IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-1709 [2013] NZHC 112

BETWEEN	V R SIEMER
Applicant	

AND	
OFFICIAL ASSIGNEE First Respondent	

AND	
K FARDELL AS EXECUTRIX OF THE ESTATE OF J R F FARDELL
Second Respondent	

Hearing:	25 July 2012	

Appearances:	
Applicant in person
DM Salmon and ITF Hikaka for First Respondent
Appearance for the Second Respondent excused	

Judgment:	
8 February 2013	

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 8 February 2013 at 2:00 pm
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

SIEMER v OFFICIAL ASSIGNEE [2013] NZHC 112 [8 February 2013]

[1]       The applicant, a bankrupt, has brought judicial review proceedings against the Official Assignee who, under the provisions of the Insolvency Act 2006, has control of Mr Siemer’s estate.   The review proceedings concern a decision by the Official Assignee not to pursue certain Court proceedings in which Mr Siemer was involved  prior  to  his  bankruptcy  and  to  refuse  to  assign  the  claim  in  those proceedings back to Mr Siemer.

[2]       In judicial review proceedings a party may not cross-examine a deponent without the leave of the Court.   This requirement follows from the nature of the proceeding which is confined in most cases to a consideration of the process by which a statutory power of decision has been exercised.  The Court’s focus is not on whether the decision-maker made the right decision but on whether all relevant factors  were  considered, all  irrelevant  factors  disregarded,  and  the principles  of natural justice observed.  Even where the ground for challenge is unreasonableness, that conclusion is available to the Court only where the outcome of the exercise of the power of decision is so irrational or such that no reasonable body of persons could have arrived at the decision leading to an inference that the power must have been misused.

[3]       For these  reasons  judicial  review  proceedings  almost  always  involve  the consideration of affidavit evidence upon which there is no cross-examination.  The Court  examines  the  written  material  recording  the  challenged  decision  and  the reasons for it to decide whether the decision-maker’s process has been in accordance with the legal requirements.   Upon a review, the Court does not act as if it were hearing an appeal against the substance of the decision.

[4]       Cross-examination,  however,  may  be  permitted  “on  rare  occasions  when required by the interests of justice”.1  The test for grant of leave to cross-examine has not altered since it was stated by the Court of Appeal to be confined to circumstances where cross-examination is “clearly necessary to enable the case to be disposed of
fairly”.2

1	Geary v Psychologists Board (2009) 19 PRNZ 415 (SC) at [1].
2           Roussel Uclaf Australia Pty Ltd v Pharmaceutical Management Agency Ltd[1997] 1 NZLR 650 (CA), 656.  See also Geary v Psychologists Board (SC) above n 1; Geary v Psychologists Board (2009) 19  PRNZ 409  (CA);  and  Commerce Commission v  Powerco Limited  CA123/06, 9

[5]       It is necessary, therefore, to consider the grounds for the review sought by Mr Siemer and to determine, in that context, whether cross-examination of the first respondent’s sole witness, Mr Viljoen, a Deputy Assignee should be permitted.

[6]       The grounds advanced by Mr Siemer in support of the application for review are set out in an amended statement of claim dated 16 August 2011.  The filing of this pleading followed the release of a judgment of Duffy J on 4 August 2011,3  in which  the  Judge  refused  an  earlier  application  by  Mr Siemer  to  cross-examine Mr Viljoen.  I shall return to that judgment in due course.

[7]       The claim concerns a decision by or on behalf of the Official Assignee not to pursue a claim brought by Mr Siemer against an Auckland Queen’s Counsel, Robert Fardell QC (now deceased), for breaches of duty arising from Mr Fardell’s involvement as an adviser to Mr Siemer in respect of the receivership of a company, Paragon Oil Systems Limited, in which Mr Siemer and his wife were shareholders. Mr Siemer  was  aggrieved  about  actions  taken  by  the  receiver  of  the  company, Mr Stiassny.  He alleged negligence and misconduct by Mr Fardell in his capacity as Mr Siemer’s legal adviser.  In the course of the proceedings, and before the Official Assignee took over the conduct of Mr Siemer’s affairs, settlement offers were made on behalf of Mr Fardell but they were not accepted and lapsed.  Mr Siemer points to the making of these offers, among other things, as justifying his attack upon the Official Assignee’s conclusion that the proceeding should not be pursued because it lacked merit and had no reasonable chance of success.

[8]       Mr Siemer alleges that:

(a)       The  Official  Assignee’s  actions  amounted  to  a  breach  of  natural justice and of Mr Siemer’s rights under s 27 of the New Zealand Bill of Rights Act 1990;

(b)       The Official Assignee failed properly to take into account relevant considerations;

November 2006.
3	Siemer v Official Assignee HC AucklandCIV-2010-404-1709, 4 August 2011.

	(c)

(d)	The decision was based on irrelevant considerations;

The  decision  was  reached  in  a  manner  which  was  procedurally	
		improper in that there is a real possibility that the Official Assignee was biased;	
	
(e)	
The Official Assignee and his legal advisers acted in bad faith in the manner in which the decision was reached.	

[9]	
The	
Official  Assignee’s   evidence  in   response  to   the  judicial   review	
application is comprised in two affidavits sworn by Mr Viljoen.   The first, dated

20 December 2010,  describes  the process  by which the challenged  decision  was reached and annexes relevant documents which include memoranda and correspondence between Mr Siemer and the Official Assignee related to a number of Court proceedings in which Mr Siemer was involved at the time of his bankruptcy. They  include  two  letters  from  Mr Viljoen  to  Mr Siemer  explaining  the  Official Assignee’s  decision  not  to  pursue  the  Fardell  proceeding  and  not  to  assign  to Mr Siemer the right to continue the proceeding in his name.

[10]     The first of these letters, dated 25 August 2009, gave no reasons for the Assignee’s  decision  but  merely  stated  in  brief  the  matters  which  the  Official Assignee said he had considered in detail and on which he had taken legal advice. Following requests by Mr Siemer for more information as to the reasons for the Assignee’s decision, the Official Assignee’s second letter of 4 March 2010 provided more detailed reasoning which he summarised as follows:

Having   considered   this   matter   in   line   with   the   letter   to   you   of
25 August 2009, the Official Assignee came to the view that he should not continue the proceeding because:

(a)        the  claims  in  the  proceeding  were  weak,  with  no  prospects  of success;

(b)        although  there  had  been  a  prior  settlement  offer,  that  offer  had lapsed and would not likely be repeated.   Gilbert Walker, the solicitors representing Mr Fardell’s estate, have said as much;

(c)       there would be significant costs associated with continuing the proceeding which could not be justified as a result, even if they were progressed simply with a view to trying to extract a ‘nuisance value’ payment from Mr Fardell’s estate.

[11]     The letter then explained the reasons for these views in more detail.   The further explanation included the following paragraph which assumes some significance in the review proceeding:

Additionally and significantly, when the negligence claim was discussed with  you,  you  were  unable  to  explain  or  provide  any  evidence  to demonstrate how the alleged negligent advice caused you loss.  You simply asserted that you would not have agreed to appoint a Receiver, and that you would have pursued another course of action, which, you said, might have prevented the disposal of the intellectual property.

[12]     Mr Viljoen’s second affidavit, sworn on 11 November 2011, since the hearing of the first application to cross-examine and the judgment of Duffy J on it, attached a written transcript of a meeting between Mr Viljoen and Mr Siemer at the Official Assignee’s offices on 7 May 2009, and a copy of a legal opinion received by the Official Assignee from Simpson Grierson related to the merits of the Fardell claim. It is clear that these documents were provided to give Mr Siemer and the Court further and more extensive information as to the basis upon which the  Official Assignee reached the challenged decisions and, importantly, to inform Mr Siemer and the Court as to the considerations taken into account by the decision-maker.

[13]     To the extent that Mr Siemer relies, albeit not exclusively, on a challenge to the statement that he was unable to explain how Mr Fardell’s negligence caused him loss,  the  meeting  transcript  will  assist  the  Court  to  determine  the  accuracy  of Mr Viljoen’s account.

[14]     Mr Siemer argues that cross-examination of Mr Viljoen is appropriate for four distinct reasons:

(a)	There exists a lack of adequate or proper explanation of the decision- making process in the affidavit evidence;

(b)	There exists a material conflict of evidence; (c)	The credibility of Mr Viljoen is in issue;
(d)       Cross-examination  “could  very  possibly  expose  a  fraud  upon  the

court” by the Official Assignee and his counsel.

[15]     Mr Siemer argues that the Court’s ability to make sound judgments in the interests   of  justice  relies   upon   being  fully  informed  and   having  a  proper understanding of the reliability of the evidence before it and that cross-examination is appropriate towards that aim.  Mr Siemer places some reliance on an observation by the Court of Appeal in Orlov v New Zealand Law Society,4 in which the Court of Appeal indicated on the facts of that case that to the extent that the respondents in the judicial review proceedings intended to rely on affidavits filed with a disciplinary tribunal, the appellant “must have an opportunity to cross-examine the makers” of
the affidavits.

[16]     Being mindful  of the limitations  on  cross-examination  in  judicial  review proceedings, and no doubt intending to assure the Court that any cross-examination would  be  focused  on  relevant  matters,  Mr Siemer  has  provided  the  following summary of the issues upon which he wishes to cross-examine Mr Viljoen:

(a)       Whether the reasons the Official Assignee claimed to have considered in reaching his decision not to assign were in fact actually grounds considered by him, and to what degree they were  considered and weight given;

(b)       In refusing to pursue or assign the claim, to what degree was the conflict of interest considered in a claim which sought damages as a result of allegedly wrongful and deceptive legal advice which led directly to the plaintiff’s bankruptcy (namely for Mr Siemer to sign a compromise   agreement   with   Mr   Stiassny   without   Mr   Fardell disclosing to Mr Siemer that Mr Stiassny was also his client and a trustee of Mr Fardell’s family trust);

(c)	Material contradictions in the evidence;

(d)       The credibility of Mr Viljoen and the veracity of the evidence put before the Court by his counsel;

(e)       Why the Official Assignee did not immediately notify the Court of his decision refusing to assign or to provide the reasons for it;

(f)	To  what  extent  Mr Viljoen  relied  upon  his  prior  counsel  (i.e.  a

Mr Upton from Simpson Grierson) to compose and vet his affidavit;

(g)       The effect of material contradictions, evident in equitable approaches, confusion and ignorance on the integrity of the decision-making process by the Official Assignee not to assign; and finally

(h)       Questions which may be determined by the Court as assisting and exposing a likely abuse of process.

[17]     For the first  respondent,  Mr Salmon submits principally that  the  matters relied upon by Mr Siemer do not meet the threshold test in Geary of being one of those rare occasions upon which cross-examination is necessary to meet the interests of justice.5    He argues forcefully that Duffy J was right to reject Mr Siemer’s first application to cross-examine and says that, notwithstanding the revised pleading, events which have taken place since Her Honour’s judgment weaken rather than strengthen the grounds advanced.   To the extent that, when the matter was before Duffy J, there was an apparent conflict between the witnesses as to what was said at the May 2009 meeting between Mr Siemer and Mr Viljoen, any such conflict could
now be resolved by the Court merely by reference  to the full transcript of the meeting.   Further, to the extent that there was any gap in the evidence as to the factors considered by the Official Assignee in coming to the challenged decision, further arguably relevant information was provided by disclosure of the formerly privileged legal advice given by Simpson Grierson in its letter to Mr Viljoen of 19
August 2009.

[18]     Duffy J traversed the background to Mr Siemer’s first application to cross- examine Mr Viljoen in her judgment of 4 August 2011.   Significantly, the Judge recorded that Mr Siemer had taken her through the passages of Mr Viljoen’s first affidavit for which leave to cross-examine was sought and had identified for the

Court the issues upon which he wished to cross-examine Mr Viljoen.6     They are identical to the issues put to me at paragraph 13 of Mr Siemer’s written submissions in support of this second application to cross-examine.

[19]     Duffy J determined on the basis of the material then before the Court, that cross-examination was not necessary to ensure a fair hearing.   She considered the allegations  of bias  or improper purpose and  identified,  in  a  discussion  which  I respectfully adopt, the particular matters relied upon by Mr Siemer in support of that allegation as follows:

[25]     Furthermore, insofar as the Viljoen affidavit refers in paragraph
32 to other litigation in which Mr Siemer has been involved and suggests that views expressed by Courts in the other litigation are relevant in confirming the correctness of the Official Assignee’s stance, the evidence
is inadmissible under s 50 of the Evidence Act 2006. Section 50 makes it clear that findings in one set of civil proceedings are not admissible in later proceedings involving different parties. This is consistent with the common law position that treated factual findings and reasons for judgment in one proceeding as either hearsay or opinion evidence, that
was  accordingly inadmissible  in  other  proceedings  not  involving  the same parties or their privies: see Rawlinson v Rice (1998) 12 PRNZ 639.

[26]     However, since the objectionable material has now been included in  the Viljoen affidavit,  it could be said that the Official Assignee’s decision has been coloured by material which is not relevant to the legal tests for when it is appropriate to assign proceedings to a bankrupt and may  also  evidence  a  biased  view.  In  this  way,  the  objectionable paragraphs of the Viljoen  affidavit  have  become highly relevant and available for Mr Siemer to use in pursuing his breach of natural justice and breach of s 27 of the New Zealand Bill of Rights Act grounds of review. On its own, the inference might be weak, but in this case Mr Siemer received advice of the refusal to assign by letter dated 25 August
2009 with reasons to support the refusal not being issued until a letter dated 4 March 2010. The period between the refusal and the delivery of reasons for refusal is referred to by Mr Siemer as demonstrating the Official Assignee has not acted fairly and even-handedly. The delay in delivery of reasons, coupled with the use of inadmissible evidence to bolster the refusal provides a basis for Mr Siemer’s arguments regarding bias.

[27]     Added to the above is another matter that Mr Siemer drew to my attention after the hearing by written memorandum dated 7 March 2011. Counsel for the Official Assignee filed no explanation in response. Mr Siemer requested details of the legal costs incurred by the Official Assignee in relation to managing his estate. The request was made under the Privacy Act 1993. The Official Assignee responded by declining to provide the information on the ground the request was “subsumed by ...

the application for a witness subpoena seeking cross-examination”, and further said that the information would not be released until the Court issued a decision on the application to cross-examine. The request was also described as being “sub-judice”. It is hard to see how the request could be considered “sub-judice” and to see any other reason under the Privacy Act for refusing to release the information requested. The result has been that Mr Siemer has drawn the matter to the Court’s attention on the ground it provides “further evidence of the legally flawed and obstructive approach the [Official Assignee] has adamantly clung to”.

[20]     It is apparent that the arguments which Mr Siemer wishes to advance in relation to the Official Assignee’s consideration of other cases, the delay in the delivery of reasons for the challenged decision, and the alleged refusal of the Official Assignee to provide Mr Siemer in a timely way with information as to legal costs incurred in the management of his estate, are all matters which can be identified and argued upon the basis of the material before the Court.  To the extent that further information may be sought by Mr Siemer, Duffy J effectively invited him to consider issuing interrogatories as a substitute for cross-examination.   He has not accepted that invitation.  Further, as Duffy J noted, Mr Siemer had not filed any affidavit in reply to the Viljoen affidavit.  He has still not done so.

[21]     The only differences between the position considered by Duffy J and that upon which I am required to consider the renewed application for cross-examination are that an amended statement of claim has been filed and that further information has been provided by the first respondent.  Mr Siemer did not point to any material amendment to his pleading as justifying my coming to a different conclusion from that of Duffy J.  I agree with Mr Salmon that, rather than providing a basis to come to a different view on the appropriateness of cross-examination from that reached by Duffy J, the provision of the additional evidential material weakens Mr Siemer’s claim that cross-examination is necessary in order for him to obtain a fair hearing on the basis for the Official Assignee’s decision.

[22]     Further, the allegation that the Court might be assisted by cross-examination in coming to a view as to whether a likely abuse of process has occurred or might “very possibly expose a fraud” is so vague as not to require further consideration in this context.  Whether the evidence supports a finding of fraud is a matter for the Judge hearing the application.

[23]     I am satisfied that the material before the Court, including the more recent evidence of the May 2009 meeting and the legal advice upon which the Official Assignee relied in coming to his decision, provides sufficient information to enable the Court to inquire into those issues which are properly the concern of a Court in a judicial review proceeding.  There is nothing in the evidence which suggests that this is one of the rare cases, even though allegations of bias are made, which justify departing  from  the  usual  principle  that  cross-examination  on  affidavits  filed  in judicial review proceedings is not necessary.

[24]     While I am not sitting in review of the reasons given by Duffy J for refusing cross-examination in August 2011, I record that I respectfully agree with the Judge’s reasoning in that case and in my view, nothing has changed to cast doubt on the correctness of that decision.

[25]     I record further that if the Judge hearing the substantive argument comes to the  view,  once  Mr Siemer  and  counsel  for  the  first  respondent  develop  their respective arguments more fully, that there are factual issues upon which it is necessary to receive further evidence by way of cross-examination, it will be open to the Judge to direct such a course.  This is not an invitation to Mr Siemer to make a third application for leave but merely an indication that the door is not completely and firmly shut against him.

[26]     The application for leave to cross-examine Mr Viljoen is dismissed.

[27]     The first respondent is prima facie entitled to costs on the application. If the first respondent wishes to apply for costs he shall do so by way of a memorandum filed and served on Mr Siemer by 5:00 pm, 8 March 2013.  Any memorandum from Mr Siemer in reply shall be filed and served by 5:00 pm, 5 April 2013.   Unless I consider a further hearing as to costs is necessary and so direct, the question of costs shall then be dealt with on the papers.

.....................................

Toogood J