HND Holdings Limited v Lau
[2024] NZHC 1987
•18 July 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-002137
[2024] NZHC 1987
UNDER of the Insolvency Act 2006 BETWEEN
HND HOLDINGS LIMITED
Judgment Creditor
AND
EE KUOH LAU (also known as Augustine Lau)
Judgment Debtor
Hearing: 25 June 2024 Appearances:
R O Parmenter for the Judgment Creditor
No appearance by or for the Judgment Debtor
Judgment:
18 July 2024
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 18 July 2024 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
Solicitors:
Ganda & Associates, Auckland R O Parmenter, Auckland
HND HOLDINGS LTD v LAU [2024] NZHC 1987 [18 July 2024]
Introduction
[1] The judgment debtor, Ee Kuoh Lau (also known as Augustine Lau), applies to set aside a bankruptcy notice from HND Holding Ltd (HND) dated 20 September 2023, demanding payment of $7,401.50 (the judgment debt) due under a sealed order of this Court, together with interest and costs.1
[2] Mr Lau claims to have a cross claim against HND that exceeds the judgment debt. The cross claim is said to be his one-third interest in a claim brought by a Daniel Kwok and companies associated with him against HND, its director Yaxun Zhang, and its lawyer (the 1504 proceeding),2 pursuant to a deed of assignment dated 28 September 2023.
[3] Mr Lau is self-represented. He filed the interlocutory application to set aside the bankruptcy notice and an affidavit in support which attaches the deed of assignment and the statement of claim in the 1504 proceeding.3 He did not file submissions or appear at the hearing.
[4] HND opposes the application to set aside the bankruptcy notice, on the basis that Mr Lau has not established that he has a genuine triable cross claim, he is not a party to the 1504 proceeding, and the assignment is invalid.
Legal principles
[5] Section 17 of the Insolvency Act 2006 (the Act) provides that a debtor commits an act of bankruptcy when they fail to comply with the requirements of a bankruptcy notice served on them by a creditor within 10 working days after the date of service of that notice (if served in New Zealand).
[6] Rule 24.10 of the High Court Rules 2016 extends the time for compliance until an application to set aside the bankruptcy notice has been determined, where a valid application has been made within the 10 working day limit.4
1 HND Holding Ltd v Lau [2023] NZHC 2211 at [9].
2 Kwok v HND Holding Ltd CIV-2023-404-1504.
3 Statement of claim, dated 8 October 2023.
4 High Court Rules 2016, r 24.10 and sch 1(B 2).
[7] To have a bankruptcy notice set aside, the debtor must satisfy the Court that they have a genuine, triable cross claim (a counterclaim, set-off or cross demand) that is equal to or greater than the judgment debt or amount the debtor has been ordered to pay, and that could not have been used as a defence in the action in which the relevant judgment was given.5
[8] The Court of Appeal approved this test in Sharma v ANZ Banking Group (New Zealand) Ltd,6 and reaffirmed it in Robertson v ASB Bank Ltd,7 with a slight qualification stating that “the better approach is to consider objectively whether it can be said a “genuine triable” cross claim exists on the facts as they now stand”.8
[9]The Court in Robertson held:9
(a)the onus is on the debtor to show that they have a genuine triable cross claim;
(b)the debtor must show a genuine triable claim in terms of both liability and quantum;
(c)not only must the existence of a cross claim be established, but it must also be established that the cross claim is equal to or greater than the judgment debt, and could not have been used as a defence in the proceeding in which that judgment was entered;
(d)the summary nature of the procedure governing applications to set aside bankruptcy notices is wholly unsuitable for the determination of disputed questions of fact;
(e)in assessing the strength of a claim, the Court need not accept uncritically evidence that is inherently lacking in credibility; for
5 Insolvency Act 2006, s 17(1)(d)(ii) and (7); and Clark v UDC Finance Ltd [1985] 2 NZLR 636 (HC) at 637.
6 Sharma v ANZ Banking Group (New Zealand) Ltd (1992) 6 PRNZ 386 (CA) at 389.
7 Robertson v ASB Bank Ltd [2014] NZCA 597 at [19].
8 Robertson v ASB Bank Ltd, above n 7, at [26]–[27].
9 Robertson v ASB Bank Ltd, above n 7 at [22] and [32].
example, where it is inconsistent with contemporary documents, or inherently improbable.
Assessment
[10] Mr Lau has failed to discharge the onus on him to satisfy the Court that he has a genuine triable cross claim against HND for an amount of money that it is equal to or greater than the judgment debt.
[11] He has not presented any argument that the claim by Daniel Kwok and associated entities for damages from HND in the 1504 proceeding is genuine and triable, both in terms of liability and quantum, for an amount that is equal to or greater than the judgment debt. As noted, he has simply attached the statement of claim in the 1504 proceeding to his affidavit and said nothing more.
[12] Furthermore, he has not satisfied the Court that the deed of assignment has the effect of giving him an interest in the 1504 claim or any other interest that amounts to a cross claim against HND for the purpose of s 17(1)(d)(ii) and (7) of the Act.
[13]The key parts of the deed are:
PARTIES
(1) Daniel Kwok; Daniel Kwok Properties Limited; DASP Properties Limited (DKS) assignors
(2)EE KUOH LAU ("LAU") assignee;
BACKGROUND
A. LAU and his business partner(s) had provided development advisors and translation, other services for DKS since 2021.
B. In order to defer the payment that owed by DKS to LAU since 2021, LAU has expressly requested that DKS to assign and transfer by way of assignment 1/3 of DKS's interests in the Amended statement of claim dated 22.9.2023 under CIV 2023-404-1504 and any future claim against HND holdings ltd and all other related companies; 1/3 nett interest of properties set out at schedule 1 below; in order to set-off any debt that owed by DK to LAU and his business partner(s) if any and LAU promised not to lodged liquidation or bankruptcy against DKS.
C. LAU agreed to be in the assistance of enforcement of orders if any against HND holdings ltd and all other related companies.
…
2. Assignment
2.1 Assignment: In consideration of and subject to signing by LAU to this deed and from the Effective Date:
DKS transfer 1/3 of DKS's interests in the Amended statement of claim dated 22.9.2023 under CIV 2023-404-1504 and any future claim against HND holdings ltd and all other related companies; 1/3 nett interest of properties set out at schedule 1 below…
[14] Assignments of bare causes of action in tort and other personal action are, with certain exceptions, not permitted in New Zealand.10 However, it has been recognised that an assignment may be permissible "where an assignee has a genuine commercial interest in the enforcement of the claim of another and to that extent takes an assignment of that claim".11 The Supreme Court has also recognised that “an assignment to a party that had an antecedent commercial relationship with the assignor” may constitute an exception to the rule against assignments of bare causes of action.12 This reference to a need for an “antecedent commercial relationship” between assignor and assignee appears to confirm that for an assignment to be valid, the assignee must have a genuine commercial interest in the relevant cause of action that stems from a pre-existing arrangement with the assignor, rather than a relationship that is largely founded upon the assignment in question.13
[15] There is no simple test in the common law to identify whether an assignee has a genuine commercial interest in the cause of action. The general approach towards assignments has liberalised.14 However, a court must look for “something more” over and above the assignee’s right in acquiring the cause of action.15 Professor Mulheron’s recent comments are instructive:16
A genuine commercial interest arises where there is a pre-existing debt owed by the assignor debtor to the assignee creditor prior to the assignment’s
10 Waterhouse v Contractors Bonding Ltd [2013] NZSC 89, [2014] 1 NZLR 91 at [57].
11 Body Corporate 326421 v Auckland Council [2015] NZHC 862 at [276], citing Trendtex Trading Corporation v Credit Suisse [1982] AC 679 (HL) at 703.
12 PricewaterhouseCoopers v Walker [2017] NZSC 151, [2018] 1 NZLR 735 at [77].
13 See National Mutual Property Services (Australia) Pty Ltd v Citibank Savings Ltd (No 1) (1995) 132 ALR 514 (FCA) at 540.
14 Rachael Mulheron The Modern Doctrines of Champerty and Maintenance (Oxford University Press, Oxford, 2023) at 197.
15 At 197.
16 At 203 (emphasis added).
occurring, where the assignee has involvement in the transaction which gave rise to assignor’s particular grievance against the defendant, and where the cause of action for which the defendant is being sued is intricately connected to the commercial relationship between assignor and assignee.
[16] Mr Lau has not pleaded any involvement or interest in the transaction that gave rise to the plaintiffs’ causes of action against HND in the 1504 proceeding; or any connection to or interest in the plaintiffs’ causes of action other than that arising through the purported assignment.
[17] I note that DKS also purports to assign to Mr Lau one third of its interest in five properties set out in the schedule to the deed of assignment. It is unclear what this means but, in any case, any interest Mr Lau might have in these properties does not comprise a cross claim against HND.
Result
[18] The application to set aside the bankruptcy notice dated 20 September 2023 is dismissed.
[19]Mr Lau will pay HND scale 2B costs and disbursements of $160 as sought.
Associate Judge Gardiner
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