He v Chen - [2017] NZHC 1933

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3369 [2017] NZHC 1933

BETWEEN
YAO WEI HE

Plaintiff

AND

ZHIXIONG CHEN Defendant

CIV-2016-404-3275

BETWEEN ZHIXIONG CHEN Judgment Creditor

ANDYAO WE HE Judgment Debtor

Hearing: 14 August 2017

Appearances:

Plaintiff/Judgment Debtor appearing in person
NR Campbell QC for Defendant/Judgment Creditor

Judgment:

1 August 2017

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 15 August 2017 at 10.00 am
Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

He v Chen [2017] NZHC 1933 [1 August 2017]

[1] Yao Wei He brings two interlocutory applications, in separate proceedings, which are being heard together. The proceedings are a claim by Mr He for damages and other relief against Mr Chen issued in 2014 under Court registry number CIV-
2014-404-3369 (“the 2014 proceeding”), and a bankruptcy proceeding under registry

number CIV-2016-404-3275 (“the bankruptcy proceeding”).

[2] The bankruptcy proceeding arises out of Mr He’s failure to pay the judgment sum and accrued interest and costs owed following a judgment delivered in July 2015 in which Mr He was ordered to repay a debt of $300,000.00 owed by Mr He personally to Mr Chen (“the debt proceeding”).1 Mr He appealed unsuccessfully
to the Court of Appeal against that judgment2 and was refused leave to appeal to the

Supreme Court.3

Application to set aside bankruptcy notice

[3] The bankruptcy notice dated 22 December 2016 was served on Mr He, on

22 March 2017, by substituted service. The amount now claimed, which exceeds

$450,000.00, has been paid into Court pending the hearing of the application to set the notice aside.

[4] Since the amount of the debt and Mr He’s liability to pay it cannot be in dispute, Mr He will have committed an available act of bankruptcy for failure to comply with the notice unless the Court sets the notice aside on the ground that it is satisfied that he has a counterclaim, set-off or cross-demand:

(a) that is equal to, or greater than the judgment debt; and

(b)that Mr He could not use as a defence in the proceeding in which the judgment was obtained.4

[5] Mr He’s objection to the bankruptcy notice may be disposed of quickly. In its decision dismissing the application for leave to appeal from the judgment of the

1      Chen v He [2015] NZHC 1593.
2      He v Chen [2016] NZCA 340.
3      He v Chen [2016] NZSC 151.
4      Insolvency Act 2006, ss 17(1)(d)(ii) and 17(7).

Court of Appeal in the debt proceeding, the Supreme Court noted that Mr He’s defence to Mr Chen’s debt had two limbs.5 First, that the loan was not personal to him but had become a loan to a joint venture company, NZPIL. That defence was rejected by Moore J6 and a challenge to that finding was dismissed by the Court of Appeal.7

[6] The second limb of Mr He’s defence was that NZPIL had repaid more money to Mr Chen than Mr Chen had advanced to NZPIL and…

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 He v Chen

Details

AGLC: He v Chen [2017] NZHC 1933
Case: [2017] NZHC 1933
Decision Date: 1 August 2017

CaseChat Overview and Summary

Yao Wei He brought two interlocutory applications in separate proceedings, which were heard together. The first was a claim for damages and other relief against Zhixiong Chen, issued in 2014. The second was a bankruptcy proceeding arising out of Mr He’s failure to pay the judgment sum and accrued interest and costs owed following a judgment delivered in July 2015 in which Mr He was ordered to repay a debt of $300,000 owed by Mr He personally to Mr Chen. Mr He appealed unsuccessfully to the Court of Appeal against that judgment and was refused leave to appeal to the Supreme Court. Mr He applied to set aside a bankruptcy notice and for a freezing order against Mr Chen’s New Zealand assets.

The court had to decide whether Mr He had a counterclaim that was equal to, or greater than the judgment debt and whether Mr He could not use as a defence in the proceeding in which the judgment was obtained. The court also had to determine whether Mr He had a good arguable case on an accrued or prospective cause of action that was justiciable in the Court and whether there was a danger that the prospective judgment debtor might abscond or that the assets of the prospective judgment debtor might be removed from New Zealand or disposed of, dealt with or diminished in value.

The court dismissed the application to set aside the bankruptcy notice. The court found that Mr He had no qualifying cross claim. The court also dismissed the application for a freezing order. The court found that Mr He's grounds were highly speculative and it was not satisfied that the threshold test had been met in this case. The court ordered that Mr Chen was entitled to costs and Mr He shall pay costs on both applications on a Category 2B basis, bearing in mind the consolidation of the hearing, together with disbursements as fixed by the Registrar.

Orders