MUSUKU v COMMISSIONER OF INLAND REVENUE [2017] NZCA 509

MUSUKU v COMMISSIONER OF INLAND REVENUE [2017] NZCA 509 [13 November 2017]IN THE COURT OF APPEAL OF NEW ZEALANDCA631/2016[2017] NZCA 509BETWEEN JAWAHAR BHASKAR MUSUKUAppellantAND COMMISSIONER OF INLANDREVENUERespondentHearing: 30 October 2017Court: French, Winkelmann and Asher JJCounsel: G J Thwaite for AppellantM Deligiannis and M J Bryant for RespondentJudgment: 13 November 2017 at 12.00 pmJUDGMENT OF THE COURTA The respondent's application to strike out the appeal is granted.B The appellant must pay the respondent costs for a standard application ona band A basis and usual disbursements.____________________________________________________________________REASONS OF THE COURT(Given by French J)[1] Mr Musuku filed an appeal in this Court against a decision of Associate JudgeDoogue adjudicating him bankrupt.1 Mr Musuku was ordered to pay security for costson the appeal in the sum of $6,600. He applied for payment to be dispensed with, butthat application was declined first by the Deputy Registrar and then on review byBrown J who also declined an application to recall his judgment.2 Mr Musuku thensought leave to appeal to the Supreme Court against Brown J's decision, but that toowas unsuccessful.3 Payment of the $6,600 was required to be made by 29 June 2017.It has never been paid.[2] The Commissioner of Inland Revenue now applies under r 37(1) of the Courtof Appeal (Civil) Rules 2005 for the appeal to be struck out because of the failure topay security.4[3] Mr Musuku opposes the application for strike out on three main grounds.[4] The first is that being bankrupt he is by definition impecunious and it is aviolation of fundamental common law rights, and the rule of law, that he should bedenied a hearing by virtue of his property status.[5] We do not accept that submission. The fact that Mr Musuku is bankrupt doesnot of itself mean he is impecunious for the purposes of being exempted from payingsecurity for costs.5 If he wanted to advance that argument, it was incumbent on himto provide this Court with a detailed statement of his financial position including hisincome and his ability to access other resources.6 He has never done so. We were toldthat in the High Court Mr Musuku unsuccessfully attempted to adduce evidence abouthis financial position through an affidavit from his brother. Why he did not wish toprovide an affidavit himself was not explained.1 Commissioner of Inland Revenue v Musuku [2016] NZHC 2773, (2016) 27 NZTC 22-078[HC decision].2 Musuku v Commissioner of Inland Revenue [2017] NZCA 144; and Musuku v Commissioner ofInland Revenue [2017] NZCA 255.3 Musuku v Commissioner of Inland Revenue [2017] NZSC 140.4 The Commissioner of Inland Revenue also sought in the alternative an order that the appeal betreated as abandoned because of a failure to apply for a hearing date in accordance with the Courtof Appeal (Civil) Rules 2005, rr 37(2) and 43. However, this submission was not pursued at thehearing.5 Harrison v Harrison [2017] NZCA 67 at [12].6 Rabson v Judicial Conduct Commissioner [2017] NZCA 349 at [4].[6] The second argument advanced was that a pragmatic approach should beadopted and that security for costs Mr Musuku has paid in relation to another appealalso involving the Commissioner (CA262/2016) should be transferred to this appeal.However, that is neither appropriate nor legally possible. Apart from anything else,because Mr Musuku is now bankrupt any rights he had in the security for costs arenow held by the Official Assignee.7[7] The third ground argued by Mr Musuku is that the Deputy Registrar and BrownJ were wrong to hold this appeal lacks merit.[8] The underlying debt on which the bankruptcy is founded is a tax debt owingby Mr Musuku to Inland Revenue. Mr Musuku does not dispute the debt is owing,but argues the Associate Judge should have exercised his residual discretion not tobankrupt him. At the time he was adjudicated bankrupt, Mr Musuku had litigationstill on foot against the Commissioner in relation to other tax years, including the otherappeal in this Court that we have already mentioned. The bankruptcy means he isprevented from being able to pursue the other cases, which Mr Musuku says is unjust.[9] This was an argument raised before the Associate Judge and rejected by himon the basis that even if Mr Musuku was successful in the other proceedings, hisfinancial position would not improve. At best he would be limiting the extent of anyadditional debt.8 The information before the Associate Judge supported thatconclusion. We were not provided with any new verifiable information to suggest thecontrary, only a tentatively worded submission from counsel that success in the otherproceedings "could" maximise Mr Musuku's chances of reducing the bankruptcy debt.[10] The Associate Judge's decision was comprehensive and detailed and the meritsof the appeal have been examined by both the Deputy Registrar and Brown J. Likethem, we have been unable to identify any arguable error in the way the AssociateJudge exercised his discretion. We are satisfied the appeal has no realistic prospect ofsuccess.7 Insolvency Act 2006, s 101.8 HC decision, above n 1, at [26].[11] There is in our view no reason why the appeal should not be struck out forfailing to pay security for costs. We so order.Result[12] The respondent's application to strike out the appeal is granted.[13] The appellant must pay the respondent costs for a standard application on aband A basis and usual disbursements.Solicitors:Crown Law Office, Wellington for Respondent