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Bicknell v Ministry of Economic Development [2016] NZHC 1328 (20 June 2016)

High Court of New Zealand

Bicknell v Ministry of Economic Development [2016] NZHC 1328 (20 June 2016)

Last Updated: 29 July 2016

IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY

CRI-2015-488-000052 [2016] NZHC 1328

_{JUDGMENT OF KEANE J}

This judgment was delivered by me on 20 June 2016 at 10am pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Marsden Woods Inskip & Smith, Whangarei

BICKNELL v MINISTRY OF ECONOMIC DEVELOPMENT [2016] NZHC 1328 [20 June 2016]

[1] On 25 November 2015 Paul Bicknell was convicted in the District Court, Whangarei, of failing between 9 October 2006 – 25 July 2007 to comply with his duty as a bankrupt to give to the Official Assignee a complete and accurate list of his debtors and creditors and other required information as to his property. He was fined

$2,000, which he was to pay by 26 November 2015.¹

[2] In convicting and sentencing Mr Bicknell, in the face of Mr Bicknell’s protest to his ability in law to do so, Judge Hunt gave effect to a decision of Judge C J McGuire in the District Court, Rotorua, dated 2 October 2009.

[3] In that earlier decision, and despite there too Mr Bicknell’s protest, Judge McGuire found the charge proved. Mr Bicknell, he held, had been adjudicated bankrupt on 7 June 2005. He had then come under a duty to disclose to the Official Assignee the information required. As a former bankrupt he was fully aware of his duty. He deliberately failed to comply.

[4] In finding the charge proved, Judge McGuire held that Mr Bicknell could not contend by way of defence that he had never come under that duty because his adjudication rested on a 6 September 2004 civil judgment in the District Court, Whakatane, founded on the perjured evidence of Colin MacKinnon, his petitioning creditor, compounded by fraud on the part of the judge, who presided at that trial, Judge Rollo.

[5] Judge McGuire held that he did not have jurisdiction to review Judge Rollo’s decision, which had not been set aside on appeal. Nor could he review the resultant bankruptcy adjudication made in this Court, which had not been annulled. Mr Bicknell remained an undischarged bankrupt and his challenge was precluded by the doctrine of res judicata. The Judge declined, therefore, to admit in evidence the materials on which Mr Bicknell wished to rely.

[6] Now that Mr Bicknell has been convicted and sentenced, he appeals his conviction, as he remains entitled to do, under s 116 of the Summary Proceedings Act 1967; and his single ground of appeal comes down to this. Judge McGuire was

wrong to disallow his proposed defence and to decline to receive his evidence. The

2004 proceedings constituted an abuse of process, as did therefore the 2005 adjudication. In not recognising this and ameliorating it in the criminal proceedings, he contends, Judge McGuire became complicit in Judge Rollo’s fraud.

Appeal hearing

[7] On the appeal I confirmed to Mr Bicknell, when he asked me, that in 2006 I had given an interlocutory decision adverse to him in Rotorua in civil proceedings in which he was then seeking to nullify the 2004 civil judgment and his 2005 adjudication to which I will return later.²

[8] In that decision, which I have since reviewed, I held that Mr Bicknell was not entitled to Mr MacKinnon’s accounts for 1998 – 1999, on which he then wished to rely to establish the abuse of process and judicial fraud he contends for still on this appeal.

[9] I then held that the accounts were irrelevant to Mr Bicknell’s challenge, because he asserted that the perjury and fraud he contended for were fully evident on the face of the District Court record. He was seeking to go behind it. I also said that the doctrine of res judicata could well prove an impediment for him in his proceedings as a whole, as later proved to be the case. That was as far as I went.

[10] That being so, as I told Mr Bicknell, I was not disqualified from hearing his appeal against Judge McGuire’s decision, which turned primarily, and possibly finally, on whether the Judge had made any error of law when declining to entertain his defence and receive his evidence. I heard Mr Bicknell’s appeal despite his protest.

[11] I later said that, if I found that the Judge was right to decline to entertain Mr Bicknell’s defence, by recourse to the doctrine of res judicata, that had to be fatal to Mr Bicknell’s appeal. If, however, I found that the Judge was incorrect as to that I

would have to consider in a wider way the materials in Mr Bicknell’s affidavit on the appeal, which the Judge had refused to receive, set against his full submission.

[12] I have since had to make that wider review. The doctrine of res judicata calls for a complete identity of the parties and the Official Assignee, though vested with Mr Bicknell’s estate, was not party to the 2004 proceedings. Nor was Mr MacKinnon party to the criminal proceeding. I begin with the civil judgment.

2004 civil judgment

[13] On 20 December 1996 Mr Bicknell and Mr MacKinnon entered into two reciprocal agreements for the sale and purchase of a tractor and maize planter. Under the first Mr Bicknell was to purchase them from Mr MacKinnon for

$100,000. Under the second Mr MacKinnon was to purchase them back on 20 June

1997 for $104,000, plus GST.

[14] Mr Bicknell completed purchase under the first agreement, paying the purchase price, plus GST, $112,500, but the tractor and planter remained in Mr MacKinnon’s possession until 23 September 1997, when Mr Bicknell took possession of them with police assistance.

[15] Mr Bicknell then invoiced Mr MacKinnon for $33,412.50 for the dry hire of the tractor and planter since 20 December 1996; and he then brought the civil proceedings which resulted in judgment being entered against him on Mr MacKinnon’s counterclaim, in which he claimed from Mr MacKinnon the sum invoiced, $33,412.50, together with two per cent compound interest, $38,538.50, in total $71,951.

[16] In his counterclaim Mr MacKinnon contended that on 23 September 1997, the date to which as the Judge found the second agreement had been varied to take effect, he was entitled to repurchase the tractor and planter for $104,000 plus GST, but Mr Bicknell then converted them without colour of right. He claimed losses of the order of $200,000.

[17] In dismissing Mr Bicknell’s claim and giving judgment for $25,000 to Mr MacKinnon on his counterclaim, Judge Rollo held that the two reciprocal agreements constituted a $100,000 loan to Mr MacKinnon from Mr Bicknell, at eight per cent interest, initially until 20 June 1997, and then until 23 September

1997, against the security of the tractor and planter.

[18] The Judge also held, and this is central to Mr Bicknell’s present appeal, that

Mr MacKinnon had not agreed at a meeting some two weeks before 23 September

1997, that despite the second agreement, Mr Bicknell could sell the tractor and planter to anyone he liked and agreed also to pay Mr Bicknell for their dry hire since

20 December 1996. The Judge accepted Mr MacKinnon’s evidence that there had

been no such meeting.

[19] In these conclusions the Judge relied on a range of wider evidence, one strand of which was that Mr Bicknell had afterwards sold the tractor and planter for $100, plus GST, and then that 18 months – two years later his son had acquired both for

$5,000 and that they had then been sold to a Pukekohe tractor dealer for $65,000.

[20] In these conclusions, as the Judge said, he relied finally on his findings of credibility and reliability. He believed the evidence of Mr MacKinnon and his partner. He disbelieved the evidence of Mr Bicknell and his son.

Adjudication and later challenges

[21] On 9 May 2005 Judge Rollo declined Mr Bicknell a stay of judgment pending the outcome of the appeal Mr Bicknell had by then filed, and on 7 June

2005, as I have said, Mr Bicknell was adjudicated bankrupt on Mr MacKinnon’s

petition as judgment creditor.

[22] On 15 August 2005 Mr Bicknell’s application to have his adjudication

annulled was dismissed, and his only recourse against his adjudication then lay by way of appeal to the Court of Appeal.³ On 8 September 2005 the Official Assignee,

³ Bicknell v MacKinnon HC Rotorua CIV-2004-063-882, 15 August 2005.

in whom his right to pursue his appeal to the 2004 judgment then vested,

discontinued that appeal with Mr MacKinnon’s agreement.

[23] In civil proceedings, which Mr Bicknell brought himself, and in which his son also joined as a party interested in his father’s bankruptcy, he set out to nullify his 2005 adjudication and the 2004 judgment on which it depended, contending, then as now, that the 2004 judgment had been obtained on perjured evidence and by judicial fraud.

[24] In July – September 2006 three interlocutory decisions were given by this Court, which were adverse to Mr MacKinnon and his son, the second of which was mine.⁴ Then on 13 October 2006 his application for transfer to the Court of Appeal

was declined,⁵ and all his remaining applications, and those of his son were declined

on 6 December 2006.⁶ On 16 April 2007 his appeal to the Court of Appeal was dismissed.⁷

[25] The result is that at all dates material to his appeal, Mr Bicknell has remained a bankrupt subject to the duty of disclosure with which he deliberately failed to comply.

Abuse and fraud principles

[26] To contend that Judge McGuire was wrong in law, and complicit in Judge Rollo’s fraud, when he declined to entertain Mr Bicknell’s defence that his bankruptcy was nullified by the 2004 abuse of process he contends for, Mr Bicknell relies on two very broad statements of principle.

[27] The first comes from Hunter v Chief Constable of West Midlands Police, where Lord Diplock confirmed that a court, confronted with an abuse of process, has

_{an inherent power to correct it. The power that Diplock J spoke of}⁸ _{was this:}

⁴ Bicknell v MacKinnon HC Rotorua CIV-2004-063-000882, 12 July 2006, 21 July 2006, 15

_{September 2006.}

⁵ _{Bicknell v MacKinnon HC Rotorua CIV-2004-463-668, CIV-463-882, 13 October 2006.}

⁶ _{Re Paul Daniel Bicknell (a bankrupt) HC Rotorua CIV-2004-463-883, 6 December 2006.}

⁷ _{Bicknell v MacKinnon and Official Assignee [2007] NZCA 145.}

8. Hunter v Chief Constable of West Midlands Police [1981] UKHL 13; [1982] AC 529 at 536; [1981] UKHL 13; [1981] 3 All ER 727, at 729 (HL); see also Reid v New Zealand Trotting Conference [1984] 1 NZLR 8 (CA).

the inherent power which any Court of justice must possess to prevent misuse of its procedure in a way which, although not inconsistent with the literal application of its procedural rules, would nevertheless be manifestly unfair to a party to litigation before it, or would otherwise bring the administration of justice into disrepute among right-thinking people.

[28] As Mr Bicknell emphasised on the appeal, Lord Diplock then went on to say that an abuse of process may take many forms and was careful not to confine the Court’s powers to respond to limited categories of abuse. Mr Bicknell also emphasised that Lord Diplock then stated that, when confronted with an abuse, a Court not merely has the power to respond, it has the duty.

[29] What Mr Bicknell did not recognise, however, was that while Lord Diplock spoke in very wide terms the abuse in issue in that case was the very form of abuse which Judge McGuire identified to be inherent in Mr Bicknell’s own challenge in the

2009 criminal proceeding to the 2004 civil judgment and the 2005 adjudication.

[30] In Hunter the House of Lords held that the appellants could not by civil proceedings challenge decisions taken against them in prior criminal proceedings. It upheld the decision of the Court of Appeal to strike out their civil claim. The abuse of process, which the House of Lords then held the Court of Appeal had been right to

correct, as Lord Diplock said, lay in this:⁹

... the initiation of proceedings in a Court of justice for the purpose of mounting a collateral attack on a final decision against the intending plaintiff which has been made by another Court of competent jurisdiction in previous proceedings in which the intending plaintiff had a full opportunity of contesting the decision in the Court by which it was made.

[31] In Saif Ali v Sidney Mitchell & Co (a firm), which preceded this case by two years, Lord Diplock set out the principle on which that statement rests. He said:¹⁰

Under the English system of administration of justice, the appropriate method of correcting a wrong decision of a court of justice reached after a contested hearing is by appeal against the judgment to a superior Court. This is not based solely on technical doctrines of res judicata but on principles of public policy, which also discourage collateral attack on the correctness of a subsisting judgment of a court of trial on a contested issue

⁹ _{Ibid, 541; 733.}

¹⁰ Saif Ali v Sidney Mitchell & Co (a firm) [1980] AC 198 at 222 – 223; [1978] 3 All ER 103 at

1045.

by retrial on the same issue, either directly or indirectly in a Court of co- ordinate jurisdiction. ...

[32] In that earlier case Lord Diplock concluded by saying this:¹¹

... to require a court of co-ordinate jurisdiction to try the question whether another court reached a wrong decision and, if so, to inquire into the causes of its doing so is calculated to bring the administration of justice into disrepute.

[33] That logic applies equally in this case even though the collateral challenge that Mr Bicknell wishes to make is to a civil judgment by way of a criminal proceeding. To confront that difficulty, however, he then relies on a second wide statement of principle, the effect of which is, he says, that there cannot be an abuse where the earlier proceeding is tainted by perjury and fraud. As he says, in Lazarus

Estates Ltd v Beasley, Denning LJ said this:¹²:

No Court in this land will allow a person to keep an advantage which he has obtained by fraud. No judgment of a Court, no order of a Minister, can be allowed to stand if it has been obtained by fraud. Fraud unravels everything. The Court is careful not to find fraud unless it is distinctly pleaded and proved; but once it is proved it vitiates judgments, contracts, and all transactions whatsoever; ...

[34] In that very wide statement, however, Denning LJ went well beyond the issue to be decided, as the other judgments on that appeal show. The narrow issue was whether a statutory tenant could challenge a rent increase out of time, on the ground that the increase was founded on a fraudulent declaration. In issue was the effect of a statutory bar, not the finality of a decision of a Court of co-ordinate or superior jurisdiction.

[35] In Hunter, moreover, when the case lay in the Court of Appeal under the name McIlkenny, Lord Denning MR held emphatically that the collateral challenge to the criminal proceedings, which the civil proceedings constituted, had to be brought to a halt. It was precluded by issue estoppel and constituted an abuse of

_process.¹³ _{In that Court of Appeal decision also Goff LJ, whose judgment was}

¹¹ _{Ibid, at 223.}

¹² _{Lazarus Estates Ltd v Beasley [1956] 1 QB 702 at 712, [1956] 1 All ER 341 at 345 (CA).}

¹³ McIlkenny v Chief Constable of West Midlands Police Force [1980] 2 All ER 227 (CA).

endorsed in the House of Lords, held that the civil claimants could not avoid being struck out by contending that the criminal proceedings had been tainted by perjury.

[36] Any decision relying on contested evidence, as he said, is open to the attack that it is founded on perjured evidence and for such an attack to begin to be entertained in a later proceeding, even on a direct appeal, the evidence of perjury must be both fresh and conclusive. He began by saying this:¹⁴

... where the issue at the first trial was which of two parties or their witnesses was committing perjury, it is not sufficient merely to aver that the judgment was obtained by perjury since that is no more than to say that the decision ought to have gone the other way. There must be sufficient fresh evidence to support the allegation.

[37] Then he went further. To be fresh, he said, the proposed evidence must not have been “available at the time or ... by reasonable diligence have been (able to be) obtained”. Even if the proposed evidence passes that threshold, he said, to be admissible it “must be likely to be decisive”.¹⁵

Proposed fresh evidence

[38] Mr Bicknell contends that the evidence on which he wishes to rely is fresh evidence, but the primary evidence on which he relies comes from the transcript of evidence in the 2004 proceeding.

[39] The transcript Mr Bicknell relies on records an exchange between Mr MacKinnon and the Judge as to the effect of the first of the two agreements, in which Mr MacKinnon said that he had come to realise that Mr Bicknell must have had the ability under that agreement to sell to whomever he chose. The exchange began in this way:

Do you accept that Mr Bicknell had the right under the written agreements that (sic) had signed with him to onsell the tractor and planter? Once he had taken possession of the tractor and I still had the money and he could do what he liked with it I guess having failed to buy it back off him.

If Mr Bicknell had onsold the tractor at a fair market price in September

_{1997, tractor and planter, what do you estimate it would have reached, fair}

¹⁴ _{At 247.}

¹⁵ At 249.

market price for both items? I would have thought that $25k for the planter and $65k for the tractor would have been a fair market price.

Is that inclusive GST or plus GST? Sorry that would be plus GST.

So $90k plus GST? Yes, if I may go back to when Mr Bicknell took the planter and tractor with the Police, I pointed out in front of the Police that the tractor was only worth $117,000 to me because I had agreed to pay that sum to anybody else including Mr Bicknell it was worth less than that because you’ll be aware that selling secondhand machinery is difficult.

You’re referring to the tractor and planter worth $117k? Yes.

[40] The Judge then asked Mr MacKinnon why he thought Mr Bicknell might have sold it for $100 plus GST, and Mr MacKinnon’s answer was that this would have given him a tax write off and ought to have been investigated by the Commissioner of Inland Revenue. After that there was this exchange:

Do I understand Mr MacKinnon and tell me if I haven’t got that right, that you accept that the documents you signed gave the right to Mr Bicknell to onsell the tractor and planter? After he had taken possession of it, there wasn’t anything else I could do, I guess I could of, if I’d gone to the court to repossess it my crop wouldn’t have been in the grounds, I didn’t have.

I understand that point, that point I’m asking did you understand the agreement you signed with Mr Bicknell on 20 December 1986 would have enabled him for instance in February 1997 to onsell the tractor and planter because he was the owner? No I completely overlooked that, I thought the spirit of the agreement is that I, would repurchase that tractor on demand or on June 20^th and the loan would have been repaid.

[41] In his decision, as Mr Bicknell points out, the Judge did not refer expressly to this exchange when he rejected Mr Bicknell’s evidence as unworthy of belief as to the possibility that there had been that second variation two weeks before 23

September 1997. The Judge said this:¹⁶

I find that Mr Bicknell first raised the issue of an on-sale to a third party with Mr MacKinnon on the morning of 22 September 1997, as the latter said in his evidence. I also find that Mr MacKinnon did not agree to pay a dry hire hourly rate for his use of the tractor and maize planter. As Mr MacKinnon questioned, why would he want to pay a hire for what he considered to be his own tractor which he was expecting to “repurchase back” from Mr Bicknell? I agree with his question, especially since I have found that the total transaction was intended to be a loan, and that there were implied terms in the agreements that Mr Bicknell was not only bound to re-sell the machinery to Mr MacKinnon, but also that possession of the machinery remained with Mr MacKinnon until the buy-back.

¹⁶ At [70].

[42] On this appeal, as before the Judge, Mr Bicknell also wished to rely on a report from a forensic accountant, dated 6 July 2009, concerning Mr MacKinnon’s wage records for 1996 – 1997, the accounting steps necessary to sell the tractor and planter, and Mr MacKinnon’s counterclaimed loss of income. Also on a range of materials the immediate effect of which is not obvious.

Conclusions

[43] On the evidence before Judge McGuire, and as the Judge held, Mr Bicknell did commit the offence charged. He was then a bankrupt as a result of the adjudication of this Court, dated 5 June 2005. The Official Assignee had required him to supply a list of his creditors and debtors and other usual information. He had not merely failed to comply with his duty as a bankrupt. He had positively refused.

[44] The Judge was correct equally to hold that Mr Bicknell could not defend this charge by asserting that his adjudication constituted an abuse of process because it rested on a judgment debt obtained by perjury and judicial fraud. He was right, equally, not to admit the materials on which Mr Bicknell wished to rely.

[45] Before the criminal proceeding Mr Bicknell had attempted to appeal the 2004 judgment, and to have it stayed while he did so, and then to have his adjudication annulled by contending for, as he wished to do in defence of this prosecution, an abuse of process in the 2004 proceeding. He had not succeeded. Yet he was inviting the Judge in these criminal proceedings to deem those decisions to be devoid of effect.

[46] The Judge founded his decision on the doctrine of res judicata which, as I consider, did not strictly apply because there was not complete identity of parties. But, on my own review of Mr Bicknell’s affidavit on this appeal, set against his full submissions, I conclude that the Judge would have been compelled to reach the same conclusion by recourse to the wider doctrine of abuse of process.

[47] Furthermore, the materials on which Mr Bicknell wished to rely, and which the Judge declined to receive as evidence, did not constitute fresh, let alone conclusive evidence. The 2004 transcript hearing was hardly new evidence. Mr

Bicknell could have called at the civil hearing a forensic accountant had he chosen to. His wider materials were no more than an attempt to rework and strengthen his case. None of those materials point to an abuse of process in 2004. If anything the contrary is the case.

[48] Finally, while Mr MacKinnon may have said to the Judge that the first of the December 1996 agreements on its face gave Mr Bicknell the ability to sell to whomever he chose, that ignored the effect of the second and reciprocal agreement, as the Judge held.

[49] The effect of the two agreements together, the Judge was entitled to conclude, was to constitute a loan from Mr Bicknell to Mr MacKinnon on the security of the tractor and planter. That being so, Mr Bicknell would only have had the right to sell elsewhere, if Mr MacKinnon failed to comply with the second agreement. The Judge was entitled equally to hold that the concessions Mr Bicknell attributed to Mr MacKinnon as to that issue, and as to dry hire, defied belief.

[50] I dismiss Mr Bicknell’s appeal against his conviction. That being so, he remains liable to pay the fine imposed on him by Judge Hunt.

P.J. Keane J