Roderick John Young v Bay of Plenty District Health Board Nzempc Auckland

• Jurisdiction: New Zealand
• Judge: G L COLGAN
• Judgment Date: 15 July 2013
• Court: Employment Court
• Docket Number: ARC 34/11
• Date: 15 July 2013

In the Matter of a challenge to a determination of the Employment Relations Authority

Between

Roderick John Young

Plaintiff

and

Bay of Plenty District Health Board

Defendant

[2013] NZEmpC 131

Court:

Judge Colgan

ARC 34/11

IN THE EMPLOYMENT COURT AUCKLAND

Interlocutory judgment concerning the ability in law of the Official Assignee to discontinue or withdraw proceedings or parts of proceedings in the Employment Court, on behalf of a bankrupt — plaintiff had been adjudicated bankrupt on the application of the defendant — plaintiff had lodged a challenge against determination on his personal grievance against defendant for constructive dismissal — plaintiff was claiming reinstatement and compensation for remuneration lost from the date of his dismissal — Employment Relations Act 2000 (“ERA”) did not provide for the filing of a notice of discontinuance in proceedings but only withdrawing from a proceeding — whether “income” was property under the Insolvency Act 2006 — whether the remedies of reimbursement of lost wages and compensation under s123 ERA (remedies) were “property” under the IA and vested in the OA.

Appearances:

Plaintiff in person

No appearance for defendant

Guy Caro, counsel for Official Assignee

INTERLOCUTORY JUDGMENT NO 2 OF CHIEF JUDGE G L COLGAN

1 This interlocutory judgment concerns the ability in law of the Official Assignee to discontinue or withdraw proceedings or parts of proceedings in this Court, on behalf of a bankrupt.

2 The plaintiff, Roderick Young, was adjudicated bankrupt on the application of the defendant on 19 November 2012. Whilst his personal grievance was before the Court, on 6 May 2013 the Official Assignee filed a “Notice of discontinuance” which stated materially: “To the extent that the claim vests in the Official Assignee in bankruptcy of the property of Roderick John Young, the Official Assignee discontinues the claim.”

3 Although it is not determinative of the case, the legislation does not provide for the filing of a notice of discontinuance in proceedings. Rather, cl 18 of Schedule 3 to the Employment Relations Act 2000 (the Act) provides for a party to withdraw “any matter … before the court …”. This is not the same thing as a discontinuation of a whole proceeding and may, arguably, be done either formally by notice or informally, for example orally at a hearing or by informal written communication to the Registrar.

4 What is more important, in terms of this case, is sub-cl (2). This provides: “… if a matter is withdrawn under sub-cl (1), it does not affect any other matters before the court that form part of the same proceedings.”

5 This allows for a part or parts of a proceeding to be withdrawn other than on an all-or-nothing basis. So, for example, an applicant or plaintiff may withdraw a claim to a particular remedy or one of a number of causes of action, without affecting the remaining matters. Despite the reference to such withdrawals being able to be made by “the applicant or appellant” (because not only are there no appeals under the current regime, but such parties are referred to almost inevitably as ‘plaintiffs’), this must extend relevantly to a defendant bringing a counterclaim who would fall within the broad description of an “applicant”.

6 The Registrar referred the notice of discontinuance to me for directions. By minute dated 7 May 2013 I directed the Registrar not to accept the notice of discontinuance for filing until the Official Assignee was able to persuade the Court either that Mr Young was agreeable to his challenge or parts of it being discontinued or that the Official Assignee was empowered to do so against Mr Young's wishes. I did so because s 217(2) of the Insolvency Act 2006 provides that under Schedule 1, cl (b) of the Act, the Official Assignee can “… discontinue … legal proceedings relating to the property of the bankrupt …”.

7 In the minute of 7 May 2013 I said that even though it was difficult to discern the nature of Mr Young's cause of action in his statement of claim filed on 10 May 2011, it was nevertheless a challenge to a determination of the Employment Relations Authority issued on 12 April 2011. 1 The Authority's determination recorded that Mr Young's claims appeared to be that he was dismissed constructively

and unjustifiably, for which wrongs he was (and now in this Court, is) seeking 2 reinstatement, compensation for remuneration lost from the date of his dismissal in 2008 until an unspecified date in 2011, compensation for “pain and suffering” (I presume under s 123(1)(c)(i) of the Employment Relations Act 2000), interest on wage arrears compensation, and costs

8 I am grateful to the Official Assignee, through counsel, for making submissions on the point.

9 The Official Assignee says that he did not purport to discontinue the proceeding but, rather, only that part or parts of it that “vested in the Assignee”. The Official Assignee did not, however, identify these parts in the notice he filed. The Official Assignee submits that a claim for compensation for lost earnings under the Employment Relations Act 2000 is a claim for damages and is “property” for the purposes of the Insolvency Act 2006 which defines “property” as:

property

means property of every kind, whether tangible or intangible, real or personal, corporeal or incorporeal, and includes rights, interests, and claims of every kind in relation to property however they arise

10 The Official Assignee submits that under the Insolvency Act 1986 (UK) a bankrupt's income does not vest in his or her trustee in bankruptcy, who must seek what is known as an income payments order if contributions to the estate are to be recovered. The Official Assignee says that this, however, is not the law in New Zealand and that the only exclusions to vesting of property are provided by ss 104, 105 and 158 of the Insolvency Act. He says that social welfare benefits, Maori land interests and accident compensation entitlements are prevented from vesting under s 104 by other applicable statutes, but no statute prevents the vesting of income. So, for example, the Official Assignee says that a claim for recovery of legal costs paid by the bankrupt vests in the Official Assignee as the payments made were the bankrupt's property.

11 The Official Assignee acknowledges that not all causes of action vest in him. Claims for damages assessed “by immediate reference to injury or pain felt by a

bankrupt in respect of his body, mind or character and without immediate reference to his rights and property” do not vest in the Official Assignee. 3 He submits that claims for compensation for injury to feelings under s 123(1)(c) of the Act fall into this category of remaining with the bankrupt personally

12 The Official Assignee submits that Mr Young's claims for relief under paras 33, 35 and 36 of his statement of claim in this Court vest in the Official Assignee and are therefore able to be discontinued by him. The Official Assignee acknowledges that Mr Young's claims for reinstatement and compensation for pain and suffering may continue to be heard and decided.

13 Because there is no other case law guiding the Court or the Employment Relations Authority in this area, it may assist those and others if I set out the following about the survival of causes of action in circumstances of bankruptcy.

14 New Zealand bankruptcy law is largely codified in the Insolvency Act 2006. Section 76(1) provides that, upon an adjudication of bankruptcy, all proceedings to recover any debt provable in the bankruptcy are halted. Section 101(1) makes it clear that all property belonging to, or vesting in, the bankrupt, vests in the Official Assignee as do any powers that the bankrupt could have exercised in, over, or in respect of any property for the bankrupt's own benefit. Section 102(1) further provides that all after-acquired property belonging to the bankrupt vests in the Assignee, as well as any powers that the bankrupt could have exercised in, over, or in respect of that property.

15 Section 217(2) provides that the Assignee has the power set out in Schedule 1, cl (b) of the Act which provides that the Assignee has the power to “bring, continue, discontinue, and defend legal proceedings relating to the property of the bankrupt”.

16 As already noted at [9], “Property” is defined by the Insolvency Act as consisting of “property of every kind, whether tangible or intangible, real or

personal, corporeal or incorporeal, and includes rights, interests, and claims of every kind in relation to property however they arise.”

17 The common law has, however, carved out an exception to the broad vesting provisions of bankruptcy statutes with respect to “personal” causes of action. In Heath v Tang 4 the House of Lords explained:

The property which vests in the trustee includes “things in action” …. Despite the breadth of this definition, there are certain causes of action personal to the bankrupt which do not vest in his trustee. These include cases in which “the damages are to be estimated by immediate reference to pain felt by the bankrupt in respect of his body, mind or character and without immediate reference to his rights of property.”…

18 This common law exception has been endorsed by the New Zealand courts in Leach v Official Assignee 5 and Re Meller. 6

19 Counsel for the Official Assignee in the present case has conceded that Mr Young's claims for reinstatement and those in respect of non-pecuniary loss or damage are of a “personal” nature and remain with the bankrupt. The Official Assignee contends, however, that Mr Young's claims for arrears of wages, interest, and costs now vest with the Assignee who is able in law to discontinue those parts of the plaintiff's proceeding.

20 This Court has only rarely considered the extent to which bankruptcy may inhibit a litigant's claim. In Rusk and Finch Ltd v Vanderwaal 7 the...