Issued
2018
Decision
24 Jul 2018
Court
NZHC
Appeal Status
Pending

Appeal not setting aside bankruptcy notice is direct to the Court of Appeal

In a decision on 15 June 2018, Dr Muir’s application to set aside a bankruptcy notice issued against him by the Commissioner was dismissed by the High Court.

Case
Muir v Commissioner of Inland Revenue [2018] NZHC 1834
Legal terms
bankruptcy notice, leave to appeal, interlocutory application, jurisdiction

Summary

In a decision on 15 June 2018, Dr Muir’s application to set aside a bankruptcy notice issued against him by the Commissioner was dismissed by the High Court. Dr Muir sought leave from the High Court to appeal to the Court of Appeal.

The High Court agreed with the Commissioner and held that an application to set aside a bankruptcy notice is not an interlocutory application; rather a stand-alone proceeding. As such, the High Court had no jurisdiction to grant the application for leave and Dr Muir needs to appeal directly to the Court of Appeal.

Impact

This decision confirms that an application to set aside a bankruptcy notice is a stand-alone proceeding. The High Court does not have jurisdiction to grant leave to appeal to the Court of Appeal and an appeal must be directly to the Court of Appeal.

This will also apply to the Commissioner if a bankruptcy notice is set aside. If the Commissioner wishes to appeal, she must appeal directly to the Court of Appeal and not apply for leave to the High Court.

Facts

Dr Muir, the judgment debtor, made an application to set aside a bankruptcy notice issued against him by the Commissioner. The High Court dismissed this application on 15 June 2018 (June Decision).

Dr Muir then made an application to the High Court for leave to appeal the June Decision.

Decision

The High Court held that following the scheme of the Insolvency Act 2006 and the decision in Prescott v New Zealand Police [2017] NZHC 2701 at [7], an application to set aside a bankruptcy notice is not an interlocutory application as the decision goes to substance not to procedure. An application to set aside a bankruptcy notice is a stand-alone proceeding.

Given that an application to set aside a bankruptcy notice is not an interlocutory application, s 56(3) of the Senior Courts Act 2016 (Act) does not apply.

The High Court held that it had no jurisdiction to grant the application for leave under s 56(3) of the Act.

If Dr Muir wishes to challenge the June Decision he must appeal directly to the Court of Appeal under s 56(1) of the Act (Dr Muir will also have to seek leave from the Court of Appeal to file a late appeal).

Costs were reserved pending determination of the appeal in Commissioner Inland Revenue Department v New Orleans Hotel 2011 Ltd [2018] NZHC 971.

Senior Courts Act 2016 ss 4 and 56; High Court Rules 2016 r 1.2; New Zealand Bill of Rights Act 1990 s 27; Insolvency Act 2006