JEC No 2 Limited v Official Assignee at Hamilton

[2013] NZCA 501

IN THE COURT OF APPEAL OF NEW ZEALAND

CA446/2013
[2013] NZCA 501

BETWEEN	JEC NO 2 LIMITED First Appellant
AND	JEC NO 3 LIMITED Second Appellant
AND	THE OFFICIAL ASSIGNEE AT HAMILTON Respondent

Counsel:

Appellants in person
C T Gudsell QC for Respondent

Judgment:

(On the papers)

18 October 2013 at 10.00 am

JUDGMENT OF FRENCH J
(Review of Registrar’s Decision
Re Dispensing with Payment of Security for Costs)

AThe application for an extension of time in which to apply for a review of the Registrar’s decision regarding security for costs is granted.

BThe application for review is dismissed.  Security for costs in the sum of $5,880 must be paid into Court within 20 working days of the date of this judgment.

CCosts on this application are reserved.

____________________________________________________________________

REASONS

Introduction

1. JEC No 2 Ltd and JEC No 3 Ltd (the appellants) have filed a notice of appeal against a decision of Associate Judge Faire made in the High Court.[1]  In his decision, the Associate Judge refused to set aside orders he had made at an earlier hearing declaring certain transactions irregular and vesting the subject properties in the Official Assignee under s 206 of the Insolvency Act 2006.  The orders had been made in the absence of the appellants due to their failure to comply with timetabling directions and give instructions to their counsel. 

   [1]JEC No 2 Ltd v The Official Assignee at Hamilton [2013] NZHC 1352.

2. On 12 July 2013 security for costs on the appeal was set at $5,880.

3. The appellants then applied for security to be dispensed with under r 35(6)(c) of the Court of Appeal (Civil) Rules 2005 on the grounds that they have no funds and are trustee companies.  The Registrar declined the application and advised the appellants of her decision by letter dated 28 August 2013.  The Registrar confirmed that security remained set at $5,880 and also advised the appellants of their right to seek a review of her decision under r 7(2).

4. The appellants did not immediately ask for a review.  Instead they sought an extension of time in which to pay security.  When they were informed an extension of time could not be granted, they sought a review in an email on 8 October 2013.  By that time, the 10 day period for bringing a review had expired.

The Registrar’s decision

1. In dismissing the application for dispensation, the Registrar noted that no financial details relating to the shareholders of the appellant companies had been provided and that the application was opposed on jurisdictional grounds.  She stated that she did not consider there were exceptional circumstances justifying a dispensation.  Nor did she consider that the case was one of significant public interest.  The Registrar further stated that after considering previous authority,[2] she was of the view that this was not an appropriate case for dispensing with security for costs and concluded that security was necessary to protect the respondent in terms of costs should the appeal fail.

Grounds for review

[2]Fava v Zaghloul [2007] NZCA 498, (2008) 18 PRNZ 943; Siemer v Chief Justice Sian Elias of the New Zealand Supreme Court [2011] NZCA 183.

1. The appellants contend that the Registrar has misunderstood their role as corporate trustee companies.  It is submitted that the appellant companies are purely administrative and that accordingly the directors’ assets[3] are of no consequence in assessing the assets available to the companies and their ability to meet security for costs.  It is further submitted that the only funds which could be used to pay security have been taken by the Official Assignee and frozen.

The applicable principles

[3]The appellants referred to the director’s assets rather than the shareholders’ assets.  I assume this was a mistake, but it makes no difference to our determination of the appeal.

1. The applicable principles are well established.  In the normal course, appellants in civil proceedings are required to pay security for costs.[4]  Security for costs may be dispensed with where it is in the interests of justice to do so.  There must be some exceptional circumstances to justify dispensing with security for costs.[5]  The appellant must honestly intend to pursue the appeal and it must be arguable, as respondents should not face the threat of hopeless appeals without provision for security.  The importance of the issues raised in the appeal will be significant, as will the question of whether there is any public interest in having them determined.[6]  Impecuniosity alone is not usually sufficient to justify dispensing with security for costs, but may be reason to reduce the quantum of security.[7]

Decision

[4]Court of Appeal (Civil) Rules 2005, r 35(2).

[5]Fava v Zaghloul, above n 2, at [9].

[6]Creser v Official Assignee CA196/05, 12 June 2006 at [29].

[7]Fava v Zaghloul, above n 2, at [9].

1. Although the application for review is out of time, the Court has power to grant an extension of time.  The delay was due to a lack of familiarity with the rules. The appellants are not legally represented.  In those circumstances and in the absence of any prejudice to the respondent arising from the delay, the Court is normally minded to grant an extension.

2. However, even with an extension of time, the appellants face an insuperable barrier, namely that this Court has no jurisdiction to hear their appeal.  The decision of the Associate Judge was made pursuant to r 15.13 of the High Court Rules.  It was a matter falling within his chambers jurisdiction and accordingly, under s 26P(1) of the Judicature Act 1908, any challenge to the decision must be by way of review proceeding in the High Court.  There is no right of appeal to this Court and the appeal is therefore doomed to fail.

3. That is sufficient to dispose of this application. A respondent should not have to face the prospect of a hopeless appeal without provision for security.  I also agree with the Registrar that the matters raised in the appeal do not involve significant matters of public interest.

Outcome

1. The application for an extension of time in which to apply for a review of the Registrar’s decision regarding security for costs is granted.

2. The application for review is dismissed.  Security for costs in the sum of $5,880 must be paid into Court within 20 working days of the date of this judgment. 

3. Costs on this application are reserved.

Solicitors:
Almao Douch, Hamilton for Respondent