JONES v NEW ZEALAND BLOODSTOCK FINANCE & LEASING LIMITED [2021] NZHC 1228

JONES v NEW ZEALAND BLOODSTOCK FINANCE & LEASING LIMITED [2021] NZHC 1228 [28 May2021]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-1822[2021] NZHC 1228UNDER Rule 2.5 of the High Court Rules 2016BETWEEN GREGORY JOHN JONESApplicantAND NEW ZEALAND BLOODSTOCKFINANCE & LEASING LIMITEDRespondentCIV-2020-404-1357UNDER The Insolvency Act 2006BETWEEN GREGORY JOHN JONESApplicantAND NEW ZEALAND BLOODSTOCKFINANCE & LEASING LIMITEDRespondentHearing: 3 February 2021Appearances: Appellant in personF A King and A Osama for the RespondentJudgment: 28 May 2021JUDGMENT OF HARLAND JThis judgment was delivered by me on 28 May 2021, at 4 pm pursuant to Rule 11.5 of the High CourtRules.Registrar/Deputy Registrar Date:Solicitors:McKenna King, HamiltonCopy to the AppellantIntroduction[1] Mr Jones applies for an order to review the Registrar's decision to seal asummary judgment made by Jagose J on 5 June 2020.1 He also applies to set aside abankruptcy notice and to stay the bankruptcy proceedings based on the sealedjudgment.[2] Mr Jones submits that the Registrar was not entitled to seal the judgment forthe amounts of interest and solicitor-client costs, and therefore the bankruptcy noticeupon which it is based should be set aside. He also submits that any bankruptcyproceedings should be stayed or "halted" until the various appeals he has to theCourt of Appeal in relation to the summary judgment have been heard.[3] The respondent, New Zealand Bloodstock Finance & Leasing Ltd(NZ Bloodstock) opposes both applications.[4] A large amount of material was filed by both parties in support of theirrespective positions on the applications. Further submissions were filed after thehearing to cover matters that were less than clear during the hearing on 3 February2021.[5] I have decided to grant both applications. This judgment sets out the reasonsfor my decision.The factual background[6] On 6 September 2019, NZ Bloodstock sought summary judgment on its claimagainst Mr Jones for an amount of $431,630.22 (plus interest and solicitor-client costs)in repayment of credit provided to him in connection with his bloodstock business.There were two contractual documents upon which the claim was based: a creditcontract (a current advances contract), and a lease to purchase bloodstock agreement(the lease). Mr Jones opposed the application on various grounds including that hehad a cross claim and/or equitable set-off against NZ Bloodstock.1 New Zealand Bloodstock Finance & Leasing Ltd v Jones [2020] NZHC 1233, (2020) 25 PRNZ347.[7] Prior to the summary judgment hearing, Mr Jones filed two interlocutoryapplications dated 19 and 25 May 2020 dealing with pre-trial evidential issues. Healso filed applications to adjourn the hearing and stay the application for summaryjudgment. None of these applications were dealt with before the summary judgmenthearing.[8] The summary judgment hearing proceeded before Jagose J on 26 May 2020and the Judge delivered judgment in respect of it on 5 June 2020. The application forsummary judgment was granted.2 Mr Jones' other applications for adjournment, stayof the proceedings and pre-trial evidential rulings were also dismissed.[9] On 16 June 2020, Mr Jones sought leave to appeal to the Court of Appealagainst Jagose J's decision to dismiss his interlocutory applications. He also appliedfor a stay of execution of the 5 June judgment.[10] Counsel for NZ Bloodstock then filed a memorandum dated 1 July 2020seeking to recover the sum of $591,875.76 purportedly based on the judgment ofJagose J. A copy of this memorandum was purportedly emailed to Mr Jones at thesame time it was filed, on 2 July 2020; however, receipt of it was not, and has neverbeen, acknowledged by Mr Jones.[11] The order for summary judgment appears to have been sealed by theHigh Court on 6 July 2020 for the amount included in NZ Bloodstock's costsmemorandum of 1 July 2020. I say "appears" because orders are backdated by theRegistry to the date of the judgment (here 5 June 2020), and there is no record of theactual date of sealing. However, the front page of the original sealed judgment isstamped with the date 6 July 2020. This date is corroborated by the sealing order feereceipt scanned onto the back of the order, which is dated 6/07/2020.[12] The sealed judgment is as follows:1. On 5 June 2020, His Honour Jagose J granted summary judgment of$431,632.22 (plus interest and solicitor-client costs), in favour of theplaintiff.2 Jones, above n 1, at [38].2. Judgment is given that the plaintiff recovers $591,875.76, being:2.1. $431,632.22 principal debt;2.2. $52,221.59 interest; and2.3. $108,021.95 solicitor-client costs.[13] On 9 July 2020, Jagose J dismissed Mr Jones' applications for leave to appealto the Court of Appeal and for a stay of execution of the summary judgment; however,there are still two extant appeals to the Court of Appeal from the summary judgmentproceedings, both in relation to the substantive judgment and in relation to threeinterlocutory applications.[14] On 16 July 2020, the sealed order was purportedly served on Mr Jones by wayof email. This email referred to email service being permitted because of Mr Jones'notice of representation dated 29 November 2020. On the face of it, this referencedoes not make sense, as the date given for the notice of representation is after the dateof the email. A check of the Registry file reveals that the date of the documentconcerned is 29 November 2019. This document is a notice under r 5.41 of the HighCourt Rules 2016 (the Rules) confirming that Mr Jones intended to act in person. Hisaddress for service included an email address.[15] NZ Bloodstock relies on the email of 16 July 2020 as service on Mr Jones ofthe order thereby requiring him to pay the sum of $591,875.76 within 28 days of theemail. The email refers to this deadline being 13 August 2020 and a trust accountdeposit slip was enclosed to enable payment.[16] Mr Jones did not confirm that he had been served with the sealed order on16 July 2020. In these proceedings, Mr Fraser filed a supplementary affidavitattaching the email correspondence dated 16 July 2020 and further emailcorrespondence of 21 January 2021 and 25 January 2021 purporting to re-serve thesealed order on Mr Jones, this time with the sealed order attached as it had apparentlynot been included as an attachment to the 16 July 2020 email.33 The sealed order had been annexed to Mr Fraser's first affidavit.[17] Mr Jones did not and has not paid all or any of the amount referred to above toNZ Bloodstock.[18] On 14 August 2020, NZ Bloodstock applied to the High Court for a bankruptcynotice to be issued.[19] A bankruptcy notice was issued on 20 August 2020.[20] On 27 August 2020 at 11:49am, counsel for NZ Bloodstock sent an email toMr Jones attaching the bankruptcy notice and stating that Mr Jones was in breach ofthe sealed order.[21] Mr Jones sent an email response at 11:59am on 27 August 2020, saying:"Please withdraw the bankruptcy notice immediately. You were not entitled to sealthe judgment on which it is based as the judgment is not in accordance with thejudgment of his honour. If you proceed I will institute proceedings against you inrespect of this mistake. I am currently preparing a stay of execution in this matter forthe Court of Appeal. My suggestion is you refrain from proceeding until that is heard.Please advise your intentions immnediately (sic)."[22] Counsel for NZ Bloodstock responded by email at 12:29pm on 27 August 2020that the notice would not be withdrawn. The email also says: "Please find attachedemail service of the judgment on you." However, the email attached to Mr Jones'affidavit does not include a copy of the sealed judgment. Mr Jones replied at 12:42pm:"I leave that to you. You are aware of the ramifications of proceeding having beenplaced on notice about its deficiencies."[23] On 16 September 2020 the bankruptcy notice was again served upon Mr Jones.Mr Jones had 10 working days from the date of service of the notice to comply withit. The expiry of 10 working days from the date of service was 30 September 2020.Mr Jones did not pay all or any of the amount referred to in the bankruptcy notice toNZ Bloodstock.[24] The application to set aside the bankruptcy notice by Mr Jones was served oncounsel for NZ Bloodstock on 30 September 2020. NZ Bloodstock has therefore notapplied for adjudication.Application to review Registrar's decision to seal judgmentThe application and notice of opposition[25] Mr Jones' original application for a review of the Registrar's decision to sealjudgment related only to the interest and solicitor-client costs included in the order,not the principal sum of $431,632.22.4[26] The day before this hearing, Mr Jones filed an amended application entitled"amended application for orders that the Registrar's decision to seal judgment for asum including solicitor-client costs be reviewed". The amended application does notchange or amend the nature of the challenge to the sealed order as outlined;5 however,there is a slight amendment to paragraph 3 of the application, which outlines the legalbasis for it. To support his application, Mr Jones now relies on rr 1.6, 2.5, 2.6, 2.11,11.11 and 14 of the Rules, s 151 of the Senior Courts Act 2016, the inherent jurisdictionof the Court and a minute of Nation J, Fisher v Fisher.6[27] Counsel for NZ Bloodstock opposed the Court receiving the amendedapplication and affidavit but conceded there was no prejudice because of it havingbeen filed just before the hearing. Accordingly, while not a practice to be encouraged,I allow the filing of the amended application.[28] NZ Bloodstock opposed the application on the grounds that it has been broughtout of time and there is no legal basis for it under the provisions relied on by Mr Jones.It relied on rr 2.11 and 14.1 of the Rules, and Jagose J's judgment of 5 June 2020.4 The original application was dated 30 September 2020.5 The amended application appears to relate more in substance to the application to set aside thebankruptcy notice as it repeats paragraphs 1 and 2 of Mr Jones' original application for that order.6 Fisher v Fisher HC Auckland CIV-2015-404-574, 14 April 2016.The arguments – an overview[29] Mr Jones submitted that:(a) Jagose J did not in fact award solicitor-client costs or interest in hisjudgment, as the evidence before the Judge did not include a calculationfor interest or solicitor-client costs and therefore could only relate tojudgment on the principal sum.(b) If interest was awarded, the statement of claim sought interest at therate of 10 per cent per annum whereas the judgment subsequentlysealed incorrectly included interest at the rate of 16 per cent per annum.(c) The statement of claim did not seek solicitor-client costs, but if it did,NZ Bloodstock, through its memorandum for costs, sought to introduceadditional evidence after the hearing and the Registrar sealed thejudgment on the basis of that evidence, which he or she was not entitledto do under rr 2.5 to 2.10 of the Rules, as sealed orders can only containmaterial that was part of the judgment being sealed, as held by Nation Jin Fisher v Fisher.7(d) These are not matters that can or should be dealt with on appeal.[30] Mr King for NZ Bloodstock submitted that:(a) Judgment was granted upon the terms of the statement of claim andtherefore Mr Jones was required to pay solicitor-client costs andinterest.(b) The Registrar, having access to the statement of claim, judgment andmemorandum of counsel, was entitled to seal the order based on thecontractual interest rate of 16 per cent.7 Fisher, above n 6, at [4]–[5].(c) Any perceived issues with the sealed judgment are a matter for appeal.(d) The Rules do not permit the sealing of the judgment to be reviewed, butif they do, the application has been out of time, which is fatal.The issues[31] From the above, I distil the issues I need to determine as:(a) Did the Registrar correctly seal the judgment in relation to interestand/or solicitor-client costs?(b) If the answer to (a) is no, how should this be remedied?[32] I deal with each issue in turn.Did the Registrar correctly seal the judgment in relation to interest and solicitor-client costs?[33] Rule 11.11 of the Rules deals with the sealing of judgments by a Registrar. Itprovides:11.11 Judgments to be sealed, dated, and served(1) A Registrar must seal judgments with the seal of the court.(2) A judgment must be sealed—(a) in accordance with any direction given by the Judge relatingto the sealing of the judgment; or(b) if no direction is given, at any time after the judgment is given.(3) Except with the leave of the court, a judgment must not be sealed untilany application under rule 11.9 for the recall of the judgment isdetermined.(4) A sealed judgment must state—(a) the date on which the judgment is given; and(b) Revoked.(5) A party who has a judgment sealed must immediately serve a sealedcopy of it on—(a) every other party who has given an address for service; and(b) any other person who, although not a party, is affected by thejudgment.[34] The first point is that a Registrar "must" seal a judgment in either of the twocircumstances outlined in subs (2). In this case, subs (2)(b) applies. The second point(and there was no dispute about this) is that "the judgment" in this case is the judgmentgiven by Jagose J on 5 June 2020. The question then arises whether the judgmentawarded interest and solicitor-client (i.e. indemnity costs) in favour of NZ Bloodstock.[35] The first paragraph of the judgment outlines that interest and solicitor-clientcosts are part of the claim and in the "Result" section of the judgment, judgment issaid to be given "against Mr Jones on NZ Bloodstock's claim dated 3 September2019".8 The "claim" is the statement of claim described at [1] of the judgment inwhich NZ Bloodstock specifically claimed interest at the rate of 10 per cent andsolicitor-client costs against Mr Jones.[36] There is no reference in the judgment to evidence or argument during thehearing about interest and costs, apart from the description of NZ Bloodstock'sstatement of claim at [1], and Jagose J's specific references to interest and/or costs at[3], [4] and [6] of the judgment.9 Paragraphs [3] and [4] outline the parts of the currentadvances contract that refer to interest at the rate of 10 per cent on the unpaid dailybalance,10 and that Mr Jones was to pay "all legal fees (on a solicitor-client basis) andother fees and expenses" incurred by NZ Bloodstock in enforcing the contract.11Paragraph [6] refers to the part of the lease to purchase agreement dealing with costs.It says that "under the lease, Mr Jones was to 'indemnify' NZ Bloodstock for its costsand expenses incurred under the lease, including 'in recovering any moneys securedhereunder".8 Jones, above n 1, at [1] and [42].9 Jagose J also referred to interest at [18], [13] and [27] of the judgment, in relation to cashflow, NZBloodstock's solicitors' revision of the current advances contract, and Mr Jones' initial defaultunder the lease agreement.10 Jones, above n 1, at [3].11 At [4].[37] Mr King submitted that in relation to interest, the "discounted" 10 per centinterest rate was an original position taken to help Mr Jones repay his debt, but thatMr Jones ignored this offer. He submitted that NZ Bloodstock then sought the penaltyrate of 16 per cent in its costs memorandum based upon its contracts with Mr Jones.Mr King further submitted that the Registrar, having access to the statement of claim,judgment and the costs memorandum, was entitled to seal the order based on thecontractual interest rate of 16 per cent.[38] I have no difficulty in concluding that by referring to giving judgment on the"claim", the Judge was not only referring to the principal sum claimed byNZ Bloodstock against Mr Jones, but he was also referring to interest on the judgmentsum at the rate of 10 per cent because this is what was claimed. In the absence of anamendment to the claim for interest either before or during the hearing, NZ Bloodstockwas not entitled to claim interest at the contract rate of 16 per cent as it did in itsmemorandum after the hearing, given that there is nothing in the judgment to indicatethat this rate of interest, contained as a default rate in the contractual documents, hadbeen replaced by that which had been sought in the statement of claim.[39] Mr Jones' argument that no interest was payable at all is more properly dealtwith on appeal, as it seems to be entwined with his arguments about the principal sumbeing able to be set-off and/or subject to a counter claim. For the purposes of thisapplication, however, I am satisfied that the Registrar was able to seal the principalsum owing of $431,632.22 as well as interest at a rate of 10 per cent.[40] The position in relation to solicitor-client costs is more complex, however,because although such costs were claimed, if the Court did not receive any evidenceabout quantum during the hearing or if costs were not impliedly reserved to be dealtwith later, Mr Jones was not able to challenge the reasonableness of the costs.[41] Mr King's argument was firstly that it was not possible, nor expected, that thestatement of claim would or could have detailed the amount of solicitor-client costsand interest sought, and it is standard practice that these matters are addressed by filinga memorandum of costs and interest after the judgment.[42] Mr King next submitted that viewing the statement of claim as a whole, it isevident NZ Bloodstock sought solicitor-client costs due to a contractual entitlementbecause the two contracts were the foundation of the proceedings. He submitted thatit does not matter that the statement of claim does not spell this out explicitly.[43] Although Mr King submitted that the usual practice is to file a memorandumdealing with solicitor-client costs after the hearing, as this case reveals, such a practicecan create unfairness to the persons against whom such costs are sought if they are notable to challenge the reasonableness of them. But more fundamentally, it is the Judgewho must determine the reasonableness of any solicitor-client costs claimed, not theRegistrar, because such costs are part of the judgment. In the absence of solicitor-client costs being specifically addressed in the judgment, counsel ought to havebrought the matter back to the Judge for his attention prior to asking the Registrar toseal the judgment.[44] While not cited to me by counsel, Black v ASB Bank Ltd is instructive.12 Thatcase concerned an appeal from a decision granting ASB Bank's application forsummary judgment against Mr Black, after which the Judge awarded indemnity costsagainst Mr Black in favour of ASB. The award of indemnity costs was based uponthe contractual provisions of two security documents. One of the issues on appeal waswhether the Judge had erred in awarding indemnity costs. The Court of Appealconsidered the principles that apply when determining whether indemnity costs shouldbe awarded. In doing so, it reiterated the principles it had outlined in Frater Williams& Co Ltd v Australian Guarantee Corp (NZ) Ltd.13 The Court held:[80] Assessing whether the indemnity costs claimed under a contract arereasonable involves the Court making an objective assessment of thesematters:(a) what tasks attract a costs indemnity on a proper constructionof the contract;(b) whether the tasks undertaken were those contemplated in thecontract;12 Black v ASB Bank Ltd [2012] NZCA 384.13 Frater Williams & Co Ltd v Australian Guarantee Corp (NZ) Ltd (1994) 2 NZConvC 191,873(CA) at 191,886–191,887.(c) whether the steps undertaken were reasonably necessary inpursuance of those tasks;(d) whether the rate at which the steps were charged wasreasonable having regard to the principles normallyapplicable to solicitor/client costs; and(e) whether any other principles drawn from the general law ofcontract would in whole or in part deny the claimant its primafacie right to judgment.[45] The Court of Appeal then observed that during a typically busy summaryjudgment list, it would not be feasible for the Court to undertake a detailed assessmentof the reasonableness of indemnity costs claimed under a contract, and it reiterated theobservations it had made in Frater Williams, where it was held that there was "roomfor robust judgment as to the costs considered reasonable in all the circumstances".14If a party is not content with that "robust judgment", the Court of Appeal in Blackoutlined that the dissatisfied party has three options: first, to ask the Judge to make anorder for indemnity costs subject to taxation; second, the parties could agree to bebound by the decision of a suitably qualified practitioner who vets the reasonablenessof the costs; and third, the parties could refer the fee note(s) to the New Zealand LawSociety to revise under the provisions of the then applicable Law Practitioners Act1982.15[46] Although I have set out in detail the salient aspects of the Court of Appeal'sdecision in Black, a significant distinguishing point in that case was that thereasonableness of the indemnity costs had been considered by the Judge, whereas inthis case, that did not occur. It was counsel for the plaintiff's responsibility to raisethe issue of costs with the Judge, particularly as indemnity (solicitor-client costs) hadbeen sought in the claim and because of this, the reasonableness of those costs was amatter the Judge would need to address. It follows that Mr Jones did not have theopportunity to challenge the reasonableness of the solicitor-client costs claimed infront of the Judge, which is where that argument ought to have been advanced.[47] Mr King submitted that full details about the costs sought were raised in hismemorandum of 1 July 2020 that was sent to the Registrar. This is correct, however14 Frater Williams, above n 13, at 191,887.15 Black, above n 12, at [82]–[84].there is no actual proof that Mr Jones received this email, because although a copy ofthe email purportedly sent to Mr Jones was provided in these proceedings, there is noevidence to specifically link the generic name of the email address at the top of thecommunication (namely "greg jones") with the email address provided in the noticeof representation. Although a technical point, in the absence of Mr Jones acceptingthat he had been served, there is room for doubt about whether this did in fact occur.This is particularly so because Mr Jones' actions after being served with thebankruptcy notice appear to suggest he would likely have moved very quickly torespond to the memorandum had he received it.[48] As well as some doubt existing about service, the contents of the costsmemorandum itself confirms why it is for the Judge who heard the case to determinewhether indemnity costs should be awarded, and if so, what amount is reasonable. Inthe memorandum (comprising five pages but with over 40 pages of annexed materialbeing invoices and time records), counsel addressed the reasonableness of the costssought at paragraph 3 where he acknowledged that "the legal costs for obtainingsummary judgment may at first glance appear high". He then went on to allege delayby Mr Jones, comment on the various interlocutory steps taken by Mr Jones and recordthe fact of Mr Jones' notice of appeal of 25 May 2020, although any costs in relationto the notice of appeal would be irrelevant to costs on the summary judgmentapplication as they would be dealt with on appeal. The important point to note is thatthese were all matters that the Judge would have been aware of and would be bestplaced to assess and take into account if he considered them to be relevant.[49] Further and somewhat at odds with another of his arguments, Mr Kingsubmitted that the Registrar does not make a "decision" under r 11.11 when he seals ajudgment; however, this is precisely what the Registrar was being asked to do in thiscase, namely the Registrar was being asked to decide the reasonableness of theindemnity costs.[50] I conclude that the Registrar was not authorised to seal the order for costs basedon counsel for NZ Bloodstock's memorandum, because such costs had not beendetermined by the Judge. As Nation J said in Fisher v Fisher, sealed orders must onlycontain material that was part of the Court's decision.16[51] To summarise, in my view, the judgment to be sealed required interest to befixed at a rate of 10 per cent and should not have included solicitor-client costs as thesehad not at that point been determined by the Judge. This means the judgment as sealeddid not comply with a fundamental requirement of r 11.11 because it did not accordwith the judgment. In my view these errors are material and not trivial, as theyincrease the purported amount owing by $127,605.05. The question now is how theseerrors can be remedied.How can the errors in the sealed judgment be remedied?[52] Mr Jones submitted that I have the power to review the exercise of theRegistrar's jurisdiction to seal the order and if (as I have found) it was incorrectlysealed in certain respects, I can make any order in relation to it that I think is just. Thepower for me to do this, Mr Jones submitted, was contained in r 2.11, but if that didnot specifically apply, he submitted that r 1.6 could be used to the same effect.[53] Mr King submitted that Mr Jones had incorrectly relied on r 2.5 rather thanr 2.11. He submitted that r 2.11 does not empower the Court to review a Registrar'sdecision to seal a judgment under r 11.11 because r 2.11 only applies to the Registrar'sexercise of jurisdiction conferred by Part 2, subpart 2 of the Rules. In addition, hesubmitted that r 11.11 places a mandatory requirement on Registrars to seal orders andsealing is not a "decision" under r 2.11. Mr King submitted that, even if the Court canreview the sealing under r 2.11, Mr Jones' application is time-barred because he didnot bring it within the 5 day period specified in r 2.11, nor did he apply for an extensionof time under r 1.19.Rules 2.5 – 2.11[54] Rules 2.5 to 2.10 outline the jurisdiction and powers of a Registrar, includingpowers relating to interlocutory applications.16 Fisher, above n 6, at [4]–[5].[55] Rule 2.11 outlines when a Registrar's decision can be reviewed. It provides:2.11 Review of Registrar's decision(1) An affected party to a proceeding or an intended proceeding mayapply to a Judge by interlocutory application for a review of any ofthe following:(a) a Registrar's exercise of jurisdiction:(b) a Registrar's refusal to file a document tendered for filing:(c) a Registrar's refusal to perform a duty placed on him or herunder these rules.(2) The Judge may, on review, make any orders he or she thinks just.(3) It is not necessary to apply for an order for an extraordinary remedyunder Part 30 or to make an application for review under the JudicialReview Procedure Act 2016 when seeking a review under subclause(1)(b) or (c).(4) Notice of an application for review must be filed, —(a) if it is made by a party who was present or represented whenthe decision or refusal of the Registrar was given, within 5working days of the decision or refusal; or(b) if it is made by a party who was not present or represented,within 5 working days after the receipt by the party of notice ofthe decision or refusal.(5) An application for review under this rule is not a stay of proceedingor a step in the proceeding, unless a Judge, or a Registrar acting underrule 2.5, so directs.[56] I disagree with Mr King that Mr Jones incorrectly relied on r 2.5 in hisapplication for review. Mr Jones expressly relied on r 2.11. However, I accept that,as submitted by Mr King, r 2.11 does not empower the Court to review a Registrar'sdecision to seal a judgment under r 11.11. This is because r 2.11 relates only to theRegistrar's powers as conferred by Part 2, subpart 2 of the Rules, whereas the sealingof judgments is governed by Part 11. As Mr King submitted, this point is emphasisedby the authors of McGechan on Procedure:17The previous version of [r 2.11], r 276, expressly referred to "[a]ny decisionof a Registrar in exercise of his jurisdiction under rule 270 or rule 271" (theequivalents of rr 2.5 and 2.6). Despite the removal of any reference to specific17 Andrew Beck and others McGechan on Procedure (online looseleaf ed, Thomson Reuters) at[HR2.11.01].rules in r 2.11(1)(a), the expression "exercise of jurisdiction" is still intendedto relate only to the Registrar's jurisdiction as conferred by Part 2, subpart 2.[57] Despite this procedural impediment, Mr Jones submitted that r 1.6 should beinvoked and by analogy, the powers under r 2.11 applied.[58] Mr King's submissions did not specifically address r 1.6 and whether throughthat provision I could or should apply the approach taken in r 2.11.[59] As outlined above, r 2.11 is entitled "Review of Registrar's decision" andr 2.11 (1) outlines what "decisions" can be reviewed. Mr King's submissioncontrasted the powers of the Registrar under r 2.5 with the powers to seal under r 11.11,making the point that the former requires an exercise of judgment, whereas the latteris more administrative in nature. I agree with Mr King that the requirement to sealdoes not amount to a "decision" as commonly understood, but I nonetheless considerit to be an exercise of jurisdiction in the sense a power to do something required underthe Rules. In that sense, r 2.11 is useful by way of analogy, although it is not on allfours with what is being undertaken when the Registrar exercises his or her powerunder r 11.11.Rule 1.6[60] It is now necessary to consider r 1.6, which provides:1.6 Cases not provided for(1) If any case arises for which no form of procedure is prescribed by anyAct or rules or regulations or by these rules, the court must dispose ofthe case as nearly as may be practicable in accordance with theprovisions of these rules affecting any similar case.(2) If there are no such rules, it must be disposed of in the manner that thecourt thinks is best calculated to promote the objective of these rules(see rule 1.2).[61] The question therefore arises whether it is appropriate to invoke r 1.6 in thiscase. I approach this task by first considering what other remedies there may be underthe Rules to rectify the errors in the sealed judgment which I determine are not trivial,given that in total the errors increase the purported amount owing by $127,605.05.18[62] It was common ground that the judgment could not be recalled under r 11.9 asthe sealing of the order is an impediment to this occurring. I did not receivesubmissions about whether the slip rule (r 11.10) would apply, however because of theamount involved, the use of this rule would also not be appropriate.[63] I turn now to case law invoking or rejecting the use of r 1.6. There are no casesdirectly on point addressing its use in this context, however, there are several thatoutline matters of principle that I now consider.[64] In Coolstores (New Zealand) Ltd v Sunplus Products Ltd the equivalent of thethen r 1.6 was considered.19 The Court held that the aim of the rule is to fill inprocedural gaps in the Rules, not to introduce matters of substance.[65] In Merisant Co Inc v Flujo Sanguineo Holdings Pty Ltd, the Court of Appealnoted:20[Rule 1.6] reflects the Court's inherent jurisdiction to control its ownprocedure. Where there is no applicable rule the Court must dispose of thecase as near as may be practicable in accordance with analogous rules. Inr 1.6(2) it is provided that if no such rules can be applied, the case must bedisposed of to promote the objective of the rules, which is to secure the just,speedy and inexpensive determination of the interlocutory application orproceeding.[66] In Prestige Motors Ltd v My Trustee Company (Nikolas and Petra) Ltd, theapplicant sought to vary sealed orders pursuant to r 1.6. It argued that r 1.6 could beused to vary an existing rule, r 7.49, which provides for variation of interlocutoryorders. Gordon J refused the application, saying:21Nor do I accept that r 1.6 can be applied to vary existing procedural rules suchas r 7.49. Rule 1.6 only applies to fill gaps where there are no procedural rulesgoverning the particular situation. To apply r 1.6 to expand r 7.49 in the way18 This figure constitutes the solicitor-client costs plus the difference between the interest calculatedas owing by Mr Jones if the rate is 10 per cent rather than 16 per cent.19 Coolstores (New Zealand) Ltd v Sunplus Products Ltd [1977] 1 NZLR 690 (SC) at 694.20 Merisant Co Inc v Flujo Sanguineo Holdings Pty Ltd [2018] NZCA 390, (2018) 24 PRNZ 480 at[18].21 Prestige Motors Ltd v My Trustee Company (Nikolas and Petra) Ltd [2021] NZHC 895 at [50].MTC submits can be done would have the opposite effect. It would cut acrossthe express wording and application of r 7.49 which, as I have said, onlyapplies to interlocutory orders.Rule 1.6 and inherent jurisdiction[67] It is worth noting the similarities between r 1.6 and the Court's inherentjurisdiction. As the Court of Appeal explained in Merisant, r 1.6 reflects the Court'sinherent jurisdiction to control its own procedure.22 In Re Tupou, Edwards J notedthat the power to review a decision of the Deputy Registrar falls within a Judge'sinherent power to direct and supervise Registrars in relation to the business of theCourt.23 The Judge said:24A Judge's inherent power is to be exercised consistently with express statutoryprovisions and applicable rules. In this case the inherent power should beexercised consistently with s 160(4), and with regard to r 2.11 of the HighCourt Rules which provides for the review of Registrar's decisions madeunder those rules. Review under r 2.11 proceeds by way of a full rehearing.[68] In discussing this inherent power, the Judge cited r 1.6, noting that the ruleenables the Judge to dispose of a case as nearly as may be practicable in accordancewith the provisions of the Rules.25[69] In Robert Jones Investments Ltd v Gardner, Tipping J emphasised that theCourt's inherent jurisdiction should not be used to expand or obviate existing rules:26 if the power cannot be found in the rule it is inappropriate to invoke theinherent jurisdiction of the Court. To do so is tantamount to saying that wherethe ground is covered by a rule, but the Judge sees problems in the rule, theinherent jurisdiction may be resorted to in order to expand or obviate the rule.If that is correct the utility and force of rules are seriously undermined. It isnot a case where a rule does not cover the point[70] This recalls Gordon J's comment in Prestige Motors that r 1.6 cannot be usedto cut across the express wording and application of an existing rule.2722 Merisant, above n 20, at [18].23 Re Tupou [2018] NZHC 637, (2018) 24 PRNZ 275 at [12].24 At [12].25 At n 4.26 Robert Jones Investments Ltd v Gardner (1994) 7 PRNZ 567 (HC) at 570.27 Prestige Motors Ltd, above n 21, at [50].Is there a gap in the Rules?[71] I am satisfied that there is no specific rule dealing with the problem that facesme in this case. Put another way, there is a gap in the Rules when it comes to reviewingthe Registrar's "decision" to seal a judgment. However, before determining whetherI ought to fill this gap under r 1.6 (with reference to r 2.11), I must consider theremaining two matters submitted to me, namely what is the relevance of r 2.11 inrelation to the time limits for making an application to review the decision in question,and whether rather setting aside the sealed judgment, this matter can be dealt with onappeal.Should the time limit in r 2.11 apply to this case?[72] Rule 2.11(4) requires that an application to review a Registrar's decision befiled by a party within 5 working days of the decision. This time frame can beextended pursuant to r 1.19, which provides:1.19 Extending and shortening time(1) The court may, in its discretion, extend or shorten the time appointed bythese rules, or fixed by any order, for doing any act or taking any proceedingor any step in a proceeding, on such terms (if any) as the court thinks just.(2) The court may order an extension of time although the application for theextension is not made until after the expiration of the time appointed or fixed.[73] Mr King submitted that the order was served on Mr Jones twice: on 16 July2020 and again on 16 September 2020; however, his firm also emailed the order to MrJones on 27 August 2020, to which Mr Jones replied that same day as outlined above.[74] This email correspondence shows Mr Jones knew about the sealed order on27 August 2020, yet he only filed his application for review on 30 September 2020,over a month later. He did not file an application for an extension of time under r 1.19.[75] As this judgment reveals, the process to "fix" the aspects of the judgment thatwere incorrectly sealed is not straightforward and, in my view, it would be unfair torequire the late filing of the application to be a barrier to remedying the substantivedifficulties that flow from it. Should it be in any doubt, I extend the timeframe forfiling the application under r 1.19 to 30 September 2020, the date upon whichMr Jones filed his application for review.Are any errors with the sealed judgment properly able to be dealt with on appeal?[76] Mr King submitted that any errors associated with the sealed judgment can bedealt with on appeal; however, Mr Jones disagreed.[77] I agree with Mr Jones that these matters are not appropriately dealt with onappeal, particularly in relation to costs. This is because, on my analysis, costs werenot dealt with by the Judge, or even argued before him. Accordingly, there is nodecision on this aspect from which an appeal could be brought.Should I invoke r 1.6?[78] Having considered the time limit issue and whether the errors with the sealedjudgment could be dealt with on appeal, I conclude that there is no ability under theRules to correct the errors as they have presented themselves in this sealed judgmentand that it is appropriate to invoke r 1.6 to deal with this unfortunate situation. Indoing so, I consider r 2.11 to be the most analogous and helpful rule to guide such aprocess. Rule 2.11 provides that, in reviewing a Registrar's exercise of jurisdiction,the Judge may make any orders he or she thinks just. In my view, using this processrather than the Court's inherent jurisdiction to remedy the error is more appropriate.[79] The next question is what orders I should make as a result. Mr Jones submittedthat I should set aside the bankruptcy notice, given that it is based on the incorrectlysealed judgment, whereas Mr King submitted that the errors with the judgment andnotice could be corrected through bankruptcy procedures under the Insolvency Act2006.Should the sealed order be set aside or quashed, or is this a matter able to be dealtwith under the Insolvency Act procedures?[80] As outlined above, Mr Jones' application to review the sealed order wascoupled with his application to set aside the bankruptcy notice.[81] Counsel for NZ Bloodstock opposed the application, submitting that thebankruptcy procedures were robust enough to amend the wrong done as a result of theincorrectly sealed judgment. First, Mr King submitted that Mr Jones' emails of 27August 2020 do not meet the requirements of s 30 of the Insolvency Act to give noticeof an overstatement of the amount owing and therefore the bankruptcy notice remainsvalid.[82] Mr King then relied on s 418 of the Insolvency Act, highlighting the Court'swide-reaching powers to remedy any defects in a bankruptcy notice. He submitted:(a) The solicitor-client costs remain able to be claimed; however, in theevent that they cannot yet be claimed in a bankruptcy notice, that defectcan be remedied by removing solicitor-client costs, leaving onlyinterest and the principal amount of $369,800.22.(b) Interest at 10 per cent was pleaded (notwithstanding the possibility ofa contractual right to claim 16 per cent) and Jagose J's judgment dated5 June 2020 delivered judgment as per the pleadings, so the overstatedinterest can be remedied under s 418 from $52,221.59 to $32,638.49.28(c) If interest and solicitor-client costs cannot and should not be claimed,the principal amount owing under the two loan contracts of$369,800.22 can still be claimed in the bankruptcy notice.[83] Confusion continues to reign. This is because Mr King's submissions inresponse refer to the principal judgment of $369,800.22 as opposed to that whichappears to have been claimed under the two contracts and referred to in Jagose J'sjudgment as comprising a total of $431,632.22.28 This calculation was set out in paragraph 74 of the respondent's written submissions dated25 January 2021, as being a calculation of the interest payable between 3 September 2019 until5 June 2020, i.e. 276 days divided by 365 days in a year, times by 0.10 interest. Although para 74of the respondent's submissions calculated the total to be reduced from $591,875.76 by $19,883.10to $572,292.66, this calculation results in fact in a reduction of $19,583.10, which would reducethe total judgment as sealed to $571,992.66.[84] Mr Jones submitted that if the Court is satisfied under s 30(1) that there hasbeen an overstatement of the amount owing and the notification of the dispute wasappropriately provided by him to NZ Bloodstock, then the bankruptcy notice shouldbe set aside. In these circumstances, he submitted that there is no basis to amend thebankruptcy notice, as NZ Bloodstock would need to make an application pursuant tos 418 in order to invoke that provision and has not done so.[85] Section 30 of the Insolvency Act provides:30 Effect of overstatement of amount owing(1) Overstatement in a bankruptcy notice of the amount owing by thedebtor does not invalidate the notice, unless—(a) the debtor notifies the creditor that the debtor disputes thevalidity of the notice because it overstates the amount owing;and(b) the debtor makes that notification within the time specifiedin the notice for the debtor to comply with the notice.(2) A debtor complies with a notice that overstates the amount owingby— (a) taking steps that would have been compliance with the noticehad it stated the correct amount owing (for example, by paying thecreditor the correct amount owing plus costs); and (b) taking thosesteps within the time specified in the notice for the debtor to comply.[86] Section 418 allows the Court to cure defects in a bankruptcy notice, so long asthe defect does not prejudice the debtor. It provides:418 Defects in proceedings(1) A proceeding under this Act must not be invalidated or set aside for adefect (which includes misdescription, misnomer, or omission) in astep that must be taken as part of, or in connection with, theproceeding, unless a person is prejudiced by the defect.(2) The court may order the defect to be corrected, and may order theproceeding to continue, on the conditions that the court thinksappropriate in the interests of everyone who has an interest in theproceeding.[87] In my view, given the extent of the procedural errors in the sealed judgment,which had a substantive effect on Mr Jones, the more fundamentally appropriatecourse of action in my view is to set aside the sealed order. It follows that thebankruptcy notice, which is based on the sealed order, must also be set aside in itsentirety.29[88] Given this conclusion, I do not need to deal with ss 30 and 418 any furtherbecause once the bankruptcy notice is set aside there is nothing for me to amend ordeem invalid. But had I been required to determine whether s 30 applies, I would havedetermined that Mr Jones gave sufficient notice under s 30.Conclusion[89] For the reasons given, I have determined that the errors in the incorrectly sealedjudgment, and the bankruptcy notice based upon the judgment, are significant enoughto warrant both being set aside in their entirety. The Registrar was not entitled to sealthe judgment for solicitor-client costs because the reasonableness of such costs was amatter for the Judge to determine, rather than the Registrar.[90] I have also determined that Jagose J's judgment in relation to the principal sumowing of $431,632.22 was able to be sealed by the Registrar. This amount comprisesthe:(a) $369,800.22 principal debt under the current advances contract; and(b) $61,832 principal debt under the lease to purchase agreement.[91] In addition, I have determined that the interest sought at the rate of 10 per centwas able to be sealed by the Registrar. In accordance with NZ Bloodstock'scalculation, this amounts to $32,638.49.[92] Although Mr Jones argued that Jagose J is functus officio in relation to thecosts aspect of his judgment, that submission may not be correct. While one of theoptions put forward by NZ Bloodstock indicated a preparedness to relinquish its claimin relation to solicitor-client costs, it seems to me that solution was predicated on thebasis that I may decide not to set aside the bankruptcy notice, but rather to amend it.29 See Hair v Schmidt [2014] NZHC 2476 at [46]–[47].In the light of this judgment, NZ Bloodstock may decide to review its position inrespect of this, given that a plaintiff who is successful is normally entitled to costs.30Result[93] The applications to set aside the sealed judgment and the bankruptcy notice aregranted.[94] Costs are reserved.____________________Harland J30 High Court Rules 2016, r 14(2)(1)(a).