HEENI v COMMISSIONER OF INLAND REVENUE [2021] NZCA 430

HEENI v COMMISSIONER OF INLAND REVENUE [2021] NZCA 430 [2 September 2021]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA250/2021[2021] NZCA 430BETWEEN AROHA HEENIApplicantAND COMMISSIONER OF INLANDREVENUERespondentCourt: Courtney and Goddard JJCounsel: Applicant in PersonM J Mortimer and O L Wilkinson for RespondentJudgment:(On the papers)2 September 2021 at 11.30 amJUDGMENT OF THE COURTThe 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 March2021.1 Time for appealing the decision expired on 8 April 2021. Ms Heeni filed anotice of appeal on 3 May 2021, 17 working days out of time. She applies for anextension of time under r 29A of the Court of Appeal (Civil) Rules 2005 (the Rules)1 Commissioner of Inland Revenue v Heeni [2021] NZHC 435 [High Court judgment].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 begranted is whether the interests of justice require an extension.2 The circumstances ofeach 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 alegitimate interest in the outcome; and(e) the significance of the issues raised by the proposed appeal, both to theparties and more generally.[3] In principle, the merits of the proposed appeal may also be relevant.4 That isbecause there will be occasions on which a court will risk facilitating unjustifiabledelaying tactics by the parties if the merits of an appeal are not addressed.Consideration of the merits is, necessarily, relatively superficial.5Background[4] Ms Heeni operated a book-keeping service through her company, BookkeeperExpress Ltd, which is now in liquidation. In 2011, the Inland Revenue Department(IRD) began investigating her affairs. The Commissioner filed proceedings inthe District Court to recover unpaid taxes and on 5 November 2018 obtained judgmentby default for $330,462 after deductions for payments/credit offsets. Ms Heeni didnot appeal that judgment, nor apply for a stay of execution.2 Almond v Read [2017] NZSC 80, [2017] 1 NZLR 801 at [38].3 At [38].4 At [39].5 At [39(c)].[5] On 14 May 2020, Associate Judge Bell granted the Commissioner'sapplication that Ms Heeni be adjudicated bankrupt, following attempts by Ms Heenito have the bankruptcy notice set aside. The bankruptcy was, however, annulled byAssociate Judge Smith on 21 October 2020, on the basis that a lack of prior writtennotice of the hearing may have prevented Ms Heeni from having a "fair opportunityto 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 theCommissioner's application in the following way: 8[3] Ms Heeni's main basis for opposing the Commissioner's applicationis that she does not recognise Parliamentary sovereignty and does not cede toits "legislative jurisdiction". Ms Heeni maintains that the application shouldbe "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 understandor accept the assessments made by the Commissioner that led to defaultjudgment against her in the Waitākere District Court and these adjudicationproceedings.[8] Associate Judge Gardiner did not accept these arguments. She referred todecisions of this Court and the Supreme Court determining that all persons are subjectto the laws of the New Zealand Parliament.9 The Associate Judge rejected outright thesuggestion of a constructive trust, given that Ms Heeni was unable to explain why sucha trust should exist.10 Nor did the Associate Judge accept that Ms Heeni did notunderstand the assessments; she had had the opportunity to engage with theCommissioner but had not done so, concluding that "it is not so much that Ms Heenidoes 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 whythe Court should refuse to make an order of adjudication under s 37 of the Insolvency6 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] NZSC10 at [1]–[2].10 At [29].11 At [34].Act 2006, the Associate Judge nevertheless considered the possibility thatcircumstances might exist that would justify the Court exercising its discretion not toadjudicate Ms Heeni bankrupt.12 Section 37 provides:37 Court may refuse adjudicationThe court may, at its discretion, refuse to adjudicate the debtorbankrupt if—(a) the applicant creditor has not established the requirements setout 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 orderof adjudication; or(d) for any other reason an order of adjudication should not bemade.[10] The Associate Judge concluded that Ms Heeni was not able to pay her debts.13She noted that Ms Heeni has no dependent children; to the contrary all her childrenare adults and in stable financial circumstances.14 The Associate Judge did notconsider that it would be just and equitable to refuse the Commissioner's application.15Nor was there any other reason to justify a refusal to grant the order sought.16Application for an extension of time[11] Ms Heeni's application is in the form of a document titled "Notice OfRequirement 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 havebeen within time if filed in this Court. Otherwise, the numerous grounds identifiedmay be summarised as being that (1) Ms Heeni is not subject to the jurisdiction of thecourts; (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'sapplication for Ms Heeni's bankruptcy.12 At [37]–[46].13 At [39].14 At [40].15 At [45]–[46].16 At [46].[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 notsurrender her inherent jurisdiction and is not a New Zealand citizen.[13] In her submissions, filed in the form of a document titled "Further Notice ofResponse Supporting Extension of Time to File an Appeal", Ms Heeni essentiallyrepeats the same grounds, claiming that this Court is obliged to take into account her"overriding claim" to equity jurisdiction aligned with trust law, and theAssociate 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 herbankrupt. Finally, she alleges there is no reason why her application should bedeclined, 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 favourgranting the application. The delay was short, Ms Heeni originally filed her appeal inthe wrong court, and some latitude should be given to lay litigants. Putting the meritsof the appeal to one side, Ms Heeni's conduct is not impugned, and the Commissionerhas suffered no specific prejudice from the delay.[15] Nevertheless, the Commissioner opposes Ms Heeni's application. She assertsthat the proposed appeal is wholly without merit, and Ms Heeni has chosen, in theHigh Court and in this Court, not to engage with the slim legal avenues that were opento her and has mounted no challenge to the Associate Judge's substantive reasoning.The Commissioner also submits Ms Heeni has not provided adequate reasons forthe delay.[16] We agree that the real issue in this application is whether Ms Heeni's proposedappeal lacks merit. While an application for an extension of time will rarely bedeclined on the merits alone, there is no point granting an extension to allow a hopelessappeal to proceed.17[17] In our view, Ms Heeni's appeal is clearly hopeless. The Associate Judgecomprehensively addressed the submission that Ms Heeni is not bound by, or subjectto, 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 sovereigntyarguments have no realistic prospect of success.18[18] The argument that unpaid tax ought to be dealt with by reference to equitableprinciples rather than under the Insolvency Act is untenable. The Commissioner'sclaim fell within the Insolvency Act and the Associate Judge had the jurisdiction todetermined it.[19] Ms Heeni does not seek to challenge the Associate Judge's findings that shewas unable to pay her debts or that it would not be just and equitable to refuse to makethe adjudication order.[20] The proposed appeal does not raise any legitimate basis on which this Courtmight reverse the Associate Judge's decision. The Commissioner should not be put tothe 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 Respondent17 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) 29NZTC 24-085 at [10]; Rachelle v Cadogan [2021] NZCA 69 at [16]–[19]; and Baker v Seven SeasLtd [2021] NZCA 150 at [17].18 Fabian v Attorney-General [2014] NZCA 90 at [5]. See also Niwa v Commissioner of InlandRevenue [2019] NZHC 853, [2019] NZAR 1104 at [16].