HART V ANZ BANK NEW ZEALAND LIMITED COA CA858/2012

HART V ANZ BANK NEW ZEALAND LIMITED COA CA858/2012 [13 February 2013]IN THE COURT OF APPEAL OF NEW ZEALANDCA858/2012[2013] NZCA 20BETWEEN BARRY JOHN HARTAppellantAND ANZ BANK NEW ZEALAND LIMITEDRespondentHearing: 13 February 2013Court: O'Regan P, Arnold and Harrison JJCounsel: D Murray for AppellantL A O'Gorman and A L Williams for RespondentJudgment: 13 February 2013Reasons: 19 February 2013 at 10 amJUDGMENT OF THE COURTA Leave is granted to the respondent to apply to strike out the appeal.B The appeal is struck out.C The appellant must pay the respondent costs for a standard application (but limited to the allocation for the appearance of counsel) on a band A basis and usual disbursements. We certify for one counsel.REASONS OF THE COURT(Given by Harrison J)Introduction[1] On 17 December 2012 the appellant, Barry Hart, was adjudicated bankrupt by order of the High Court at Auckland on the application of the ANZ Bank New Zealand Ltd, the respondent.1 Later that day Mr Hart filed a notice of appeal in this court against the order. At his request, the Registry allocated a priority fixture to hear the appeal for 10 am on 13 February 2013.[2] On 21 December 2012 the Registrar set security for costs at $5,880. On 5 February 2013 Mr Hart applied to the Registrar for a waiver of the requirement to pay security for costs before his appeal was heard.2 The Registrar declined that application. The next morning, 12 February 2013, Mr Hart applied for an orderreviewing the Registrar's decision.3[3] In a decision delivered at 4 pm on 12 February, Harrison J dismissed Mr Hart's application. Mr Hart was directed to pay security by 10.00 am on 13 February 2013. Shortly afterwards, Mr Hart applied for an adjournment of the substantive fixture for 13 February. His application was dismissed by an order of this Court made late on 12 February.Application to strike out[4] Mr Hart's appeal was called on 13 February. Ms Murray appeared for Mr Hart and confirmed that he was not able to comply with the order to pay security for costs. On his behalf, Ms Murray sought to revisit the two decisions made by this Court on 12 February: (a) dismissing the application to review the Registrar's refusal to waive security for costs; and (b) refusing Mr Hart's application for an adjournment. The Court confirmed that both orders were final and would not be reconsidered.1 ANZ Bank of New Zealand Ltd v Hart HC AK CIV-2012-404-4929, 17 December 2012.2 Rule 35(6) of the Court of Appeal (Civil) Rules 2005.3 Section 7(2) of the Court of Appeal (Civil) Rules and s 61A(3) of the Judicature Act 1908.[5] Ms O'Gorman for the ANZ Bank applied orally for leave to apply for anorder striking out the appeal.4 Mr Hart's failure to pay security for costs by 10 amon 13 February satisfied the jurisdictional basis for an order. The only issue was whether this Court should exercise its discretion to make the order.[6] By way of brief background, the litigation between these parties has aprocedurally complex history. It arises from the bank's provision of lending facilities to Mr Hart and entities associated with him progressively from March 2006. By 12 November 2008 the aggregate principal advanced was $22,879,000 secured by mortgages given over various properties in the Waimauku area, west of Auckland. The mortgagors defaulted in meeting their obligations to the ANZ. In August 2011 the bank made demands upon Mr Hart and others to repay an excess of $26,000,000 then owing including accumulated interest.[7] Extensive litigation ensued in the High Court arising from Mr Hart's attempts to injunct the ANZ from exercising its powers of sale and the bank's applications for summary judgment against Mr Hart and other mortgagors on their personal covenants to repay. There were numerous defended interlocutory hearings. In Hart v ANZ National Bank5, in a decision delivered on 6 September 2012, Venning J concluded6 that Mr Hart and his related entities had abused the process of the Court by acting vexatiously, frivolously and improperly, justifying an award of indemnitycosts in ANZ's favour.[8] Earlier, on 13 July 2012 the High Court in Hart v ANZ Bank7 entered judgment for the bank against Mr Hart for costs in the sum of $34,689.52 following his unsuccessful application for an interim injunction to restrain the bank from proceeding with a mortgagee sale of the various securities. Significantly, Mr Hart did not appeal the judgment.[9] On 23 August 2012 the ANZ issued a bankruptcy notice against Mr Hart for payment of the costs order. On 19 September 2012 he responded with an application4 Rule 37 of the Court of Appeal (Civil) Rules 2005.5 Hart v ANZ National Bank [2012] NZHC 2291.6 At [44].7 Hart v ANZ Bank [2012] NZHC 1705.to set aside the notice. He relied principally on the grounds that (a) the costs order was interlocutory and (b) he had filed a claim against the ANZ arising from its sale of the securities seeking damages in an unspecified amount.[10] On 29 October 2012 the High Court entered summary judgment for the ANZ against Mr Hart and others in the sum of $20,543,951.8 In a carefully reasoned decision, Associate Judge Abbott concluded that Mr Hart's claim for damagesagainst ANZ was unarguable and he did not have an arguable defence to the bank'sclaim. He also dismissed Mr Hart's application to set aside the bank's bankruptcynotice. Mr Hart has appealed against that decision. His appeal is due to be heard in this Court on 19 March 2013.[11] On 8 November 2012 the ANZ filed its application to have Mr Hart adjudicated bankrupt on the ground of his failure to comply with the earlier bankruptcy notice based on the costs order. On delivering the judgment under appeal on 17 December 2012, Associate Judge Sargisson noted that the bank had satisfied the jurisdictional requirements for an order for adjudication as required by s 13 Insolvency Act 2006. That section provides:13 When creditor may apply for debtor's adjudicationA creditor may apply for a debtor to be adjudicated bankrupt if—(a) the debtor owes the creditor $1,000 or more or, if 2 or more creditors join in the application, the debtor owes a total of $1,000 or more to those creditors between them; and(b) the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and(c) the debt is a certain amount; and(d) the debt is payable either immediately or at a date in the future that is certain.[12] It was not in dispute before the Associate Judge that: (a) Mr Hart owed the bank $1,000 or more; (b) he had committed an act of bankruptcy within the threemonths preceding the filing of the bank's application; (c) the debt was for a certain8 Hart v ANZ Bank [2012] NZHC 2839.amount; and (d) the debt was now due. In exercising her discretion to adjudicate Mr Hart bankrupt, the Associate Judge took into account that:(a) he had not taken any formal steps to oppose the application for adjudication;(b) the existence of Mr Hart's appeal against the order granting summaryjudgment of $20,543,951 did not of itself constitute a ground for refusing the adjudication;(c) Mr Hart's claim against the ANZ, even if successful, could not on theevidence before the Court ever amount to a complete set-off against his liability to the bank. In fact there would be a shortfall of some millions of dollars;(d) Mr Hart had failed to provide details on oath of his financial position including his assets and liabilities and sources of income.[13] The Associate Judge then weighed these factors along with the public interest in avoiding significant delays in bringing Mr Hart's affairs under the official assignee's control. She was satisfied that the public interest his bankruptcyoutweighed any private interests to the contrary. Mr Hart had failed to discharge his burden.Decision[14] The issue is whether the interests of justice justify striking out the appeal. The answer lies primarily in an assessment of its merits. Mr Hart's notice of appealalleges that the Associate Judge erred in four material respects.[15] First, Mr Hart alleges that the Associate Judge erred in finding that the s 13 jurisdictional prerequisites for an order for adjudication were satisfied. However, it was common ground before the Associate Judge that s 13 was satisfied. Mr Hart didnot attempt to oppose the ANZ's application on this ground. In this CourtMs Murray simply made unsubstantiated assertions in support and failed to recognise that the costs judgment for $34,689.52 was for a certain amount.[16] Second, Mr Hart asserts that the Associate Judge erred in exercising her discretion under s 36 to adjudicate Mr Hart bankrupt given that the s 13 criteria were not met. We already addressed this point.[17] Third, Mr Hart contends that the Associate Judge erred in failing to exercise her discretion under s 37 to refuse the order for adjudication. However, Mr Hart has not identified any particular error. It is plain, as we have pointed out, that the Associate Judge made her decision after balancing all relevant discretionary factors.[18] Fourth, Mr Hart contends that the Associate Judge erred in failing to halt the application pursuant to ss 38 and 42. However, Mr Hart had taken no steps, as the Associate Judge specifically noted, to apply for a temporary halt even though he hadbeen served with the bank's application on 20 November 2012.9[19] There was no evidential basis for the Associate Judge to find, as Ms Murray submits on appeal, that the ANZ had used the bankruptcy process oppressively or that the bankruptcy would have a prejudicial impact on a separate undertaking given by the bank not to exercise its rights under the mortgagee sale process until determination of an appeal. Moreover, the fact that the adjudication may possibly remove Mr Hart's right of appeal against the summary judgment award of $20,543,951 is irrelevant. We are not in a position to assess the merits of that appeal and, in any event, if the right of appeal has any real value, it will be an asset in Mr Hart's estate which will vest in the Official Assignee. He will then have todecide whether to pursue the appeal.[20] Additionally, we take into account Mr Hart's failure to comply with this Court's order for payment of security for costs. He has been unsuccessful in an attempt to review the Registrar's refusal to waive payment of security. Moreparticularly, he has failed to provide the High Court with any financial details either9 At [13].of his assets and liabilities or sources of income, whether personal or from entities with whom he has associated, which might form a reliable basis for exercising the statutory discretion in his favour. Mr Hart's continued inactivity in the face ofcompelling grounds for an adjudication is a singular feature of this case.[21] The ANZ Bank has satisfied the jurisdictional prerequisite for an order striking out the appeal. We are satisfied that his appeal has no merit. An order striking out will meet the interests of justice.Solicitors:Buddle Findlay, Auckland for the Respondent