HND Holdings Limited v Lau - [2024] NZHC 1987

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…

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: [2024] NZHC 1987
Decision Date: 18 July 2024

CaseChat Overview and Summary

Ee Kuoh Lau, also known as Augustine Lau, applied to set aside a bankruptcy notice issued by HND Holdings Limited. Lau sought to avoid the obligation to pay $7,401.50 due under a sealed order of the Court, together with interest and costs. Lau argued he had a cross claim against HND that exceeded the judgment debt. Lau claimed this cross claim was his one-third interest in a claim brought by Daniel Kwok and associated companies against HND and others, pursuant to a deed of assignment dated 28 September 2023. Lau did not file submissions or appear at the hearing, while HND opposed the application, arguing Lau had not established a genuine triable cross claim and the assignment was invalid.

The court considered whether Lau had established a genuine triable cross claim, which must be equal to or greater than the judgment debt and could not have been used as a defence in the proceeding in which the judgment was entered. The court noted that the onus was on Lau to show a genuine triable claim in terms of both liability and quantum. Lau failed to present any argument that the claim by Daniel Kwok and associated entities for damages from HND was genuine and triable for an amount equal to or greater than the judgment debt. Additionally, the court found that the deed of assignment did not give Lau an interest in the 1504 claim that amounted to a cross claim against HND. The court held that assignments of bare causes of action are not permitted, except where an assignee has a genuine commercial interest stemming from a pre-existing commercial relationship with the assignor. Lau had not pleaded any involvement or interest in the transaction that gave rise to the plaintiffs’ causes of action against HND, or any connection to or interest in the plaintiffs’ causes of action other than that arising through the purported assignment.

The application to set aside the bankruptcy notice was dismissed. Lau was ordered to pay HND scale 2B costs and disbursements of $160 as sought.

Orders