OFFICIAL ASSIGNEE IN BANKRUPTCY v NGAIRE HAENGA [2022] NZHC 177

OFFICIAL ASSIGNEE IN BANKRUPTCY v NGAIRE HAENGA [2022] NZHC 177 [21 February 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-1100[2022] NZHC 177UNDER the Property Law Act 2007, section 339BETWEEN OFFICIAL ASSIGNEE IN BANKRUPTCYOF THE PROPERTY OF PAREHE NIKAU(also known as POLLY PAREHEHAENGA)PlaintiffAND NGAIRE HAENGADefendantHearing: 8 December 2021Appearances: Gareth Neil / Sarah Farnell for the PlaintiffNo appearance for the DefendantJudgment: 21 February 2022Reissued: 12 April 2022JUDGMENT OF ASSOCIATE JUDGE C B TAYLORThis judgment was delivered by me on 21 February 2022 at 3:00pmpursuant to Rule 11.5 of the High Court RulesandRe-issued on 12 April 2022(redacting the residential addresses).Registrar/Deputy RegistrarSolicitors:Meredith Connell (G Neil / S Farnell), Auckland, for the PlaintiffIntroduction[1] The Official Assignee in bankruptcy of Parehe Nikau1 seeks sale orders, bysummary judgment, in respect of two properties under s 339 of the Property Law Act2007. The properties are each held in half-shares by the defendant, the survivingpartner of the bankrupt's former deceased partner Mr Haenga at the time of his death,in her capacity as executor of Mr Haenga's estate, and by the Assignee.[2] The Assignee seeks stepped sale orders. The Assignee seeks to give thedefendant an opportunity to acquire the Assignee's half share in the second propertywith her share in the sale proceeds of the first. The draft orders are annexed to theAssignee's submissions dated 30 November 2021.BackgroundThe family2[3] Ms Nikau was married to Mr Hone Haenga3 until their separation sometime in1985. They had four children together: Jack; Lance; Anne; and Sharon.[4] Mr Haenga died on or about 15 April 2016. At the time of his death, he was ina relationship with Ngaire Haenga.[5] Ms Nikau died on or about 23 September 2019.The properties[6] The properties subject to the summary judgment application are: Property A4and Property B.51 Also known as Polly Haenga.2 As many of the relevant people share family names, I shall refer to them by their given names.I mean no disrespect.3 Also known as John Haenga.4 NA59D/373 – Lot 45 DP 107190.5 NA3B/958 – Lot 329 DP 51196.[7] Property A was originally owned by Jack. He died intestate in 2007. Becausehe had no children, Property A passed to his parents. Mr Haenga was appointedadministrator of Jack's estate and Property A was registered in Mr Haenga's name.When Mr Haenga died, his office as administrator of Jack's estate did notautomatically pass to Ngaire in her capacity as executor of Mr Haenga's estate. Thistook place when the Assignee applied to the High Court for a vesting order. Now,Property A is registered in Ngaire's name (as executor of Mr Haenga's estate) and inthe name of the Assignee as to one half share each. The property is occupied by Anneand her family.[8] Property B was originally Ms Nikau and Mr Haenga's family home. Aftervarious changes in the nature of the ownership of the property, it was eventually vestedin Ms Nikau and Mr Haenga as tenants in common in equal shares. Since Mr Haenga'sdeath, his half interest has been held by Ngaire, in her capacity as executor of hisestate. Since Ms Nikau's death, Ms Nikau's half interest has been held by theAssignee.6 Property B was occupied by one of Ms Nikau's grandchildren(Joseph Puailiu) until mid-2017, from which point it has been occupied by Lance andhis family.[9] An updating affidavit of Susanna Maria Wewege records updated valuationsof the properties. Their value has substantially increased since the last valuationevidence was provided.Bankruptcy[10] On 14 December 2010, the Human Rights Review Tribunal found againstMs Nikau on allegations of financial exploitation of a vulnerable person in her care.When she did not pay the judgment sum of $107,500 to the Health and DisabilityCommissioner and the Commissioner of Inland Revenue, she was adjudicatedbankrupt.76 The Assignee became registered proprietor of the half share in Property B on 25 October 2019.7 On 4 August 2011.[11] Ms Nikau did not provide a "statement of affairs" to the Assignee untilMay 2019. Then she died on or about 23 September 2019, at which point she remainedan undischarged bankrupt. Her bankruptcy continues despite her death.8Attempts by the Assignee to sell the properties[12] Counsel for the Assignee describes how, in consideration of the interests ofMs Nikau and her family, comparative to the total debts of Ms Nikau's bankrupt estate,the Assignee sought to sell one of his half share interests in the properties to the widerfamily. His submissions detail negotiations between 2015–2019 as various familymembers attempted to obtain finance to meet Ms Nikau's debts. Counsel submits theAssignee has gone to great lengths to find a way for the wider family to retain one orboth of the properties, but that this has been unsuccessful as the family was unable tosecure finance. He concludes with the submission that the only way for the Assigneeto realise Ms Nikau's interest in the properties, for the benefit of her creditors, isthrough a forced sale.Proceedings[13] The procedural history of the application for summary judgment is as follows:3 June 2021 Assignee filed summary judgment application with awithout notice application for directions as to service.20 July 2021 Ngaire personally served with summary judgmentapplication, supporting documents and sealed ordersof Associate Judge Andrew as to service.19 August 2021 Deadline for Ngaire to file any notice and affidavitsin opposition (not less than three working days before24 August 2021)24 August 2021 Gault J directed notice and affidavits of opposition tobe filed by 3 September 2021. The notice was to besigned and filed by Ngaire personally or by a barristerand solicitor authorised to represent her.6 September 2021 Anne emailed the Court indicating she had replacedNgaire as executor and sought further time to instructsolicitors.8 Insolvency Act 2006, s 78.7 September 2021 Lang J allocated a one-day hearing on 8 December2021 to hear the summary judgment application anddirected that any documents in opposition were to befiled and served no later than 22 October 2021.21 October 2021 Anne emailed the Court a notice of application forHigh Court administrative settlement conference anda supporting "voluntary declaration".26 October 2021 Venning J confirmed that the fixture would proceedon 8 December 2021; extended the time for Ngaire tofile and serve any documents in opposition to12 November 2021; and declined the request for anadministrative settlement conference.12 November 2021 Deadline for Ngaire to file and serve documents inopposition passes without her filing or servinganything.[14] The summary judgment application is therefore unopposed. Rule 12.9(3) ofthe High Court Rules 2016 provides:If an opposing party does not file and serve [a notice of opposition and anaffidavit in support], the party may not be heard in opposition to theapplication without the leave of the court.[15] Ngaire could not be heard in opposition without the leave of the Court. Noleave of the Court to be heard in opposition was sought by Ngaire prior to the hearing.The Māori Land Court proceeding[16] On Wednesday, 8 December 2021, the day of the hearing, Vernon Ruwhiu(Vernon) and Anne as applicants filed an application for an injunction in the MāoriLand Court seeking to prevent the Assignee from "making application to theHigh Court for enforcement orders against the respondent in respect of the land heldin trust".[17] Following the hearing, I issued a minute dated 16 December 2021 and soughtfrom the parties, by 28 January 2022:99 Official Assignee v Haenga HC Auckland CIV-2021-404-1100, 16 December 2021 (Minute ofAssociate Judge Taylor) at [3].(a) if available, information on when the injunction will be heard in theMāori Land Court; and(b) submissions from the parties as to the implications of the injunctionin relation to the Assignee's application for orders for the sale of thetwo properties.[18] In response to the minute, counsel for the Assignee filed a memorandum dated17 December 2021 in which counsel advised:(a) As at the date of counsel's submission the injunction was not properlybefore the Māori Land Court as the filing fee has not been paid. Theinjunction application is therefore held in abeyance pending paymentof the filing fee.(b) Even if the injunction application was properly before the Māori LandCourt (which it is not) it could have no impact on the Assignee'sapplication for orders for the sale of the two properties.[19] Counsel submitted that the Māori Land Court has no jurisdiction to interferewith or prevent proceedings in the High Court, and relied on decisions of theMāori Land Court in Te Rongomau v Nikau10 and Ruwhiu v The Commissioner ofInland Revenue.11[20] In Te Rongomau v Nikau, Judge Milroy of the Māori Land Court, commentingon the procedural background, stated:[7] The trustees sought an urgent hearing because of their fears for themarae in relation to the High Court proceedings regarding buildingcontracts entered into by Ms Nikau and Te Aira Moana.[8] As this Court had no ability to interfere or stop the proceedingsin the High Court the urgent hearing was denied. The trustees wereadvised to seek legal advice in relation to the High Court proceedings.(emphasis added).10 Te Rongomau v Nikau – Whangape Parish Lot 23B (Horahora Marae) (2011) 23B WaikatoManiapoto MB 3 (23 WMN 3).11 Ruwhiu v Commissioner of Inland Revenue (2016) 143 Taitokerau MB 159 (143 TTK 159).[21] In Ruwhiu v Commissioner of Inland Revenue, Judge Ambler of theMāori Land Court considered an application to injunct the Commissioner of InlandRevenue from enforcing a High Court judgment. His Honour found:[42] I agree with Counsel for the Crown that the s 280 proceedings will nothave any bearing on the SSK proceedings before the Commissionerand High Court. It is unclear to me how I can grant an injunctionagainst the Commissioner preventing her from enforcing the HighCourt judgment. This Court does not have the jurisdiction toreview a decision of the Authority or the High Court.(emphasis added).[22] Counsel also submitted that the injunction was an abuse of process and a deviceto delay the Assignee's application to the High Court.[23] Nothing was filed by Ngaire or by any counsel representing Ngaire, in responseto my minute of 16 December 2021, by 28 January 2022. On 26 January 2022, Vernonpurported to file a memorandum on behalf of Anne. This memorandum is not properlybefore the Court as:(a) Anne is not a party to this proceeding and is not the executor ofMs Nikau's estate, that executor being Ngaire. No orders under eitherthe Administration Act 1969 or the Trusts Act 201912 have been madesubstituting Anne as executor and accordingly she has no standingbefore the Court; and(b) Vernon has no standing before the Court.[24] The Assignee's application for orders for sale of the properties thereforeremains unopposed.[25] On 27 January 2022, Judge Mullins of the Māori Land Court issued a minutewhich advised as to the status of the injunction. Relevantly, that minute recorded:12 Applicant's submissions dated 30 November 2021 at [4.3], n 22.(a) on 24 December 2021 the Deputy Registrar wrote to Vernon to advisethat he declined to accept the injunction application on the basis thatthe subject land blocks are general land and the Māori Land Courtdoes not have jurisdiction to make an injunction order in respect ofsuch lands;(b) on 12 January 2022, Vernon sought a review of the Deputy Registrar'sdecision pursuant to r 4.10(3) of the Māori Land Court Rules 2011;and(c) the matter is now before Judge Mullins for determination.[26] In conclusion, in relation to the impact of the injunction on this proceeding,I accept the submissions of counsel for the Assignee, regardless of whether theinjunction is properly before the Māori Land Court or not, and regardless of whetherit can be heard and its outcome, it has no ability to affect the High Court in the currentproceeding.The hearing[27] As submitted by counsel for the Assignee at the hearing, no notice ofopposition or affidavits in support of opposition have been filed as required byVenning J's minute of 26 October 2021. Therefore, the application remainedunopposed at the hearing.[28] With leave of the Court, Anne and Vernon were permitted to address the Court.While their addresses were received by the Court, these addresses did not constituteany submission in opposition to the orders sought by the Assignee.Legal principlesPlaintiff's application for summary judgment[29] Rule 12.2(1) of the High Court Rules provides:The court may give judgment against a defendant if the plaintiff satisfies thecourt that the defendant has no defence to a cause of action in the statement ofclaim or to a particular part of any such cause of action.[30] The relevant principles governing a summary judgment application are wellestablished:13The principles are well settled. The question on a summary judgmentapplication is whether the defendant has no defence to the claim; that is, thatthere is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1at 3 (CA). The Court must be left without any real doubt or uncertainty. Theonus is on the plaintiff, but where its evidence is sufficient to show there is nodefence, the defendant will have to respond if the application is to be defeated:MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normallyresolve material conflicts of evidence or assess the credibility of deponents.But it need not accept uncritically evidence that is inherently lacking incredibility, as for example where the evidence is inconsistent with undisputedcontemporary documents or other statements by the same deponent or isinherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341(PC). In the end the Court's assessment of the evidence is a matter ofjudgment. The Court may take a robust and realistic approach where the factswarrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).[31] The wording of r 12.2 ("may give judgment") indicates a residual discretion.Having regard to the various authorities, the position appears to be as follows:14(a) The discretion implied by the use of the word "may" is to berestrictively applied. In a great majority of cases, once the court issatisfied the defendant has no defence, there is no room for theexercise of discretion.(b) The residual discretion may be invoked to avoid oppression orinjustice to the defendant where:(i) The proceeding involves the actions or possible liability of athird party which is not before the court;(ii) The proceedings are such that the opportunity should be givento allow discovery or other interlocutory applications to beconcluded;(iii) The circumstances of the case disclose very unusual features,the presence of which leads the court to conclude that theentry of summary judgment would be oppressive or unjust; or(iv) The combination of complex issues of fact and law justify thedismissal of the application for summary judgment, either as13 Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].14 Andrew Beck and others (eds) McGechan on Procedure (online ed, Thomson Reuters) at[HR12.2.11].a matter of discretion or because the court cannot be satisfiedthat the defendant has no defence.(c) Even where the court is not satisfied that a defence has been made out,in exceptional circumstances the application may be adjourned toallow for other processes to be followed.Forced sale under s 339 of the Property Law Act[32] Section 339 of the Property Law Act relevantly provides:339 Court may order division of property(1) A court may make, in respect of property owned by co-owners,15 anorder—(a) for the sale of the property and the division of the proceedingsamong the co-owners;(2) An order under subsection (1) may be made—(a) despite anything to the contrary in the Land Transfer Act2017;(b) only if it does not contravene section 340(1); and(c) only on an application made and served in the mannerrequired by or under section 341; and(d) only after having regard to the matters specified in section342.[33] Section 340(1) pertains to orders requiring subdivision of the land and isaccordingly not relevant to this application. Section 341(2) specifies servicerequirements:341 Application for order under section 339(1)(2) Every person who is one of the following must, if not already a partyto the proceeding on that application, be served with a copy of thatapplication:(a) a co-owner of the property:(b) a person who has an estate or interest in the property that maybe affected by the granting of the application:15 Section 4 defines "co-owner" as "a tenant in common or a joint tenant".(c) a person claiming to be a party to, or entitled to a benefitunder, an instrument relating to the property.Counsel for the Assignee note that they have duly served the application on Ngaire asshe has a half-share in each of the properties as executor of Mr Haenga's estate.[34] Section 342 sets out relevant considerations to which a court consideringwhether to make an order under s 399(1) must have regard. They are:(a) the extent of the share in the property of any co-owner by whom, orin respect of whose estate or interest, the application for the order ismade:(b) the nature and location of the property:(c) the number of other co-owners and the extent of their shares:(d) the hardship that would be caused to the applicant by the refusal ofthe order, in comparison with the hardship that would be caused toany other person by the making of the order:(e) the value of any contribution made by any co-owner to the cost ofimprovements to, or the maintenance of, the property:(f) any other matters the court considers relevant.[35] In relation to the words "must have regard to" in the context of s 342 of theProperty Law Act, in Bayly v Hicks Wylie J stated:16The words are not synonymous with "shall take into account", nor do theymean "give effect to". The Court cannot ignore listed factors. They must givegenuine thought and consideration and such weight as the Court considersappropriate. However, they will not necessarily be decisive in determiningwhether an order shall be made.[36] Counsel for the Assignee in his submissions has discussed each of the mattersspecified in s 342.17[37] No validly filed and served opposition to the orders sought by the Assignee hasbeen put before the Court by Ngaire, despite ample opportunity to do. In unswornmaterial supplied by Anne, she asserts a cultural attachment to the property. She saysthat she has lived in Property B since 1964 and states that Property A has been16 Bayly v Hicks [2011] NZHC 920, [2011] 13 NZCPR 568 at [33].17 Applicant's submissions, above n 12, at [9.6]–[9.26].occupied by her whanau since the late 1980s. She says that the properties are seen asmore than a house, but as "whanau papakainga".[38] In relation to this issue, I accept the submissions of counsel for the Assignee,that the properties are not Māori land but are general land and accordingly are notafforded the same protections of Māori land under the Te Ture Whenua Māori Act1992.[39] I also accept counsel's submission18 to the extent that tikanga may be soughtto be relied upon, it must be established by evidence. No such evidence is before theCourt.Similar cases[40] Two recent cases in which the Assignee was unopposed in his application fors 339 orders for sale are Official Assignee v Vedder and Official Assignee v Truong.19Jagose J and Associate Judge Johnston respectively issued very short judgments.I reproduce them below.Official Assignee v Vedder[1] In this proceeding the plaintiff, the Official Assignee at PalmerstonNorth, seeks orders pursuant to s 339(1) of the Property Law Act2007 for the sale of a property formerly owned by Mr Russell andMrs Deborah Vedder in Horowhenua. Mr Vedder was adjudicatedbankrupt by this Court on 13 October 2016. Since then the OfficialAssignee and Mrs Vedder have been the owners of the property.[2] This proceeding was commenced in February 2019. Along withthe originating documentation — notice of proceeding andstatement of claim — the plaintiff filed and served an applicationfor summary judgment and affidavit evidence in support of thesame.[3] The Court has evidence as to service of the proceeding on thedefendant.[4] The defendant, Mrs Vedder, has not entered a defence or taken anyother step in the proceeding.18 At [9.24].19 Official Assignee v Vedder [2019] NZHC 1340; and Official Assignee v Truong [2019] NZHC1286.[5] Accordingly, the proceeding was placed in the Palmerston Northcommercial list for call today.[6] Having reviewed the originating documentation and the othermaterial already referred to, and having considered the matters towhich the Court must have regard pursuant to s 442 before makingan order under s 339(1), and the affidavit evidence relating to thosematters, and having heard Mr Kerr in support, I am satisfied thatthe plaintiff has established that the defendant has no defence tothis claim and that the Official Assignee is entitled to the orderssought.[7] Accordingly, I enter judgment for the plaintiff in terms of theprayer for relief set out in the statement of claim, together withcosts of $14,160.50 and disbursements of $2,172.10.Associate Judge JohnstonOfficial Assignee v Truong[1] The Official Assignee seeks summary judgment of its claim to saleorders of a property at 23(A2) Cotesmore Way in Auckland'sParnell.20[2] The property is co-owned by the Official Assignee with the defendant,after her husband's adjudication as bankrupt meant his joint tenancyinterest in the property with the defendant vested in the OfficialAssignee.21 The property is presently valued at $285,000, is notsubject to any material charge, and is tenanted to third parties. If sold,the net proceeds are to be divided between the parties.[3] Although abundant representations have been made to the Court byher husband, the defendant has not filed any opposition, despiteextended opportunity to do so, and therefore is not to be heard on thisapplication.22 I disregard her husband's representations.[4] I may make such sale orders, having regard to specified factors.23Although such broad discretion means the summary judgmentprocedure "is not [as] well-suited" as was its more confinedpredecessor,24 regard to those factors nonetheless is achievable here.[5] Having regard to those factors in the present context, I am satisfiedthere is no good reason not to make the sale orders sought. Inparticular, it would materially be harder on the Official Assignee –with obligations to realise the bankrupt's property for payment ofcreditors, presently exceeding $1.65 million in unpaid taxes alone –to remain as joint tenant in the property with the defendant than itwould be on the defendant also to realise her share in their apparentinvestment property (acquired notwithstanding the bankrupt's non-20 Property Law Act 2007, s 339.21 Insolvency Act, s 101.22 High Court Rules 2016, r 12.9(3).23 Property Law Act, s 342.24 Bayly v Hicks [2012] NZCA 589, [2013] 2 NZLR 401 at [31].payment of taxes). Nonetheless the sale orders are sought on termsgiving the defendant a final opportunity to acquire the propertyoutright from the Official Assignee if she can.[6] I therefore make the orders sought at paragraphs A. to C. inclusive ofthe statement of claim, paragraph A.(i) as amended at paragraph 5 ofcounsel's memorandum dated 7 June 2019, and additionally order thedefendant is liable to pay the plaintiff 2B costs in respect of each steptaken in the proceeding plus disbursements as certified by theRegistrar.Jagose J.Result[41] Having regard to the factors set out in s 342, the originating documentation,the affidavit evidence and having heard counsel for the Assignee in support, I amsatisfied that the defendant has no defence to the application and it is appropriate thatthe orders sought are made. In particular, it is appropriate that the orders be made,having regard to:(a) the lengthy delays the Assignee has experienced in dealing with thebankrupt's estate;(b) the extensive efforts the Assignee has undertaken to give the widerfamily of the bankrupt opportunities to purchase the Assignee'sinterest in one or both of the properties;(c) the long delay to the party in favour of whom the Human RightsReview Tribunal award was made in receiving any recompense.[42] I therefore make the orders sought by the plaintiff in (a) to (f) of the "DraftOrders" attached to counsel's submissions.[43] Costs are awarded on a Schedule 2B basis to the plaintiff...Associate Judge Taylor