Court rules six-year limitation defence doesn't apply to NZLS bankruptcy notice request
The Court of Appeal of New Zealand dismissed a former lawyer’s challenge to a bankruptcy notice issued for unpaid disciplinary costs, ruling that the six-year limitation defence under the Limitation Act 2010 did not apply to the New Zealand Law Society's (NZLS) steps to recover the costs.
In Ellis v New Zealand Law Society [2026] NZCA 488, the court also found that the NZLS did not need the High Court's leave under the High Court Rules 2016 before the bankruptcy notice could be issued.
The Lawyers and Conveyancers Disciplinary Tribunal issued three costs orders against the former lawyer in August 2018, November 2018, and June 2020, totalling $103,741.63.
On 19 December 2024, the NZLS filed the orders in the High Court and requested a bankruptcy notice. The court issued the notice the following day, and the NZLS served it on 13 March 2025.
The former lawyer paid the June 2020 order but disputed two outstanding 2018 orders totalling $93,848.63.
He applied to set aside the bankruptcy notice, arguing that the NZLS had waited more than six years to enforce the earlier orders. The High Court rejected his arguments, prompting the appeal.
The Court of Appeal considered whether s. 35(1) of the Limitation Act provided a defence and whether r 17.9(2) of the High Court Rules required leave to issue the notice.
The court held that a costs order, including one issued by the tribunal, constituted a judgment under s. 35. However, it found that s. 35(1) applied only to fresh proceedings seeking a second judgment for a debt established by an earlier judgment.
After examining the provision’s legislative history, the court concluded that s. 35(1) did not extend to enforcement processes or insolvency proceedings. It reached the same outcome as the High Court but based its reasoning on different grounds.
It found that filing the tribunal’s orders in the High Court did not commence fresh proceedings because the orders took effect as High Court orders upon filing. Similarly, requesting a bankruptcy notice did not constitute an action seeking another judgment.
The court also rejected the argument that issuing a bankruptcy notice constituted an enforcement process under r 17.9. It distinguished enforcement processes directed at particular judgments from bankruptcy notices, which precede collective insolvency proceedings.
The court noted that part 24 of the High Court Rules separately governed bankruptcy notices and proceedings. It found that those procedures provided sufficient protection for judgment debtors without requiring additional leave under r 17.9.
The Court of Appeal dismissed the appeal, upholding the High Court’s refusal to set aside the bankruptcy notice.
