Chen v Leung HC Auckland CIV 2010-404-4811

[2010] NZHC 2141

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-004811

IN THE MATTER OF     the Insolvency Act 2006

AND

IN THE MATTER OF     the bankruptcy of XIONG CHEN (ALSO KNOWN AS SEAN CHEN)

Judgment Debtor

ANDLEUNG CHIEN PAI (ALSO KNOWN AS ELSA LEUNG) AND JOHN LEUNG Judgment Creditors

Hearing:         9 November 2010

Appearances: A V Ram for Debtor

D Cowan for Creditors

Judgment:      9 November 2010

ORAL JUDGMENT OF ASSOCIATE JUDGE BELL

Solicitors:

Rainey Law, PO Box 1648, Auckland

Amicus Law Ltd, PO Box 68559, Newton, Auckland

XIONG CHEN V L CH PAI (AKA E LEUNG) AND J LEUNG HC AK CIV-2010-404-004811  9 November

2010

[1]      This  matter  is  an  application  to  set  aside  a  bankruptcy  notice.     The bankruptcy notice is for the sum of $185,279.77.  It is for an order that the creditors obtained against the debtor in the Weathertight Homes Tribunal.   That order has been registered in the District Court and is accordingly enforceable as a District Court judgment.

[2]       The  matter  was  called  before  me  on  5  October  2010.    On  that  day,  I determined that the application by Mr Chen to set aside the bankruptcy notice had been filed within time so that no act of bankruptcy had yet occurred.  The application made by Mr Chen to set aside the bankruptcy notice was made on these grounds:

a)       The debtor disputes liability for the amount of $185,279.77 claimed in the notice;

b)That the debtor has filed a notice to appeal and has also filed an application to stay enforcement of the judgment in the Weathertight Homes Tribunal and the order currently in force pending the hearing of the application is filed and the debtor has enduring and valid grounds to appeal the judgment of the Weathertight Homes Tribunal;

c)       The debtor has only recently instructed legal counsel and did not have any legal representation previously;  and

d)The effect of the judgment debtor being declared bankrupt would be that  he  may  be  effectively  rendered  nugatory  by  the  bankruptcy notice, and refers further to the appeals.

[3]      In essence, what I understand the debtor to be saying is that he believes he has grounds for appeal against the decision of the Weathertight Homes Tribunal.  His application to set aside is made on the basis that the original order, the subject of the indebtedness, can be subject to challenge.

[4]      When the matter was called before me on 5 October 2010, I adjourned the case until today.  That was to await the outcome of the application for stay in the

District Court.  The point about that was that if the debtor has succeeded in obtaining a stay, then that would mean that the order of the Weathertight Homes Tribunal was no longer enforceable and could therefore no longer be a proper foundation for the bankruptcy notice.

[5]      I am told today that what has happened is that, first of all, there was an application for a stay, which was heard before District Court Judge Lovell-Smith in the Manukau District Court.  She ordered a stay only on the grounds that the debtor pay into Court the amount ordered to be paid by the Weathertight Homes Tribunal, and an amount for costs.  She took a stern view against Mr Chen.  That was because evidence had been put in front of her of efforts he was making to put assets outside the reach of creditors by transferring them into the names of associates and relatives. The creditors also applied to this Court for an order freezing assets and an order was made by Venning J.

[6]      The appeal then came on for hearing before District Court Judge Wiltens. His Honour dismissed the appeal on procedural grounds that Mr Chen had not complied with the orders of District Court Judge Lovell-Smith.

[7]      In dealing with this matter today, I do not have any appellate jurisdiction.  It is not for me to rule on the correctness or otherwise of the decisions of the judges in the District Court.  I simply have to determine whether there is extant a valid order of the Weathertight Homes Tribunal.   The information today is that, after having tried to exercise his appeal rights, Mr Chen has not been successful in having that order set aside.  Mr Ram says that his client wants to take further steps for a judicial review application.  The standard procedure with judicial review applications is that the starting point is that the original decision, which is the subject of challenge, is regarded as having interim validity, at least until the Court sets it aside.  That is a useful guide to the approach I should take here.

[8]      I also take notice of the approach of the District Court judges to the extent that  they  were  concerned  at  steps  being  taken  by  Mr  Chen  to  make  himself judgment-proof, a view apparently shared by Venning J who made the order freezing assets.

[9]      The order of the Weathertight Homes Tribunal stands.   Other judges have held that the creditors should be entitled to continue with enforcement.   In these circumstances, I do not see a proper basis for me now to set aside the bankruptcy notice.

[10]     That means that time will continue to run under the bankruptcy notice.   It may  be  then  that  the  creditors  will  be  able  to  start  a  fresh  application  for adjudication.  The present one is premature and cannot be pursued.  It may be that during that time, Mr Chen can pursue other rights he thinks he has available to him to set aside the orders of the District Court to reinstate his appeal.  But I have to deal with the matter as it is now at the moment, that is, that his appeal has been dismissed and the Weathertight Homes Tribunal’s order stands.

[11]     I see no basis now for me to set aside the bankruptcy notice which has been served on Mr Chen.

[12]     Mr Ram today also today put before me an additional matter.  He said that Mr Chen was now proposing some agreement or compromise with the creditor in terms of paragraph 1(b) of the bankruptcy notice.  That matter was not the subject of the application to the Court to set aside the bankruptcy notice.  It is not a matter that calls for decision in terms of an application to set aside and does not require consideration today

[13]     Accordingly, my order is that the application to set aside the bankruptcy notice is dismissed and the creditors are entitled to costs on that application on a 2B

basis.

R M Bell

Associate Judge