot. The Supreme Court has confirmed the courts' independent duty toprevent abuse, which is not limited to fixed categories.8[14] There is also a relevant concern that the appeal constitutes a collateral attackon the original District Court decision granting the Assignee a possession order inrespect of the property. Submissions for Ms Pearson accept that the Assignee isentitled to possession of the property. Ultimately, they also do not challenge theDistrict Court's jurisdiction to issue a possession order. Notwithstanding thatconcession, the apparently intended effect of challenging the High Court decisionwould be to so delay the process as to deprive the Assignee of the benefit of the originalDistrict Court judgment, in circumstances where further resort to the courts is onlyrequired because of Ms Pearson's refusal to comply with the possession order.This consideration adds weight to the justification for a strike out.[15] We accept that if there was merit evident in the grounds for the current appeal,then that could justify what is otherwise an abuse of process. The issue on the appealis the extent of one aspect of the jurisdiction of the District Court, and if there was arealistic prospect that the High Court had wrongly confirmed the existence of thatjurisdiction, then this Court ought to address the issue. However, we are satisfied thatis not the case.[16] The Assignee's original application for a possession order in respect ofMs Pearson's property depended on s 152(2) of the Insolvency Act, which providesthat the Assignee may apply to the District Court for an order for possession ofproperty that has vested in the Assignee under a bankruptcy. That provision is withoutlimit as to the value of any property involved. Section 152 operates as an exceptionto the District Court's jurisdictional limit in s 79 of the District Court Act, whichotherwise restricts actions for recovery of land to situations where the land is valuedat no more than $500,000.[17] It was in respect of that application where issues of the Assignee's entitlementto possession, and the merits of making an order, were determined by the District Court8 Chamberlains v Lai [2006] NZSC 70, [2007] 2 NZLR 7 at [63], in the context of an appeal againstthe striking out of a defence pleaded in High Court proceedings.Judge.9 The Judge considered the jurisdictional preconditions for an order under s 152of the Insolvency Act, being satisfied that they were met, and considered thecircumstances of Ms Pearson's case, before deciding that it was in the interests ofjustice that the process be allowed to proceed.10[18] The primary ground for the High Court decision, in which the jurisdiction ofthe District Court to issue a warrant subsequent to an occupier's noncompliance withan order for possession was upheld, was that the request for an issue of a warrant wasnot "a proceeding" for the purposes of the jurisdictional limits in ss 78 and 79 of theDistrict Court Act.11 Rather, it was a procedural step in execution of the court'sexisting order for possession and, as such, ss 78 and 79 were not engaged.12 Thatcharacterisation is consistent with authority in other contexts and appears to beuncontroversial.13 The notice of appeal does not specify any challenge to it.[19] Instead, the notice of appeal seeks to reargue the issues of statutoryinterpretation that were involved in the alternative rationale for the High Court findingof jurisdiction. That reasoning was obiter and included in the High Court judgmentagainst the contingency that the first basis for upholding jurisdiction, being the findingthat the request for a warrant was merely a procedural step in existing proceedings,was not correct.14[20] In discerning Parliament's intention as to the scope of s 152 of theInsolvency Act, we are mindful of the objectives of the Insolvency Law Reform Billof 2005, from which the Insolvency Act arose. The Bill sought a regime for dealingwith financial failure which could be administered quickly and efficiently, and whichmaximised returns to creditors by providing flexible and effective methods ofinsolvency administration and enforcement.15 Harland J's approach to the9 District Court judgment, above n 4.10 At [30]–[33].11 Section 79 of the District Court Act 2016 limits the District Court's jurisdiction to "hear anddetermine a proceeding for the recovery of land".12 High Court judgment, above n 2, at [37].13 See Lay v Commissioner of Inland Revenue [2015] NZHC 2962, [2016] NZFLR 603;Re Riddiford, ex parte The New Zealand Law Society and the Wellington District Law SocietyHC Wellington CIV-2005-485-879, 15 December 2005; National Westminster Bank plc v Powney[1991] Ch 339 (CA); and WT Lamb & Sons v Rider [1948] 2 KB 331.14 High Court judgment, above n 2, at [38].15 These objectives were listed in the explanatory note introducing the Bill.interpretation of s 152 is consistent with these objectives and, realistically, we see nobasis on which the reasoning could be impugned. The Judge interpreted the variousprovisions involved so as to treat both applications by the Assignee in bankruptcy fora possession order, and subsequent steps needed to enforce execution of the order, asbeing within the District Court's jurisdiction irrespective of the value of the property.16[21] It follows that we see no credible basis for arguments that the High Court erredin confirming the District Court's jurisdiction.Result[22] The appeal is struck out. There is no issue as to costs.Solicitors:Dyer Whitechurch, Auckland for AppellantMeredith Connell, Auckland for Respondent16 High Court judgment, above n 2, at [43]–[49].