SHARMA V WATI COA CA33/2012

SHARMA V WATI COA CA33/2012 [16 May 2012]IN THE COURT OF APPEAL OF NEW ZEALANDCA33/2012[2012] NZCA 195BETWEEN DEO DATT SHARMAApplicantAND NIRMALA WATIRespondentHearing: 8 May 2012Court: Arnold, Ellen France and White JJCounsel: Applicant in PersonA J H Whitten-Hannah for RespondentJudgment: 16 May 2012 at 11 amJUDGMENT OF THE COURTA The application for special leave to appeal is dismissed.B The applicant must pay the respondent costs for a standard application on a band A basis, plus usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Arnold J)Introduction[1] The applicant, Dr Sharma, applies for special leave to appeal against a decision of Rodney Hansen J in the High Court.1 In that decision, the Judge declined Dr Sharma's application for review of a decision of Associate Judge Bell in which1 Sharma v Wati HC Auckland CIV-2008-404-6367, 30 September 2011.the Associate Judge refused to set aside five bankruptcy notices issued against Dr Sharma by his former wife, the respondent Ms Wati.2 The bankruptcy notices related to five costs orders that had been made against Dr Sharma in favour of Ms Wati, totalling $20,605.24. Dr Sharma sought leave to appeal from the High Court, but his application was declined.3Background[2] The background is a little complicated. Dr Sharma's original application to set aside the bankruptcy notices raised three grounds, namely:(a) abuse of process, arising from the fact that five bankruptcy notices were filed (one in respect of each debt) rather than one notice covering all five debts, which had the effect, he said, of inflating the costs and fees;(b) he was solvent and able to pay his debts; and(c) he had a cross claim in that he was owed $177,500 by Ms Wati.[3] The application first came before Wylie J. He dismissed the first two grounds, but adjourned the application in respect of the cross claim ground.4 The reason for this was that the cross claim was based on a decision of Judge Clarkson in the Family Court. The Judge had ordered that the former family home of Dr Sharma and Ms Wati should vest in Ms Wati and she should pay Dr Sharma $177,500 on the date of vesting, which was to be 30 November 2013.5 Dr Sharma appealed againstthe Family Court's judgment. His appeal had not been heard when his application toset aside the bankruptcy notices came before Wylie J. Wylie J considered that Dr Sharma's cross claim argument might be affected by the appeal and adjourned that aspect of the argument until the result of the appeal was known.2 Wati v Sharma HC Auckland CIV-2008-404-6367, 9 March 2011.3 Sharma v Wati HC Auckland CIV-2008-404-6367, 30 November 2011.4 Sharma v Wati HC Auckland CIV-2008-404-6367, 29 January 2009.5 NW v DDS FC Waitakere FAM-2002-90-1294, 16 June 2008.[4] Allan J heard Dr Sharma's appeal against Judge Clarkson's judgment. The appeal was partially successful in that Allan J quashed the order fixing Dr Sharma'sinterest in the relationship property at $177,500 and postponing the vesting of the matrimonial home until 30 November 2013 and substituted an occupation order in favour of Ms Wati until 31 October 2013, combined with a direction that the matrimonial home then be offered for sale with the sale proceeds to be divided equally.6[5] Following that decision, Dr Sharma's adjourned setting aside application came on for hearing before Associate Judge Bell. Besides the cross claim ground, Dr Sharma raised two further points. The first was that he had made a payment of $21,000 into Court as security. The second related to the certificates of judgment provided to the Court to allow the bankruptcy notices to issue, which, Dr Sharma said, were not annexed to the bankruptcy notices in proper form.[6] Associate Judge Bell rejected all three grounds:(a) In relation to the cross claim, the Associate Judge said that he was required to decide the matter by reference to the orders made by Allan J rather than by reference to the original orders of Judge Clarkson. The effect of Allan J's decision was that the proceeds from the sale ofthe matrimonial home would be split equally between Dr Sharma and Ms Wati: there would be no debtor/creditor relationship between them so the issue of set-off did not arise.(b) In relation to the payment into Court, the Associate Judge noted thatDr Sharma's payment into Court was not to provide Ms Wati with security but simply to demonstrate his solvency. Solvency was not a basis on which the bankruptcy notices could be set aside.(c) In relation to the certificates of judgment point, the Associate Judge held that the certificates were in proper form. In any event, this was simply a technical point which did not affect the substance.6 S v W HC Auckland CIV-2008-404-4494, 27 February 2009 and 8 October 2009.[7] On the review before Hansen J, Dr Sharma argued that Associate Judge Bell was wrong to determine the cross claim ground by reference to Allan J's judgmentrather than that of Judge Clarkson. Hansen J, having referred to s 17 of the Insolvency Act 2006 and r 24.10 of the High Court Rules, concluded that the time at which Dr Sharma was required to satisfy the Court that he had a cross claim against Ms Wati was the time when his application to set aside the bankruptcy notices was determined rather than the time at which his application to set aside was filed.[8] As to Dr Sharma's argument that the bankruptcy notices were defectivebecause they did not attach certified copies of the relevant judgments or orders, Hansen J held that s 418 of the Insolvency Act (which deals with defects in proceedings) applied to cure any defects in the notices, no prejudice having been identified by Dr Sharma.[9] In the result, then, Hansen J rejected Dr Sharma's application for review andsubsequently refused to grant him leave to appeal to this Court. Hence the present application.[10] For the sake of completeness, we should record that Dr Sharma has, since the hearing of the application, filed a memorandum in which he invites us to treat his present application as an application for an extension of time within which to appeal. The reason for that will become apparent in the discussion which follows.Approach to be adopted[11] The principles to be applied in respect of applications of this sort are those applied under s 67 of the Judicature Act 1908. Those principles are explained inWaller v Hider7 and Snee v Snee.8 The proposed appeal must raise some question of law or fact capable of bona fide and serious argument. In addition, the case must involve some interest, public or private, which is of sufficient importance to outweigh the costs and delay of a further appeal.7 Waller v Hider [1998] 1 NZLR 412 (CA).8 Snee v Snee (1999) 3 PRNZ 609 (CA).Discussion[12] In his written submissions, Dr Sharma simply raised again the various grounds that he had raised before Associate Judge Bell and Hansen J. We see no merit in any of those grounds, for the reasons given in the judgments of the Courts below. Accordingly, we do not propose to discuss them.[13] However, in his oral submissions, Dr Sharma raised for the first time a further argument. This was that he had a right of appeal to this Court againstAssociate Judge Bell's judgment (rather than a right of review to the High Court) because Associate Judge Bell had heard the case in Court rather than in chambers. Accordingly, he submitted, he should be allowed to institute the appeal process in this Court (although he had, of course, to apply for an extension of time within which to appeal because he is well out of time to lodge an appeal). Any appeal would also, he said, extend to Wylie J's judgment.[14] The question of appeal versus review in the insolvency context is by no means straightforward. This is because in addition to the general appeal/review provisions applicable to Associate Judges in the Judicature Act, there are particular provisions in the Insolvency Act and there is, arguably at least, some inconsistency between the two statutory schemes. Several High Court judgments have grappled with this issue, most notably the judgment of Heath J in Balzat v Zhang.9[15] The possible inconsistency arises in the following way:(a) Under the Judicature Act, decisions of Associate Judges in open Court may be appealed as of right to this Court,10 while decisions of Associate Judges in chambers are subject to review in the High Court.11 An appeal from a decision of the High Court on review is possible only with the leave of the High Court or special leave granted by this Court.12 Associate Judges have jurisdiction to9 Balzat v Zhang HC Auckland CIV-2008-404-6062, 22 September 2009.10 Judicature Act 1908, s 26P(2).11 Section 26P(1).12 Section 26P(1AA).exercise the powers of the Court or a Judge under the Insolvency Act.13 Where Associate Judges make decisions involving the exercise of such powers in open Court, it is clear that there is a right of appeal to this Court rather than a right of review to the High Court.14 Where such decisions are made in chambers, however, the Judicature Act provides a right of review to the High Court. Where an application for review is made, the Court "must review the ... decision" and maymake such order as is just.15(b) The Insolvency Act provides for decisions made by the Court or a Judge under the Act to be subject to review in the High Court16 or to appeal to this Court.17 Subject to three irrelevant exceptions, decisions under the Act may be made in open Court or in chambers.18(The High Court Rules require that interlocutory applications be dealt with in chambers unless the Judge directs otherwise.)19 Where an Associate Judge has delivered a fully reasoned decision under the Insolvency Act, High Court Judges have generally refused to exercise their Insolvency Act discretion to review the decision, on the ground that an appeal is the appropriate pathway.20 This does not depend on whether the decision was made in open Court or in chambers.[16] We are in no position to provide in this judgment a definitive exposition concerning the inter-relationship between these two sets of provisions. Dr Sharma has simply identified the issue. Mr Witten-Hannah for the respondent was, understandably, taken by surprise by the point and was unable to advance matters in his oral submissions.13 Section 26I(2)(ha).14 Talyancich v Index Developments Ltd [1992] 3 NZLR 28 (CA), where this Court said that whena Master was exercising the jurisdiction of the Court under s 26I, the Master had to do so inCourt and not in chambers: at 36-37.15 Section 26P(1).16 Insolvency Act 2006, s 414(1).17 Section 414(2).18 Section 411(2).19 High Court Rules, r 7.34(1).20 See Balzat v Zhang, above n 9 at [59] and Prasad v Indiana Publications (NZ) Ltd HC AucklandCIV-2010-404-3333, 20 July 2011 at [17].[17] We consider, however, that Hansen J did have jurisdiction to reviewAssociate Judge Bell's judgment:(a) Under s 26I(2)(ha) of the Judicature Act, Associate Judge Bell was entitled to exercise "all the jurisdiction and powers which are vested in the Court or a Judge" by the Insolvency Act (subject to someirrelevant exceptions). Accordingly, Associate Judge Bell was entitled to hear Dr Sharma's application to set aside the bankruptcynotices.(b) Under s 411(1) of the Insolvency Act, a Judge (or an Associate Judge) may exercise all the powers and jurisdiction of the Court under the Act and under s 411(2) a Judge (or an Associate Judge) may hear an application under the Act in open Court or in chambers (again, subject to some irrelevant exceptions).(c) Under r 7.34(1) of the High Court Rules, because the application was interlocutory, it was to be dealt with in chambers unless Associate Judge Bell directed otherwise.(d) There being no indication that the Associate Judge did direct otherwise, his decision must be treated as having been made in chambers.(e) Accordingly, the High Court had a power of review under s 26P(1) of the Judicature Act.[18] Implicit in this analysis is that Associate Judge Bell was exercising the jurisdiction of a Judge under the Insolvency Act, rather than the jurisdiction of the Court. As a consequence, this Court's observation in Talyancich v Index Developments Ltd, to the effect that, where an Associate Judge exercises the jurisdiction of the Court under s 26I, the Associate Judge must do so in Court and not in chambers, does not apply.2121 Talyancich v Index Developments Ltd, above n 14 at 36. This feature also distinguishes thesituation in Wilson v ANZ National Bank Ltd HC Auckland CIV-2010-404-5025, 22 July 2011 at[6].[19] On the assumption that the preceding analysis is correct, we consider that special leave should not be granted as the test for leave is not met. However, against the possibility that the analysis is not correct, we propose to consider what decision we would reach if we were to accede to Mr Sharma's invitation to treat thisapplication as an application for an extension of time within which to appeal.[20] We would reject such an application. The overarching consideration is where the interests of justice lie. Various factors will be relevant, including the length ofthe delay and the reasons for it; the parties' conduct; the extent of the prejudicecaused by the delay; the prospective merits of the proposed appeal; and whether the proposed appeal raises any issue of public importance.22[21] These factors are, overwhelmingly, against the grant of an extension of time.First, Associate Judge Bell's decision was given in March 2011, so the delay is considerable. Much of the reason for the delay lies in Dr Sharma's decision to pursue a procedural path which he now says was erroneous. Second, Dr Sharma'sconduct in the proceedings leaves much to be desired. He has taken every opportunity to seek to avoid his clear obligation to meet the costs orders made against him. Now, opportunistically, he seeks to take advantage of another perceived avenue for challenge. Third, Ms Wati has suffered prejudice in terms of time, expense and no doubt stress as a result of Dr Sharma's unreasonable intransigence.Fourth, the proposed appeal is without merit, for the reasons identified in the judgments below. Finally, there is no issue of public importance meriting consideration by this Court.Decision[22] The application for special leave to appeal is dismissed. The applicant must pay the respondent costs for a standard application on a band A basis plus usual disbursements.Solicitors:Witten-Hannah Howard, Takapuna for Respondent22 See Andrew Beck and others McGechan on Procedure (looseleaf ed, Brookers) at [CR29A.02].