Hu v Liu - [2023] NZHC 2588

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-899

[2023] NZHC 2588

IN THE MATTER of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of KUN LIU

BETWEEN

ZHENGXI HU

Judgment Creditor

AND

KUN LIU

Judgment Debtor

Hearing: 11 September 2023 (by AVL)

Appearances:

Z Hu – self-represented Judgment Creditor R O Parmenter for Judgment Debtor

Judgment:

15 September 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 15 December 2023 at 3.30pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar
……

HU v LIU [2023] NZHC 2588 [15 September 2023]

[1] Mr Hu applied for the issue of a bankruptcy notice against Ms Liu. Mr Hu then assigned absolutely his interest in the judgment to a Mr Ee Kuoh Lau (Mr Lau), but with the assignment purporting to leave “the bankruptcy proceeding rights” with Mr Hu.

[2] Ms Liu applied to set aside the bankruptcy notice on the basis Mr Hu was no longer the creditor by the time the notice was served on her. Mr Hu has applied for an order under r 4.56 of the High Court Rules 2016 (the Rules) that Mr Lau also be named as a creditor on the bankruptcy notice.

Timeline and context

[3]The timeline and context is as follows:

28 April 2023: Mr Hu obtains judgment against Ms Liu.

5 May 2023: Mr Hu requests the issue of a bankruptcy notice from the Court. While the request is dated 5 May 2023, the Court stamp on the request of 15 May 2023 is in error, the filing fee being paid on 5 May 2023.

6 May 2023: Mr Hu assigns absolutely to Mr Lau all his “right title and interest” in the judgment debt subject to the purported reservation noted above.

15 May 2023: Bankruptcy notice issued by the Court and it appears served the same day.

16 May 2023: Ms Liu applies to set aside the bankruptcy notice on the grounds Mr Hu had absolutely assigned his rights under the judgment to Mr Lau therefore no debt was owed to Mr Hu.

17 May 2023: Mr Hu applies to add Mr Lau as judgment creditor, relying on the 6 May 2023 assignment.

[4] Associate Judge Taylor, in a minute of 15 June 2023, directed the application by Mr Hu to join Mr Lau as a judgment creditor be heard prior to the application to set aside the bankruptcy notice.

The terms of the assignment

[5] The assignment between Mr Hu and Mr Lau dated 6 May 2023 records in Background B:

B.LAU has expressly requested that HU to assign and transfer by way of assignment all of HU’s interests in the sealed Court order 28.4.2023 in order to set-off any debt that owed by Hu to LAU and his business partner(s).

[6]“Assigned Property” is defined as follows:

“Assigned Property”…

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 Hu v Liu

Details

AGLC: Hu v Liu [2023] NZHC 2588
Case: [2023] NZHC 2588
Decision Date: 15 September 2023

CaseChat Overview and Summary

Zhengxi Hu, the judgment creditor, applied for the issue of a bankruptcy notice against Kun Liu, the judgment debtor. The application was made after Mr Hu assigned absolutely his interest in the judgment to Ee Kuoh Lau, but with the assignment purporting to leave "the bankruptcy proceeding rights" with Mr Hu. Ms Liu applied to set aside the bankruptcy notice on the basis that Mr Hu was no longer the creditor by the time the notice was served on her. Mr Hu then applied for an order that Mr Lau also be named as a creditor on the bankruptcy notice.

The court had to decide whether Mr Hu could still enforce the judgment against Ms Liu when the bankruptcy notice was issued, given that he had assigned his rights under the judgment to Mr Lau. The court also needed to determine whether Mr Lau could be added as a creditor under r 4.56 of the High Court Rules 2016, and if a new parties order under r 4.52 was appropriate. The court considered the implications of the assignment on Mr Hu’s status as the creditor and the validity of the bankruptcy notice. It was established that a bankruptcy notice is a proceeding for the purposes of rr 4.51 and 4.52 of the Rules. However, the court found that the application under r 4.56 was inappropriate and that a new parties order would not retrospectively cure the invalidity of the bankruptcy notice. The court concluded that Mr Hu’s application to join Mr Lau as an additional creditor should be dismissed.

In its judgment, the court dismissed Mr Hu's application under r 4.56 of the Rules. The court found that Mr Hu was no longer the creditor when the bankruptcy notice was served as he had assigned his rights to Mr Lau. The court held that a new parties order would not have a retrospective effect and that Mr Hu was the only creditor at the time the proceeding was commenced. The court further concluded that the application to set aside the bankruptcy notice should be granted if it went to a hearing. The court ordered that Mr Hu pay Ms Liu's costs on a 2B basis together with disbursements as fixed by the Registrar.

Orders