MURRAY v WEST COAST HOLDINGS LIMITED [2020] NZCA 611

MURRAY v WEST COAST HOLDINGS LIMITED [2020] NZCA 611 [2 December 2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA220/2020[2020] NZCA 611BETWEEN TREVOR JAMES MURRAYApplicantAND WEST COAST HOLDINGS LIMITEDRespondentCourt: Brown and Gilbert JJCounsel: Applicant in personS A McKenna and R G Scott for RespondentJudgment:(On the papers)2 December 2020 at 2 pmJUDGMENT OF THE COURTA The application for an extension of time to file the case on appeal and applyfor a hearing date is declined.B We make no order for costs.____________________________________________________________________REASONS OF THE COURT(Given by Gilbert J)[1] On 28 April 2020, Mr Murray filed an appeal against a decision ofthe High Court delivered on 22 April 2020 adjudicating him bankrupt.1However, Mr Murray did not file the case on appeal or apply for the allocation ofa hearing date for his appeal within three months after his appeal was brought and hisappeal was accordingly deemed abandoned on 29 July 2020. Mr Murray promptly1 West Coast Holdings Ltd v Murray [2020] NZHC 783 [High Court judgment].made an application which is to be treated as an application under r 43(2) of theCourt of Appeal (Civil) Rules 2005 for an extension of time to file the case on appealand apply for the allocation of a hearing date. The respondent, West Coast HoldingsLtd (West Coast), opposes the application.[2] Mr Murray, who is not legally represented, has satisfactorily explainedthe delay. In particular, he applied for a transcript of the hearing in the High Court,considering that this would provide support for the grounds of appeal he wishes toadvance. The High Court declined his application for a transcript.2 However, on17 July 2020, Brown J directed that a transcript be provided. Mr Murray receivedthe transcript on 31 July 2020, two days after the three month time limit had expired.West Coast is not materially prejudiced by the comparatively short delay. In thesecircumstances, an extension of time should be granted in the interests of justice unlesswe are satisfied the appeal is clearly hopeless, as West Coast contends it is. This isthe critical issue on the present application.Background[3] Mr Murray was a director and shareholder of Enlightenz NZ Ltd (Enlightenz)which formerly occupied premises in Albany, Auckland leased from West Coast.Mr Murray personally guaranteed Enlightenz's obligations under the lease.Enlightenz was placed in receivership and in liquidation in April 2016 owingsubstantial sums to numerous creditors. On 14 February 2017, West Coast obtainedsummary judgment against Mr Murray for amounts outstanding under the leasetotalling $247,250 plus costs and disbursements of $10,535.25.[4] Three bankruptcy notices were subsequently issued in respect of this judgment.The first, issued on 24 October 2017, was apparently not served. The second, issuedon 18 July 2018, was served on 27 July 2018. Mr Murray instructed Kevin Whitley,an insolvency practitioner, to respond to this notice. Mr Whitley wrote to West Coast'ssolicitors on 23 August 2018 proposing a possible compromise of the judgment debt:2 West Coast Holdings Ltd v Murray HC Auckland CIV 2019-404-1559, 7 May 2020 (Minute ofAssociate Judge Sargisson).Mr Murray is simply unable to meet the amount demanded by your client andhis other creditors.Mr Murray has approached his family members and they have agreed to offerhim some assistance to perhaps resolve this matter if appropriate terms areable to be reached.Mr Murray could put a proposal under Part 5 Sub-part 2 of the [I]nsolvencyAct but without your clients support it would not meet the voting requirementsof 75% of value.Against this background, his suggested proposal to your client is:-a) 10% of the debt paid within 90 daysb) A further 10% in six months' timec) An irrevocable commitment to support a creditors compromiseoffering no more than 20% to his other creditorsd) This would be full and final settlementAll of these requirements being interdependent.We have no doubt that this would result in a better outcome for your clientthan would be available if Mr Murray was adjudged bankrupt.Please advise if you require any further information to assist in your client'sdecision.[5] At the bankruptcy hearing on 19 March 2020, Mr Murray told the High Courtthere was no response to this proposal:Mr Whitley followed [West Coast's solicitor] up multiple times by telephoneand eventually got a response on the 23rd of October [2018] saying, "We havecommunicated your client's offer to mine and am awaiting instructions.We will respond accordingly. Mr Whitley followed up [with the solicitor] byphone three or four times after this time, including an email dated 6th ofNovember [2018] asking, "Any progress?" Mr Whitley received no response.[6] Nevertheless, Mr Murray contended that West Coast wished to accept"this formal offer", but this did not occur because of its solicitor's negligent failure tocommunicate acceptance. For this proposition, Mr Murray relied on a memorandumfiled by West Coast's solicitor on 10 March 2020. Mr Murray continued:[West Coast's solicitor's] statement in his memorandum from last week,the 10th of March [2020], filed with this Court said in one of the paragraphs,"However, the creditor chose not to seek adjudication at that stage, in relianceon promises and representations made by the debtor." The fact of the matteris that [the solicitors] never replied to this formal offer, despite being followedup numerous times by Mr Whitley as mentioned previously.[The solicitor's] statement makes it clear that the creditor wished to acceptthe offer and instructed [its solicitor] to accept, and this is evidenced by hissubmissions of 10 March [2020] when he says, "In reliance on promises andrepresentations made by the debtor." [7] In any event, the prospect of a creditors' compromise did not eventuate, and nopayments were made by Mr Murray to West Coast.[8] A third bankruptcy notice was issued by the High Court on 8 August 2019 andserved on 30 August 2019. Mr Murray applied to set aside this bankruptcy notice, buthis application was declined by Associate Judge Smith on 7 November 2019.3High Court judgment[9] Following a defended hearing on 19 March 2020, the High Court adjudicatedMr Murray bankrupt for reasons set out in a reserved judgment delivered on22 April 2020. Associate Judge Sargisson was satisfied that the jurisdictional groundsfor the adjudication order were made out in that Mr Murray had failed to comply withthe third bankruptcy notice issued in respect of the judgment debt and there were nogrounds for exercising the Court's discretion to refuse the order.4 In particular,the Associate Judge was not persuaded that a compromise agreement had been reachedwith West Coast in relation to the judgment debt.5 The Associate Judge rejectedMr Murray's contention that there had been an abuse of process.6Finally, the Associate Judge did not consider that further time should be allowed toenable settlement with assistance from Mr Murray's family or through recoveryproceedings against a third party.7 The Associate Judge concluded that the publicinterest in having Mr Murray's affairs administered by the Official Assigneeoutweighed any contrary private interest.83 West Coast Holdings Ltd v Murray [2019] NZHC 2913.4 At [3].5 At [14].6 At [16]–[17].7 At [18].8 At [19].Proposed appeal[10] Mr Murray's notice of appeal does not specify grounds. He stated that thesewill be detailed in submissions "including specific reference to evidence on record notincluded in Associate Judge Sargisson's judgment". Following receipt ofthe transcript, Mr Murray filed detailed submissions on 12 November 2020 in whichhe advances three broad contentions:(a) He did not have a fair hearing in the High Court.(b) Counsel for West Coast made numerous incorrect claims in written andoral submissions.(c) The High Court judgment does not accurately reflect what was said atthe hearing.Fair hearing[11] Mr Murray complains that the entire hearing was restricted to 45 minutes andhe says he was "cut off by the [Associate] Judge in the middle of his testimony".The "testimony" referred to was Mr Murray's oral submissions. We have reviewedthe transcript of the hearing including the interruptions he objects to.The Associate Judge interrupted Mr Murray on several occasions during his oralsubmissions to clarify his position. There is nothing unusual or wrong about that.The only other interruption complained about came after the hearing had concludedand the Associate Judge had announced that her decision was reserved.The Associate Judge then directed counsel for West Coast to file a certificateconfirming that the judgment debt had not been paid.9 At that point, Mr Murrayindicated that he wished to make further submissions. The hearing having concluded,the Associate Judge appropriately declined to hear any further submissions. The timeallowed for submissions was perfectly adequate given the limited scope of the issuesthat needed to be addressed at a hearing of this nature.9 High Court Rules 2016, r 24.20.[12] Mr Murray submits that the hearing was additionally unfair because ofthe failure by counsel of West Coast to file the certificate confirming non-payment ofthe debt. Mr Murray says he had the right to view and question the certificate duringthe hearing, but the certificate was not completed and filed until after the hearing.There is no merit in this complaint. Mr Murray does not suggest that the certificatewas not filed prior to the judgment being delivered. Further, he does not dispute thatthe debt remains unpaid.[13] Mr Murray next complains that the Associate Judge ignored his request to"cross-examine" counsel for West Coast and thereby breached the Evidence Act 2006and consequently the New Zealand Bill of Rights Act 1990. This complaint ismisconceived. Counsel was present to make submissions based on the evidence, notto give the evidence or be cross-examined as a witness. Mr Murray had no right toask counsel to answer questions.[14] We are satisfied that Mr Murray's proposed challenge to the fairness ofthe hearing in the High Court is devoid of merit and has no prospect of success.Errors in submissions[15] Mr Murray states that there were numerous incorrect claims in the submissionsand "testimony" of counsel for West Coast. He claims the Court had "a responsibilityto investigate unclear or contradictory evidence" and failed to do so. Further, he sayshe was not given an opportunity to question the "contradictory and false evidence"because of the "unfair time constraints".[16] It appears that Mr Murray wished to investigate the reasons for the delays inbringing the application for adjudication including the circumstances surroundingthe earlier bankruptcy notices and the reasons why the settlement proposal was notresponded to. Mr Murray contends that the chronology demonstrates "grossnegligence" by West Coast's solicitors and that counsel's "involvement in the matterneeds to be understood". He says this is because the solicitors did not serve the firstbankruptcy notice within the prescribed time limit and did not apply for an extensionof time to do so. He claims that issuing the second and third bankruptcy notices"makes a mockery of the law". He contends that the solicitors conduct was "reckless"and he has "suffered a penal outcome as a result". In summary, he saysthe "preliminaries have not been complied with" and the solicitor's "negligence indealing with the [settlement] offer [has] resulted in [West Coast] receiving no moniesand Mr Murray being adjudged bankrupt".[17] These submissions are misconceived. The conduct of West Coast's solicitorsin connection with the earlier bankruptcy notices and the so-called settlement offerwas irrelevant to the limited issues requiring determination in the High Court onthe adjudication application. Because the first bankruptcy notice was not served, ithad no relevance to the adjudication proceedings. The only potential relevance ofthe second bankruptcy notice was that it prompted Mr Murray's settlement initiative.However, it is plain from the evidence that this "offer", even if it can properly be socharacterised, was never accepted and did not progress. Mr Murray toldthe Associate Judge at the hearing "[t]he offer was made in good faith and would havebeen paid on the agreed dates, had I been notified of acceptance". The "offer" madein August 2018 was plainly not accepted. It had no relevance at the timethe adjudication application came to be considered in March 2020.[18] The act of bankruptcy relied on for the purposes of the adjudication applicationwas Mr Murray's failure to respond to the third bankruptcy notice, which was servedwithin the prescribed time limit. Mr Murray did not respond to this notice by paying,securing or entering into a formal agreement with West Coast for payment ofthe judgment debt. Nothing Mr Murray has raised in his submissions casts any doubton the fact that he committed an act of bankruptcy by not complying with this noticeand there was a proper jurisdictional basis for the adjudication order. Nor do hissubmissions raise any matter that could justify this Court interfering withthe Associate Judge's exercise of her discretion to make the order. There is no disputethat Mr Murray has no material assets or income and is unable to pay his creditors.Errors in the judgment[19] Mr Murray has reviewed the High Court judgment and compared it line-by-line with the transcript of the hearing. We have considered all the allegedinconsistencies he claims to have identified and we are satisfied that none are materialto the judgment or could call its correctness into question. We set out below a fewexamples to illustrate this.[20] Mr Murray says the Associate Judge did not accurately record his submissionsas to the just and equitable grounds for refusing to adjudicate him bankrupt and thatthe proceeding was an abuse of process. Included in this category are the followingcomplaints:(a) The Associate Judge recorded "[Mr Murray] claims the parties reacheda settlement agreement".10 Mr Murray complains that "[t]he assertionof the agreement was not made by [him], but by [counsel forWest Coast]". This is incorrect. Counsel for West Coast denied thatany agreement was reached. It was Mr Murray who raised the issue ofan agreement — for example, the transcript records Mr Murray assaying "[counsel's] statement makes it clear that the creditor acceptedthe offer and instructed [its solicitors] to accept".(b) The Associate Judge recorded that Mr Murray "was unable to say what[West Coast] had agreed to".11 Mr Murray says he was able to providethe specifics of the agreement, namely the terms set out in Mr Whitley'sletter quoted at [4] above. Mr Murray said that Mr Whitley neverreceived a response to this offer. According to Mr Murray, this wasbecause of West Coast's solicitor's negligence. The suggestion thatWest Coast accepted the offer is wholly untenable on the evidence.In any case, Mr Whitley's letter does not appear to constitute a formaloffer. It refers to "family members" having "agreed to offer"Mr Murray "some assistance" to "perhaps" resolve the matter "ifappropriate terms are able to be reached". This is not the usuallanguage of a formal offer capable of immediate acceptance andthereby creating a legally binding agreement. The proposal was alsodependent on a creditors' compromise at a similarly discounted levelbeing achieved with Mr Murray's other creditors.10 High Court judgment, above n 1, at [7(a)].11 At [7(a)].(c) The Associate Judge referred to "an earlier bankruptcy notice" whereasthere were three altogether.12 The Associate Judge did not need to referto the first bankruptcy notice because it was not served.(d) The Associate Judge summarised Mr Murray's submission as includinga challenge to the bona fides of counsel for West Coast who hadallegedly been "deliberately pursuing him to prolong his misery".13Mr Murray says he made no reference to "prolonging his misery".Rather, he says he "questions their abuse of process to escape liabilityrisk to their client for their failure to administer the settlement, and theircomplete disregard to justice". Contrary to Mr Murray's submission,there was no settlement to administer. Mr Murray stated at the hearingthat the "offer was made in good faith and would have been paid onthe agreed dates, had [he] been notified of acceptance" and thatthe matter "should have been concluded in 2018". Mr Murray alsostated at the hearing that if West Coast's solicitors had acted properlyhe "would be clear of bankruptcy now". He also referred tothe repeated issue of bankruptcy notices being used "as a weapon".While Mr Murray did not use the word "misery", the Associate Judge'ssummary adequately captures the gist of his submission.(e) The Associate Judge recorded that Mr Murray had requested time tocome up with funds to enable a settlement, explaining that his daughterand son-in-law had earlier indicated they could "possibly assist".14Mr Murray complains that the Associate Judge's wording shows shedid not understand the formality of the agreement, as the document wasnot presented. We have already addressed this issue. Mr Whitley'sletter refers to family members having "agreed to offer him someassistance" to "perhaps resolve this matter if appropriate terms are ableto be reached". There was no material error here.12 At [7(b)].13 At [7(c)].14 At [7(d)].[21] In addressing whether the jurisdictional requirements for an order foradjudication were satisfied, the Associate Judge stated it was not in dispute thatMr Murray had committed an act of bankruptcy within the three-month periodpreceding the adjudication application by failing to comply with the (third) bankruptcynotice.15 Mr Murray says this was an error because West Coast "was satisfied withthe compromise". This is plainly wrong. West Coast's forbearance cannot be equatedto acceptance of the settlement proposal. There is no evidence that any compromisewas ever agreed to; Mr Murray's own evidence and submissions demonstratethe contrary.Conclusion[22] The proposed appeal has no prospect of succeeding. The evidencedemonstrates that the judgment debt was never compromised, Mr Murray did notcomply with the (third) bankruptcy notice by paying the judgment debt or otherwise,and he committed the act of bankruptcy upon which the adjudication application wasbased. Nothing in Mr Murray's submissions indicates a tenable basis to challengethe order for adjudication. In these circumstances, the interests of justice are bestserved by declining the present application for an extension of time.[23] Given that Mr Murray is a bankrupt and the size of the unpaid judgment debt,we make no order for costs.Result[24] The application for an extension of time to file the case on appeal and applyfor a hearing date is declined.[25] We make no order for costs.Solicitors:McKenna King, Hamilton for Respondent15 At [9].