Gardiner v An - [2025] NZHC 986

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-2456

[2025] NZHC 986

BETWEEN
CAROL ELIZABETH GARDINER

Judgment Creditor

AND

CHAO AN

Judgment Debtor

Hearing: 28 April 2025

Counsel:

C J Pendleton for the Judgment Creditor N G Lawerence for the Judgment Debtor

Judgment:

29 April 2025

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 29 April 2025 at 3 pm.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors/Counsel:
Turner Hopkins, Auckland Clendon Webb, Auckland NG Lawrence, Auckland

GARDINER v AN [2025] NZHC 986 [29 April 2025]

Introduction

[1] The judgment creditor, Carol Gardiner (Mrs Gardiner), owned a property in Takapuna (the property). In 2022, Mrs Gardiner entered into a contract to sell the property to the judgment debtor, Chao An (Mr An). Mr An failed to settle the contract and Mrs Gardiner resold the property, suffering a loss on the resale.

[2] In 2024, Mrs Gardiner filed a proceeding against Mr An in the Auckland District Court seeking to recover her losses. Mrs Gardiner applied for summary judgment. Mr An was served with the proceeding and took no steps to defend it. On 29 August 2024, the Auckland District Court entered judgment against Mr An for
$332,211.19 plus interest and costs (the judgment).1

[3] On 15 October 2024, Mrs Gardiner served Mr An with a bankruptcy notice requiring payment of the amount due under the judgment, being $340,684.85. Mr An has applied to set the bankruptcy notice aside on the grounds that he has a set-off, counterclaim or cross demand that exceeds the amount claimed in the bankruptcy notice. Mr An says that he was induced to enter into the contract by misrepresentations regarding the state of the property, entitling him to cancel the contract.

Legal principles

[4] Section 17 of the Insolvency Act 2006 (the Act) prescribes the grounds for setting aside a bankruptcy notice where the debtor has a counterclaim, set-off or cross demand equal to or greater than the judgment debt, which could not be set up in the proceeding in which the judgment was obtained.

[5]Section 17 of the Act relevantly provides:

17 Failure to comply with bankruptcy notice

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

(a)a creditor has obtained a final judgment or a final order against the debtor for any amount; and

1 Gardiner v An DC Auckland CIV-2024-004-001477, 29 August 2024 (Oral Judgment of Judge J Clark)

(b)execution of the judgment or order has not been halted by a court; and

(c)the debtor has been served with a bankruptcy notice; and

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

complied with the requirements of the notice; or
(ii)satisfied the court that he or she has a cross claim against the creditor.
…

(7)In subsection (1)(d)(ii), cross claim means a counterclaim, set-off, or cross demand that—

(a)is equal to, or greater than, the judgment debt or the amount that the…

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.

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Details

Case: [2025] NZHC 986
Decision Date: 29 April 2025

CaseChat Overview and Summary

Carol Elizabeth Gardiner, the judgment creditor, sought to recover losses she incurred from Chao An, the judgment debtor, who had failed to settle a contract to purchase a property in Takapuna. After a judgment was entered against Mr An in the Auckland District Court, Ms Gardiner served him with a bankruptcy notice. Mr An applied to set the bankruptcy notice aside on the basis that he had a set-off, counterclaim, or cross demand that exceeded the amount claimed in the bankruptcy notice. Mr An claimed he was induced to enter into the contract by misrepresentations regarding the state of the property, entitling him to cancel the contract.

The court had to decide whether Mr An's application to set aside the bankruptcy notice was valid under section 17 of the Insolvency Act 2006. The court also needed to determine whether there were grounds for the exercise of the Court’s inherent jurisdiction to set aside the bankruptcy notice. The court considered whether Mr An's claim of misrepresentation was a genuine triable claim and whether there were circumstances that warranted the exercise of the inherent jurisdiction.

The court found that Mr An's claim of misrepresentation was not a genuine triable claim as it was available to him as a defence in the District Court proceeding, which resulted in the judgment. Therefore, Mr An could not assert the same ground to obtain an order setting aside the bankruptcy notice. The court also found that there were no grounds for the exercise of the inherent jurisdiction to adjourn Mr An’s application to set aside the bankruptcy notice. The court was not prepared to adjourn the application because Mr An had not yet filed an application for an order setting aside the District Court judgment, and there was no satisfactory explanation for his delay in doing so. The court further found that Mr An's claim of misrepresentation appeared weak, and there was nothing overtly misleading in the description of the property used in the advertising.

The application to set aside the bankruptcy notice was dismissed. The judgment debtor was ordered to pay the judgment creditor's costs on the application.

Orders