FALOON v THE COMMISSIONER OF INLAND REVENUE [2016] NZCA 344

FALOON v THE COMMISSIONER OF INLAND REVENUE [2016] NZCA 344 [20 July 2016]IN THE COURT OF APPEAL OF NEW ZEALANDCA208/2016[2016] NZCA 344BETWEEN CLARENCE JOHN FALOONAppellantAND THE COMMISSIONER OF INLANDREVENUERespondentCounsel: Appellant in personR Park and M Nicholson for RespondentJudgment:(On the papers)20 July 2016 at 11.30 amJUDGMENT OF THE HON JUSTICE KÓSThe application to review the Deputy Registrar's decision is declined.____________________________________________________________________[1] Mr Faloon has a long history of litigation arising out of, first, the diversion of the Kawau Stream across land owned by a Faloon family company in the 1970s, and, secondly, the compulsory acquisition of land owned by the same company for the Palmerston North Airport in the 1990s. Inter alia, Mr Faloon has made claims against the Commissioner of Inland Revenue for an income tax adjustment associated with compensation paid for the compulsory acquisition.[2] Mr Faloon's protracted litigation with the Commissioner failed in both the High Court and Court of Appeal. He failed to pay costs awarded against him, some $46,735. The Commissioner then served bankruptcy notices. Associate Judge Bell adjudicated him bankrupt on 14 April 2016.11 Commissioner of Inland Revenue v Faloon [2016] NZHC 760.[3] Mr Faloon filed a notice of appeal against that decision on 11 May 2016. He then filed an application dated 2 June 2016 to dispense with, reduce or defer payment of security for costs. That application was declined by the Deputy Registrar in a letter dated 29 June 2016. She considered the appeal lacked merit and was not one a reasonable and solvent litigant would prosecute.[4] Mr Faloon applies for review of the Deputy Registrar's decision.Review[5] Security may be dispensed with if the appellant is impecunious and the appeal is one that a solvent appellant would reasonably wish to prosecute. A solvent appellant would not reasonably pursue an appeal which is hopeless or in which the potential costs outweigh the potential benefits.2Impecunious?[6] The first issue is whether Mr Faloon is impecunious. I agree with the DeputyRegistrar that there is inadequate information to ascertain Mr Faloon's financialposition. It appears Mr Faloon lacks the personal means to provide security. But he has not provided any information about whether he is able to borrow funds to pay security.[7] Assuming in his favour that he is impecunious, that of itself does not warrant dispensing with security.3 The second issue is whether this appeal is one that a reasonable and solvent litigant would prosecute. The Deputy Registrar found the grounds of appeal lack merit. I agree with her.No merit?[8] Mr Faloon says the Deputy Registrar was wrong to find no merit in his ground of appeal that he is immune from bankruptcy. He says his litigation wasbrought pursuant to special powers arising from his position as trustee of his father'sestate. As the Associate Judge explained, the Public Trust was granted probate and2 Reekie v Attorney-General [2014] NZSC 63, [2014] 1 NZLR 737 at [35].3 At [20].Mr Faloon had no right to commence proceedings on behalf of his father's estate.4Mr Faloon has provided no convincing reason why that is incorrect.[9] Secondly, Mr Faloon says security should be deferred while he awaits permission from the Official Assignee to obtain a warrant to investigate a company under the Corporations (Investigation and Management) Act 1989. Such a warrantwill not affect Mr Faloon's appeal to this Court. And it is highly unlikely he will be appointed by the Registrar of Companies in any case.5[10] Thirdly, Mr Faloon says the compensation given by the Crown in respect of the compulsorily acquired land (in the 1990s) was never paid to him. This issue has been ventilated already in earlier proceedings. The land was owned by a company,not Mr Faloon. Any claim for compensation would lie with the company'sliquidators. There is nothing in this point.[11] Finally, Mr Faloon submits the Deputy Registrar exceeded her jurisdiction in suggesting that ongoing patent proceedings in the High Court between Mr Faloon and the Commissioner of Patents, Trade Marks and Designs are unlikely to succeed. This too was an entirely reasonable inference, given Mr Faloon's extensive history ofunsuccessful litigation and the absence of any counsel's opinion in support. The Deputy Registrar concluded that the patent proceedings are unlikely to affect this appeal. Such a merits assessment is mandated by Reekie, and was correct.[12] The Deputy Registrar's assessment that this appeal lacks merit is correct.No public interest[13] The Deputy Registrar found there is no public interest in this appeal so as to warrant dispensing with security. I agree. The appeal relates to matters unique to Mr Faloon.4 Commissioner of Inland Revenue v Faloon, above n 1, at [29].5 Corporations (Investigation and Management) Act 1989, ss 17(1)(d), 19, 21, 22 and 24.Result[14] The application to review the Deputy Registrar's decision is declined.Security of $6,600 is to be paid within 20 working days of this decision.Solicitors:Crown Law Office, Wellington for Respondent