HENDERSON V THE OFFICIAL ASSIGNEE CA202/2014 [2014] NZCA 104

HENDERSON V THE OFFICIAL ASSIGNEE CA202/2014 [2014] NZCA 104 [27 March 2015]IN THE COURT OF APPEAL OF NEW ZEALANDCA202/2014[2015] NZCA 104BETWEEN DAVID IAN HENDERSONApplicantAND THE OFFICIAL ASSIGNEERespondentCourt: White, Miller and Cooper JJCounsel: Applicant in personS M Kinsler for RespondentJudgment:(On the papers)27 March 2015 at 3 pmJUDGMENT OF THE COURTA The application for an extension to 15 October 2014 of the time to make application for a fixture is granted.B Questions of costs are reserved to be dealt with at the hearing of the appeal.____________________________________________________________________REASONS OF THE COURT(Given by Cooper J)[1] On 15 April 2014, the applicant, David Henderson, filed an appeal against a judgment of Associate Judge Osborne requiring him to deliver up certain documents to the respondent, the Official Assignee (the Assignee).1 Mr Henderson is a bankrupt1 Havenleigh Global Services Ltd & FM Custodians Ltd v Henderson [2014] NZHC 499 [judgment under appeal].and production of the documents was ordered in the context of the Assignee'sopposition to discharge of the bankruptcy.[2] Mr Henderson did not apply for the allocation of a hearing date or file the case on appeal within three months after the appeal was brought. Consequently, pursuant to r 43(1) of the Court of Appeal (Civil) Rules 2005, the appeal was to be treated as having been abandoned. The Registrar of this Court certified that it was deemed abandoned as at 17 July 2014.[3] Mr Henderson had previously made an application to dispense with payment of security for costs. However, in a letter dated 15 July 2014, the Registrar had advised Mr Henderson that security in the sum of $5,880 was required to be paid on or before 11 August 2014. Mr Henderson claims that the Registrar's letter was sentto the wrong email address and consequently not received by him until 3 September.[4] On 24 September 2014, Mr Henderson applied under r 43(2) for an extension of time to 15 October 2014 to apply for the allocation of a hearing date for the appeal. In his application, Mr Henderson acknowledged that r 37(2) prevented him from applying for the allocation of a hearing date at that stage, because he was in default of his obligation to pay security for costs. Subsequently he paid the required security on 15 October 2014 at which time he also proffered the setting down fee of $2,700. The effectiveness of those steps, however, depends on the Court granting him an extension of the time limited by r 43(1).[5] The Registrar referred the application to Wild J who issued a minute on 15 October 2014 recording that he was not prepared to grant Mr Henderson'sapplication acting as a single judge of this Court under r 7(1). He noted that the application would need to be considered by three judges. The parties have consented to the matter being dealt with on the papers.Background[6] Mr Henderson would have been automatically discharged from bankruptcy in January 2014 but for an objection made by the Assignee on 28 November 2013. In addition, two other parties opposed the discharge and the High Court ruled that theyhad standing as creditors.2 Because of the objections the Assignee was required by s 295(1) of the Insolvency Act 2006 (the Act) to summons Mr Henderson for public examination. The Assignee was also required to prepare and file a report pursuant to s 296(1)(b) of the Act.[7] The subject matter of such a report is prescribed by s 296(2) of the Act. The prescription is extensive, stating:(2) The Assignee must report as to—(a) the bankrupt's affairs; and(b) the causes of the bankruptcy; and(c) the bankrupt's performance of his or her duties under thisAct; and(d) the manner in which the bankrupt has obeyed orders of the court; and(e) the bankrupt's conduct before and after adjudication; and(f) any other matter that would assist the court in making adecision as to the bankrupt's discharge.[8] To assist with the preparation of the report the Assignee applied to the High Court for orders relating to:(a) Electronic documents in the possession of Robert Walker, the liquidator of Property Ventures Ltd (in receivership and liquidation) and other entities previously associated with Mr Henderson. Thosedocuments had been recovered from Mr Henderson's personal laptopand stored on an external hard drive and flash drives. The laptop was obtained by police pursuant to a search warrant executed on 8 April 2011 at premises at 96 and 110 Lichfield St, Christchurch, following the February earthquake. The Official Assignee sought an order thatMr Walker deliver the drives to her. We will refer to this as the "hard drive application".2 Havenleigh Global Services Ltd v Henderson [2014] NZHC 336.(b) Emails in Mr Henderson's possession which were sent to or received by him from named addressees/correspondents during his bankruptcy. The application extended to the affairs of any company of which he had been a shareholder or director, or the holder of any beneficial interest. The Official Assignee sought directions as to whether she was entitled to require Mr Henderson to deliver the emails to her; whether Mr Henderson could resist doing so on the basis that they related to property other than his personal property; and as to theambit of the term "conduct" as used in ss 171 and 165 of the Act. We will refer to this as "the emails application".[9] The Assignee's application was supported by an affidavit made byGrant Slevin, a senior investigating solicitor employed by the Insolvency and Trustee Service. Mr Slevin recorded that the Assignee suspects that Mr Henderson has taken part in the management or control of businesses during his bankruptcy, in breach of s 149 of the Act, and set out the reasons for that suspicion.[10] Mr Henderson opposed the hard drive application on the basis that the documents sought did not disclose a breach of the Act, and that it would be unfair and oppressive to grant the applications because there was no evidence that they were material to any breach. He also raised issues of privacy and legal professional privilege. He did not oppose the emails application, but he sought that it be made subject to certain protections relating to documents of a purely personal nature.[11] All of the issues raised in opposition to the hard drive application were rejected by the Judge following an extensive review of the relevant facts. Heconsidered there were legitimate reasons for inquiry into Mr Henderson's role inrelation to three companies: RFD Finance Ltd, Liverton Technology Group Ltd and Odeon Property Holdings Ltd. The documents sought would be relevant to that inquiry. Any privacy issues could be met by directing the Assignee to return to Mr Henderson any documents that she accepted were purely private in nature. Other documents, in respect of which the Assignee anticipated a dispute, should be quarantined and not disclosed without further order of the Court. Any issue as toprivilege was to be appropriately determined as and when the relevant documents were before the Court and able to be properly assessed.The applicant's submissions[12] Mr Henderson's grounds for the application may be summarised as:(a) The case on appeal was filed in time.(b) The letter from the Registrar advising him that an application to dispense with security for costs had not been granted was only received by him on 3 September 2014, having been sent to the wrong email address.(c) He could not seek the allocation of a hearing date until he had received notification of the outcome of his application to dispense with security for costs, because of the provisions of r 37.(d) As his bankruptcy continues pending the hearing of this appeal he would be the only party prejudiced by any delay.(e) The appeal is being brought in good faith, and will raise issues not previously the subject of decision by this Court.(f) An appeal from the High Court judgment did not require leave and the appeal should not lightly be dismissed for procedural reasons. He asserts that the reason for an initial delay (in making application to dispense with security for costs) was an unintentional error on his part, which was compounded by the Registrar using the wrong email address. He claims he has taken all other steps necessary to prosecute the appeal.[13] The Assignee opposes the application on the basis that:(a) Although the notice of appeal was filed in time, Mr Henderson did not provide security for costs nor apply for a dispensation within time. That meant that the appeal was deemed to be abandoned on 17 July.(b) Mr Henderson has failed to comply with the orders made in the High Court and has not sought a stay. The public examination has been delayed on a number of occasions on the basis that the appellant has not provided information properly requested in accordance withthe High Court's judgment.(c) The applicant's reason for delay is thin, notwithstanding any extra latitude he might be afforded as a litigant in person. Counsel relies on the fact that the application for dispensation from the requirement to pay security for costs was itself brought out of time.(d) The merits of the appeal are weak, the High Court having concludedthat the respondent had "solid ground" for the investigation shewishes to make.3(e) The contentions Mr Henderson seeks to advance on appeal would unduly restrict the scope and effectiveness of the inquiry the respondent is required to undertake under pt 3 of the Act.(f) Further delay and uncertainty will continue to frustrate the effectiveadministration of Mr Henderson's bankruptcy.(g) Mr Henderson himself will be prejudiced as a result of remaining bankrupt pending completion of the public examination procedures.The law[14] Rule 43(1) provides that an appeal is to be treated as having been abandoned if the appellant does not apply for the allocation of a hearing date and file a case on appeal within three months after the appeal is brought. However, under r 43(2):3 Judgment under appeal, above n 1, at [103].The Court, on application, may—(a) grant an extension of the period referred to in subclause (1); and(b) grant 1 or more further extensions of any extended period.[15] Then, under r 43(3):An application for the grant of an extension may be made before the expiry of the period to which the application relates or within 3 months after that expiry; but no extension may be granted on an application that is made later than 3 months after that expiry.[16] Consequently, an application for the grant of an extension under r 43(2) may effectively be made within six months after the appeal is filed. In this case, the appeal was filed on 15 April 2014, and Mr Henderson's application for an extensionof time was made on 24 September 2014. That was within the second three month period but as we have already noted, when the application was made it breached r 37(2), which provides:The appellant may not apply for the allocation of a hearing date under rule 38(1) if the appellant is in default of any obligation to pay security for costs.[17] As Mr Henderson foreshadowed in his 24 September application, he was not to pay security until 15 October 2014 and was therefore in default until that day. However, as 15 October was within the second three month period allowed by r 43(3), we consider he has, albeit belatedly, now made a proper application for an extension of time.[18] Although r 43(1) justified the Registrar's certification that the appeal wasdeemed abandoned as at 17 July, the effect of r 43(2) and (3) is that, if an extension of time is granted, the appeal may proceed.[19] The relevant approach to applications such as the present was recently confirmed by this Court in Schmidt v Ebada Property Investments Ltd:4[7] Having failed to meet the six month deadline, however, the intended appellant faces an appeal that is treated as abandoned, unless the Court4 Schmidt v Ebada Property Investments Ltd [2012] NZCA 452.intervenes. The position under the current rule was summarised as follows in Harris v Davies:5Once an appellant has allowed r 43 to be triggered, he or she is then in a position where, instead of being able to appeal as of right, he orshe "requires the exercise by this Court of a positive discretion":Russell v Commissioner of Inland Revenue (2006) 22 NZTC 19,807 at [10] (CA). Before exercising that discretion, this Court is always interested in the reason why the appeal has not been prosecuted diligently. Another relevant factor, as stated in Russell, is "whether the proposed appeal is genuinely arguable". Appeals as of right can be brought regardless of merits, but once an appellant needs leave to continue, this court will generally grant such leave only if the appeal seems meritorious.[20] In that case, the Court's consideration of the issues addressed the length ofdelay, the reason for the delay, issues of prejudice, the merits of the proposed appeal, and whether there had been any disentitling behaviour. The same considerations will be appropriate here.Evaluation[21] Mr Henderson accepts that there was an initial delay on his part in making the necessary application to dispense with security for costs. The application was not made until 16 July, and it was by then well out of time. It was subsequently rejected on that basis. He claims it was late due to inadvertence: he assumed he had three months to apply.[22] Having said that, it seems that because of the wrongly addressed communication from the Registrar, Mr Henderson did not become aware of the result of his application to dispense with security until 3 September 2014. It appears that he then, on 7 September, sent an email to the Registrar asking for an extension. On 16 September the Registrar responded asking for his request to be placed in a memorandum, which Mr Henderson filed on 24 September.[23] Although Mr Henderson thereby purported to make his application for an extension under r 42(2), he did so on the basis that he then remained in breach of his obligation to pay security for costs, and was therefore unable to make an application5 Harris v Davies [2007] NZCA 358 at [8].for a hearing date because of r 37(2). Security was not paid until 15 October and that effectively defines the period of delay relevant for present purposes.[24] Overall, however, although the delays have not been insignificant it is not appropriate to lay all responsibility for that at the feet of Mr Henderson. Although Mr Henderson could have proceeded more quickly once becoming aware of the fate of his application to dispense with security, any additional delay was not significant.[25] We are not in a position to say much about the merits, other than to note that Mr Henderson has particularised 15 grounds of appeal against what on the face of it was a thorough and careful judgment of the High Court. Some of the issues he raises are novel (at least in this field) and derive from the fact that the hard drive application sought information obtained as a result of a search that Mr Henderson claims was unlawful and carried out in breach of s 21 of the New Zealand Bill of Rights Act 1990. He also raises issues concerning the extent to which material relating to personal dealings with his spouse was properly able to be the subject of disclosure under the Insolvency Act regime, and as to the proper ambit of relevant provisions of the Act. In the absence of full submissions addressing the merits, we are not prepared to find that Mr Henderson's appeal would be hopeless.[26] We accept that if the present application is granted there will be prejudice of a general kind arising out of continuing delay affecting the public examination of Mr Henderson. However, Mr Kinsler for the Assignee has not bought any particular matter to our attention. Further, Mr Henderson will throughout remain a bankrupt and, notionally at least, he is the person most affected by the delay.[27] Apart from the issue of delay, we are not aware of any disentitling conduct militating against granting the application.[28] In all the circumstances, we consider the appropriate course to follow is to grant the application and extend the period of applying for a fixture to 15 October 2014, as sought.[29] In doing so, we direct the Registrar to set the appeal down for hearing as soon as convenient and note that a degree of urgency will be appropriate.Result[30] The application for an extension to 15 October 2014 of the time to apply for a fixture is granted. Questions of costs are reserved to be dealt with at the hearing of the appeal.Solicitors:Meredith Connell, Wellington for Respondent