ARMITAGE v WESTPAC NEW ZEALAND LIMITED [2015] NZCA 415

ARMITAGE v WESTPAC NEW ZEALAND LIMITED [2015] NZCA 415 [7 September 2015]IN THE COURT OF APPEAL OF NEW ZEALANDCA113/2015[2015] NZCA 415BETWEEN HERBERT BRUCE ARMITAGEAppellantAND WESTPAC NEW ZEALAND LIMITEDRespondentCourt: Wild, French and Winkelmann JJCounsel: Appellant in PersonJ A Harrop for RespondentJudgment:(On the papers)7 September 2015 at 11.30 amJUDGMENT OF THE COURTA The respondent's application to strike out the appeal is allowed. Theappeal is struck out.B The appellant's application for an extension of time to apply for allocationof a hearing date and file the case on appeal is dismissed.C The appellant is to pay the respondent's costs on both applications, as fortwo applications for leave to appeal on a band A basis, with usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by Wild J)Introduction[1] For decision are two interlocutory applications:(a) An application filed on 24 April 2015 by the respondent (Westpac) to strike out the appeal on the ground that the appellant has not paid the required $5,880 security for costs.(b) An application filed on 18 June 2015 by the appellant for an extension of time to file his case on appeal and apply for the allocation of a hearing date, on the grounds:1. I am in the process of an application for Legal Aid; and2. Pending such decision and allocation of Legal Aid I am unfortunately unable to file my case on appeal or set a fixture; and3. I am expeditiously and diligently progressing this process; and4. I would be injuriously affected if this extension is not granted; and5. It would be unjust not to grant an extension.[2] The strike-out application is opposed, primarily on the basis: the Appellant is seeking legal aid, and pursuant to Rule 36 of the Court ofAppeal (Civil) Rules 2005, the need to pay security for costs is stayed pending the determination of such application, and if granted the need to pay security for costs is waived.[3] The application for an extension of time is also opposed on the basis of the delays to date and the prejudice to Westpac from those delays and further delays.Westpac's bankruptcy proceeding against the appellant is effectively stayed pendingthe outcome of this appeal.[4] By consent, we are dealing with the two applications on the papers.Background[5] The appellant and his son Duncan Armitage both became insolvent as a resultof an unsuccessful property development project in Mairangi Bay on Auckland'sNorth Shore. Westpac is owed approximately $242,000 by the appellant and his son.[6] On 11 November 2013 Westpac applied to have the appellant and his son (the two insolvents) adjudicated bankrupt.1[7] The two insolvents responded by making proposals to their creditors under sub-pt 2 of pt 5 of the Insolvency Act 2006. A meeting of creditors voted in favour of the proposals by the required 75 per cent both in number and value.[8] The two insolvents then applied, on 24 March 2014, to the High Court to approve their respective proposals to creditors under s 333 of the Insolvency Act. Their applications were refused in a judgment delivered by Associate Judge Sargisson in the High Court at Auckland on 3 March 2015. This is the judgment challenged in this appeal.2[9] The Associate Judge noted that the return to Westpac if both proposals were approved would be 11.78 cents per dollar of debt.3 Given Westpac's debt ofapproximately $242,000 and the fact that the assets of the two insolvents totalled $11,300, the Associate Judge observed that Westpac — on the face of it — would be better off to accept the proposals.4[10] However, Westpac considered that over $1 million or 75 per cent of the overall debt claimed in the proposals was suspicious. The judgment records the basis for these suspicions in some detail. We need not go into detail. It suffices to say that much of the debt was claimed to be owed to related parties, particularly members of the Armitage family. There were other grounds for concern, including the absence of documentary evidence to support some of the claimed debts and also1 The term "insolvent" is defined in s 325(1) of the Insolvency Act 2006 as meaning "a person who is not a bankrupt, but who is unable to pay his or her debts as they become due".2 Westpac New Zealand Ltd v Armitage [2015] NZHC 337.3 At [8].4 At [9].the age of some of those debts coupled with the fact that they had not earlier been invoiced.[11] The Associate Judge found, under s 333(3)(c) of the Insolvency Act, that itwas not expedient to approve the insolvents' proposals. She considered it "properand appropriate that the Official Assignee be able to investigate fully their financialaffairs".5 For that reason, she refused approval.[12] On 13 March 2015 the High Court ordered the insolvents to pay Westpac costs of $7,576. Those costs remain unpaid.[13] Westpac's counsel advises that notices of appeal by both the appellant and his son Duncan were served on Westpac on 13 March 2015. There is, in fact, no appeal by Duncan Armitage. It seems he may have attempted to file a notice of appeal but that the Registry returned it to him, as it was out of time. But this is not clear from the Court file in this appeal.[14] The appellant filed his notice of appeal on 16 March 2015. The grounds of appeal are stated in these terms:My grounds for Appeal are that the decision of Associate Judge Sargisson is wrong in fact and law. The learned Judge took account of matters, which she ought not have, failed to consider and apply the law properly, and erred in her decision.[15] The appellant was granted a waiver of the $1,100 filing fee on this appeal. By letter dated 23 March 2015, he was advised by the Registry that security for costs had been fixed at $5,880 to be paid within 20 working days of the filing of the notice of appeal (that is, by 14 April).[16] Security for costs was not paid by 14 April and remains unpaid.[17] It appears from the Court file that nothing further was heard from the appellant until 5 June 2015, and then only after the Registry inquired whether he5 At [36].intended opposing Westpac's strike-out application, filed on 24 April 2015, which had been served on the appellant on 7 May 2015.[18] The appellant filed a notice of opposition to the strike-out application, out of time, on 10 June 2015. In that notice of opposition and an accompanying memorandum, also filed on 10 June, the appellant makes these points:(a) He was not aware that he needed to pay security for costs, as he had received a fee waiver from the Court.(b) As of "last Friday" (5 June) he has understood that the fee waiverdoes not cover security for costs and he must apply separately for dispensation from giving security.(c) He is of "limited liquid financial means", and receives GovernmentSuperannuation.(d) His lawyer has advised him to seek legal aid and he has "therefore completed the forms for legal aid and have sent them in for approval"(no date given).Decision[19] For four reasons, we consider Westpac's strike-out application must begranted, and the appellant's application for an extension of time dismissed.[20] First, this appeal appears to have little or no merit. The grounds of appeal, which we have set out in [14] above, lack specificity. Making due allowances for the fact that the appellant represents himself, he has not, either in his notice of appeal or in anything he has filed subsequently, explained why he maintains there is error in the judgment of Associate Judge Sargisson. For example, in the notice of opposition to the strike-out application he filed on 10 June, the appellant stated as his grounds of opposition:2. That the Appellant will suffer a serious injustice if the judgment the subject of the Appeal is able to stand.3. That there is serious question to be tried in relation to the appeal.4. That will be advanced by my representative at any hearing to be held in relation to the strike-out application.[21] But he does not elaborate on how or why he will suffer a serious injustice, orgive any indication as to the "serious question to be tried" that will be advanced byhis lawyer.[22] Unaided by the appellant, we cannot detect any error. For reasons she adequately explained, the Associate Judge declined to approve the insolvents'proposals to their creditors. The consequence, as the Associate Judge pointed out,was that the Official Assignee would be able to investigate fully the insolvents' (by then bankrupts') financial affairs, and in particular whether the debts Westpac regarded as suspicious should be accepted. It is difficult to see why that outcome is wrong. And we reiterate that the appellant has not explained why he asserts it is.[23] Secondly, we cannot accept that the appellant was unaware, until 5 June 2015, that he needed to give security for costs. The letter the Court Registry sent him on 23 March 2015 was unequivocal. And that letter was sent about a week after he had been advised, on 16 March, that his application for a fee waiver had beensuccessful. Further, Westpac's strike-out application of 24 April 2015 (served on the appellant on 7 May) was squarely based on the appellant's failure to give security forcosts.[24] Thirdly, although he has now known, for approaching three months, that he must pay security for costs, the appellant has still neither paid nor applied for a dispensation from paying. He does not assert that he is unable to pay security, butmerely that he is "of limited liquid financial means".[25] Fourthly, although he does not specify precisely when he applied for legal aid for this appeal, it appears it was only on or about 8 June 2015 (the date on hismemorandum filed in support of his notice of opposition to strike-out application). That is some three months after he filed his notice of appeal.[26] We summarise. This appeal appears to lack any merit. The appeal has not been diligently prosecuted. Only when faced with a strike-out application did the appellant claim he was unaware of the need to give security for costs, despite thatbeing spelt out for him in a letter from the Court's Registry. Once aware of the needto pay security, his response was, belatedly, to apply for legal aid for this appeal and to rely on a misinterpretation of r 36 of the Court of Appeal (Civil) Rules (we expand on this in [27] below). In our view, those considerations, certainly in combination,strongly support Westpac's application to strike out this appeal. Add to that theconsideration that Westpac's bankruptcy proceedings are stayed pending the outcomeof this appeal, and the case to strike it out becomes quite overwhelming. Given that stay, the appellant was obliged to prosecute this appeal diligently and has failed to do so. Accordingly, we grant Westpac's application to strike out the appeal.[27] The consequence is that the appellant's application for an extension of timemust be dismissed. We need add only one comment about that application. The appellant is incorrect in stating that, pursuant to r 36, "the need to pay security for costs is stayed pending the determination of [his application for legal aid]".6 As the wording of r 36 makes clear, that is only the position for an appellant who, at the time the appeal is brought, has applied for legal aid for the appeal. Where, as in theappellant's case, application for legal aid is only made belatedly, the obligation togive security for costs remains unaffected and the appellant liable to have the appeal struck out pursuant to r 37(1) if security for costs has not been paid or dispensed with.Result[28] The respondent's application to strike out this appeal is allowed. The appealis struck out.6 In his Notice of Opposition to Strikeout Application, filed 10 June 2015.[29] The appellant's application for an extension of time pursuant to r 43(2) isdismissed.[30] The appellant is to pay the respondent's costs of both applications, as for twoapplications for leave to appeal on a band A basis, with usual disbursements.Solicitors:MinterEllisonRuddWatts, Auckland for Respondent