Connolly v Keung - [2025] NZHC 1689

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2024-409-510 [2025] NZHC 1689

IN THE MATTER of the Insolvency Act 2006 AND
IN THE MATTER of the bankruptcy of SENG BOU (PAUL)
KEUNG

BETWEEN LEISHA MAUD CONNOLLY
Judgment Creditor

AND SENG BOU (PAUL) KEUNG
Judgment Debtor

Hearing: 16 May 2025

Appearances: L C Elliott for Judgment Creditor
Judgment Debtor appears in person

Judgment: 24 June 2025

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 24 June 2025 at 4.30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date:

CONNOLLY v KEUNG [2025] NZHC 1689 [24 June 2025]

[1] Mr Keung applies to set aside a bankruptcy notice issued in respect to several cost judgments obtained against him by Ms Connolly in proceedings before the High Court and Court of Appeal. The proceedings were, in essence, challenges by Mr Keung to the entry of summary judgment in favour of Ms Connolly in the District Court, where Judge Zohrab held that advances made by Ms Connolly to Mr Keung were unrepaid loans and not, as Mr Keung argued, contributions by Ms Connolly to a joint venture or partnership between the parties.

[2]Mr Keung applies to set aside the bankruptcy notice on the grounds that:

(a)he has counterclaims or cross-claims against Ms Connolly which equal or exceed the amount owing to Ms Connolly in the bankruptcy notice;1

(b)he could not advance his counterclaims by way of defence of Ms Connolly’s claim because she proceeded by way of summary judgment and he did not have available to him all relevant evidence or documents that were yet to be obtained by way of discovery; and

(c)his counterclaims are now pursued in a civil proceeding filed against Ms Connolly in the High Court under CIV-2023-409-574 (the 574 proceeding).

[3]Ms Connolly opposes the application. She says the alleged counterclaims:

(a)were as a matter of law and fact able to be set up in defence of her claim;

(b)lack sufficient mutuality of subject matter and parties;

(c)do not exceed the amount owed to her under the bankruptcy notice; and

(d)are not genuinely triable.

1 For present purposes it is not necessary to address the difference between counterclaims and cross- claims.

[4]I consider the issues I must decide are:

(a)Does Mr Keung have counterclaims against Ms Connolly which equal or exceed the amount owing under the bankruptcy notice?

(b)Could Mr Keung have advanced his counterclaims by way of defence of Ms Connolly’s claim in the proceedings in which her judgment was obtained?

(c)Should the Court exercise its discretion to set aside the bankruptcy notice?

Principles

[5]Section 17(1)(a) of the Insolvency Act 2006 (the Act) provides:

17 Failure to comply with bankruptcy notice

(1)A debtor commits an act of bankruptcy if—

...

(d)the debtor has not, within the time limit specified in subsection (4), —

(i)complied with the requirements of the notice; or

(ii)satisfied the court that he or she has a cross claim…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Connolly v Keung

Details

AGLC: Connolly v Keung [2025] NZHC 1689
Case: [2025] NZHC 1689
Decision Date: 24 June 2025

CaseChat Overview and Summary

The case of Connolly v Keung involves an application by the judgment debtor, Seng Bou (Paul) Keung, to set aside a bankruptcy notice issued by the judgment creditor, Leisha Maud Connolly. The bankruptcy notice was issued in relation to several cost judgments obtained by Ms Connolly against Mr Keung in proceedings before the High Court and Court of Appeal. Mr Keung argues that he has counterclaims or cross-claims against Ms Connolly which equal or exceed the amount owing to her in the bankruptcy notice. The primary issues before the Court were whether Mr Keung had genuine counterclaims that could not be raised as a defence in the proceedings in which the judgment was obtained, and whether the Court should exercise its discretion to set aside the bankruptcy notice. The Court found that Mr Keung's counterclaims were not genuinely triable and that he could have raised them as a defence in the original proceedings. As a result, the application to set aside the bankruptcy notice was dismissed, and Ms Connolly is entitled to costs.

Orders