Jiang v Liu

[2025] NZHC 3032

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2025-404-510

[2025] NZHC 3032

UNDER

the Insolvency Act 2006

IN THE MATTER OF

of the bankruptcy of KUPE HEYOKA JIANG

IN THE MATTER OF

an application to set aside a bankruptcy notice

BETWEEN

KUPE HEYOKA JIANG
Applicant/Judgment Debtor

AND

MINYING LIU
First Respondent/Judgment Creditor

YUHUAN LI

Second Respondent/Judgment Creditor

Hearing:

22 September 2025

Appearances:

A S Ahmed for the Applicant/Judgment Debtor

G J M Chan for the Respondents/Judgment Creditors

Judgment:

16 October 2025

JUDGMENT OF ASSOCIATE JUDGE C B TAYLOR

[Application to set aside a Bankruptcy Notice]

This judgment was delivered by me on 16 October 2025 at 3:00pm

pursuant to Rule 11.5 of the High Court Rules 2016

……………………………………… Registrar/Deputy Registrar

Solicitors:

Little Hen Limited (Adnan S Ahmed), Albany, Auckland, for the Applicant/Judgment Debtor Norling Law (G M J Chan), Auckland for the Respondents/Judgment Creditors

JIANG v LIU [2025] NZHC 3032 [16 October 2025]

Application

[1]    Kupe Heyoka Jiang (Mr Jiang) has applied to set aside a bankruptcy notice dated 3 March 2025 served on him by Minying Liu and Yuhuan Li (the respondents).

[2]    The respondents oppose Mr Jiang’s application and seek increased costs if it is unsuccessful.

Background

[3]    The background to this matter is extensive and need not be fully repeated in this judgment. The parties’ substantive disputes are currently before this Court in proceedings under the file CIV-2023-404-1018 (the substantive proceedings). The substantive proceedings are currently progressing through discovery and case management.

[4]    The bankruptcy notice which Mr Jiang seeks to set aside in this application is based on a costs award against Mr Jiang in the substantive proceedings for $9,993.20, which the respondents seek to enforce against Mr Jiang by serving the bankruptcy notice.

[5]    Section 17 of the Insolvency Act 2006 provides that failure to comply with    a bankruptcy notice is an “act of bankruptcy”:

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

(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), —

1. 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 debtor has been ordered to pay; and

(b)the debtor could not use as a defence in the action or proceedings in which the judgment or the order, as the case may be, was obtained.

[6]    With reference to s 17(1)(d), the Court may set aside a bankruptcy notice if it is   satisfied   that   the   debtor    has    complied    with    the    requirements    of   the bankruptcy notice or has satisfied the Court that they have a cross claim against the creditor.

[7]    Mr Jiang does not submit that he has satisfied the requirements of the bankruptcy notice or that he has a cross claim against the creditor. His initial application was based on the application for a stay of the costs order and a counterclaim against the respondents and their daughter. However, on 14 July 2025, Blanchard J refused the application to stay the costs order, and directed the Registry to refuse to accept the counterclaim for filing in its current form. Counsel for Mr Jiang now accepts that the only basis upon which this application may succeed is through the Court’s inherent jurisdiction to set aside a bankruptcy notice.

Legal principles

[8]    In seeking to invoke the Court’s inherent jurisdiction to control the abuse of its process (as a ground for setting aside the bankruptcy notice), the starting point is the following passage of Master Kennedy-Grant in Re Wise:1

Having considered the matter further, I have come to the following conclusions:

(a)I do have jurisdiction to grant relief to the debtors;

(b)[t]he jurisdiction is the inherent jurisdiction of the Court to control the abuse of its process;

(c)[t]he grounds on which the jurisdiction may be exercised are:

1      Re Wise, ex parte Benecke HC Auckland B227-228/95, 21 June 1995 at [6].

(i)procedural defect in the obtaining of the judgment on which the bankruptcy notice is based; and/or

(ii)the existence of arguable grounds of defence to the claim for which judgment was given;

(d)[t]he grounds on which the jurisdiction may be exercised may extend beyond those stated in [(c)] to any ground on which the Court feels it necessary to intervene to prevent injustice but I make no finding on that point in this judgment;

[9]    In addition, the following passage of Associate Judge Abbott in Re Krukziener, ex parte Hanover Finance Ltd is relevant:2

The first two circumstances identified by Master Kennedy-Grant in Re Wise call into question the judgment itself. A procedural defect suggests an element of unfairness in letting the judgment stand. The “arguable grounds of defence” suggests a substantive reason for questioning the soundness of the judgment (hence the case law built up around stay pending an appeal, but perhaps also a defence that had not been identified at the time of the underlying judgment or which has emerged since). In all these cases there is an issue as to the safety of the underlying judgment. The Court will intervene in those cases on the grounds that it would be an abuse to allow a bankruptcy proceeding to be pursued if there is good reason to doubt the judgment on which it is based. There is no suggestion in the present case of a procedural defect, a legitimate defence being overlooked, or (now that the appeal has been determined) that there was any error in the judgment.

[10]   However, the case is different where there is a defect in the bankruptcy notice. A bankruptcy notice will be a nullity where it does not comply with the legislation or will prejudice the applicant.

[11]Section 418 of the Insolvency Act provides:

(1)A proceeding under this Act must not be invalidated or set aside for a defect (which includes misdescription, misnomer, or omission) in a step that must be taken as part of, or in connection with, the proceeding, unless a person is prejudiced by the defect.

(2)The court may order the defect to be corrected, and may order the proceeding to continue, on the conditions that the court thinks appropriate in the interests of everyone who has an interest in the proceeding

2      Re Krukziener, ex parte Hanover Finance Ltd HC Auckland CIV-2007-404-2896, 12 August 2008 at [29].

Submissions for the applicant

[12]   Mr Ahmed, for Mr Jiang, submits that the bankruptcy notice is defective. He refers to Re Robertson, ex parte Cable as authority that a bankruptcy must comply with the prescribed form to be valid.3

[13]   Mr Ahmed submits that the address on the notice was insufficient to comply with the High Court Rues. He refers to the following authorities:

(a)Jenkins v Jenkins in which the judgment debtor was required by the bankruptcy notice to pay the amount claimed “to Joy Rosanne Jenkins of Christchurch”, which was found to be insufficient.4 Master Venning referred to Re Matheson,5 in ruling that a solicitors’ address was an address for service only, and did not specify the solicitors as the agent for payment as required by section 20 of the Insolvency Act 1967. The Master found the bankruptcy notice was defective on the grounds that the address of the judgment creditor on the notice was insufficient.

(b)Re McIntyre, which ruled that the requirements of the statute were objective because a bankruptcy notice, being penal or quasi-penal, was a matter of strict form in which defects are fatal. In that case Finlay J stated:6

It is not a question of what the debtor knows, but a simple question of what the statute requires. It is irrelevant that a debtor could refer to a telephone directory or simply inquire.

(c)Solicitor-General v Miss Alice,7 in which Associate Judge Gendall held that, applying the authorities of Jenkins v Jenkins, Re McIntyre and  Re Matheson, all authorities for a strict approach, the bankruptcy notice maybe seen as defective. Nonetheless, the Judge ruled that the defect

3      Re Robertson, ex parte Cable HC Nelson B12/95, 25 August 1995.

4      Jenkins v Jenkins HC Christchurch B236/99, 25 June 1999.

5      Re Matheson, ex parte Watson [1972] NZLR 1084.

6      Re McIntyre [1955] NZLR 337 at 338.

7      Solicitor-General v Miss Alice [2008] BCL 389.

was capable of rectification under s 11 of the Insolvency Act 1967 (now s 418 of the Insolvency Act 2006).

[14]   Applying these authorities to the present case, Mr Ahmed notes that in the present proceedings, the bankruptcy notice stated:

You must pay the judgment creditors, Minying Liu and Yuhan Li, both of Henan Province in China, $9,993.20 either in person or at the address for service of the judgment creditors (or the solicitors for the judgment creditors).

[15]   Mr Ahmed submits that the applicant does not know where the judgment creditors reside in China, and the relevant case law shows that the address of the solicitor’s office (in this case Norling Law) is not sufficient.

[16]   Mr Ahmed also acknowledges that in Solicitor-General v Miss Alice, the Court provided relief to the judgment creditors for the defects in their bankruptcy notice, but still required that the bankruptcy notice be set aside or stayed until after the substantive hearing had been heard.

Filing of evidence

[17]   Mr Ahmed also raises a further issue relating to the instructions received by Norling Law. He notes that all the affidavits submitted by the respondents were in English and not in Chinese. He submits the respondents are not fluent in English, so their evidence should have been submitted in their own words, and then translated into English, with both the original and translated versions submitted. As such, his submission is that the respondents’ solicitor may be acting without the instructions of his clients.

Subpoena issue

[18]   Mr Ahmed submits Mr Jiang had issued a subpoena to one of the respondents, Ms Liu, to appear at the hearing to verify that she is genuinely wanting to adjudicate Mr Jiang, rather than using the bankruptcy notice as a debt collection tool. Ms Liu is in China, and did not appear to give evidence. Mr Ahmed also submits there is a question of whether Mr Li is alive and is capable of giving instructions and submits

that the unavailability of Ms Liu to give evidence supports his view that the process is being misused as a coercive debt collection tool.

Other factors

[19]   Mr Ahmed submits the following factors support setting the bankruptcy notice aside:

(a)Mr Jiang has almost completed his Bachelor of Laws at the University of Waikato and will apply to be admitted as a lawyer soon after. Bankruptcy will bar him from being admitted as a lawyer, and prevents him from gaining employment.

(b)Bankruptcy will lead to Mr Jiang not being able to be a company director and this will mean his  current part-time employment with  Mr Capital Limited and 3Q Engineering Services Limited will be terminated.

(c)Mr Jiang is solvent with part-time employment but, after paying living expenses and child support, there are no funds left to pay the respondents. Mr Jiang submitted a payment proposal to the respondents’ solicitors but there was no response.

[20]   Mr Ahmed submits the Court can apply a practical view and use its inherent jurisdiction to stay proceedings at the bankruptcy notice stage, rather than leave open the possibility of a further application based on s 37 of the Insolvency Act. He submits Mr Jiang:

(a)is a victim of an industry-wide downturn for the manuka honey industry and the wider economy downturn in New Zealand;

(b)has next to no assets so bankruptcy will not yield anything from him and will bar him from becoming a lawyer and director of any company; and

(c)the bankruptcy will be punitive towards Mr Jiang and will also render the substantive proceedings nugatory.

Submissions for the respondents

[21]   Mr Chan, for the respondents, submits that Mr Jiang’s claim cannot succeed because he has not pleaded one of the three grounds on which the Court can set aside the bankruptcy notice. In his submission, these are:

(a)the debtor has a genuine/triable counterclaim against the creditor issuing the bankruptcy notice which could not be brought to Court within time;

(b)the debtor has a set-off equal or greater in amount to the demand of the creditor issuing the bankruptcy notice that could not be used as in defence in the action where judgment was given; or

(c)the debtor has a cross-claim against the creditor of an equal sum that could not be used as in defence in the action where judgment was given.

[22]   However, this submission does not answer Mr Jiang’s application, as his application is now based on the grounds that the bankruptcy notice should be set aside under the Court’s inherent jurisdiction.

Alleged defect in the bankruptcy notice

[23]   Mr Chen submits the notice is not defective as alleged by Mr Jiang. He submits:

(a)it clearly states the place at which payment or negotiations should occur—at the respondents’ solicitor’s offices at Level 1, 55 Corinthian Drive, Albany, Auckland and names their solicitors Brent Norling and Anna Cherkashina;

(b)there can be no confusion about these details under a reasonable and objective reading of the notice, as it clearly states the place for where

payment can be made, and the identity of the respondents’ authorised agents with whom a compromise may be negotiated; and

(c)the notice contains all the information required for Mr Jiang to comply by paying, securing, or compounding with the respondents.

Accordingly, the bankruptcy notice is not defective.

[24]Mr Chen submits:

(a)It is not enough to set aside the bankruptcy notice even if the omission of the respondents’ residential address in China renders the notice defective. The Court has long departed from the strict approach of setting aside bankruptcy notices on account of technical omissions,8 and such authorities are now to be read in conjunction with the legislation, in that proceedings ought not to be set aside for a defect unless a person is prejudiced by it.

(b)Mr Jiang did not allege any prejudice from him not having the respondents’ residential address in China. Prior to and after service of the bankruptcy notice, Mr Jiang communicated and negotiated with the respondents’ solicitors regarding the debt.9

(c)if the alleged defect in the bankruptcy notice does exist, it is appropriate for the Court to cure the defect under s 418 of the Act to allow the proceedings to continue.

Abuse of process

[25]   Mr Chan submits that using the bankruptcy process to recover judgment debt is not an abuse of process and it is well settled that there is no impropriety in a judgment creditor taking whatever legitimate steps to recover a debt (including issuing

8      Re Denize, ex parte Stockco Ltd HC Auckland CIV-2011-404-3557, 31 October 2011 at [28] and [33]; and Cockayne v Ellen Mitchell Creations Ltd HC Auckland M706/92, 19 August 1992.

9      Affidavit of Kupe Jiang dated 9 September 2025.

bankruptcy notices).10 He submits that if Mr Jiang cannot comply with the bankruptcy notice (and thus commits an act of bankruptcy), it is right that he be adjudicated bankrupt.

Personal circumstances

[26]   There is no abuse of process arising from, and nothing unique about, the alleged “special” circumstances of Mr Jiang because:

(a)The respondents may apply for leave to continue their claims in the substantive proceedings against Mr Jiang if he is adjudicated bankrupt in the interim. These may be more appropriate for determination by the Court rather than the Official Assignee.

(b)There is nothing inappropriate about the respondents’ use of the bankruptcy notice as a means of debt recovery.

(c)Mr Jiang has not provided any evidence or submissions to demonstrate that he would inevitably be barred from applying for admission as a barrister and solicitor on account of his bankruptcy.

(d)Although Mr Jiang’s bankruptcy would disqualify him from being a company director, he did not provide evidence that he would inevitably have his employment terminated as a result.

(e)Mr Jiang does not appear solvent by his own evidence. The costs order and subsequent judgment debts against him (in favour of the respondents) in the substantive proceedings remain unpaid. Mr Jiang is also liable for substantial judgment debts ordered against him in other proceedings (of approximately $200,000). He admits there are no funds to pay the respondents or other creditors.

10     Bay Cities Real Estate Ltd v Re/Max New Zealand Ltd HC Napier CIV-2010-441-134, 8 June 2011 at [19] and [30].

(f)Mr Jiang admits to being insolvent and his payment proposal was accordingly not achievable. He did not provide a statement of his known assets as evidence in support his assertion that he has “next to no assets”. It is therefore appropriate for the Official Assignee to inquire into his asset position.

(g)The costs order on which the bankruptcy notice was based was brought about by Mr Jiang being unsuccessful in Court. It has nothing to do with any downturn in the economy or trade in manuka honey, as he has attempted to claim.

Result

[27]   I am of the view that Mr Jiang’s application to set aside the bankruptcy notice should be dismissed.

[28]The reasons for my view are:

(a)The bankruptcy notice is not defective. It is clear from the bankruptcy notice that Mr Jiang must pay either the respondents in person or at the address for service of the respondents or the respondents’ solicitors. It is clear that payment can be made at the address for service, and the address for service is not merely an address for service. Details of the solicitors for the respondents are set out, including the names of the relevant persons within the solicitors’ firm. It is irrelevant as to whether the respondents might live in China, and there was no prejudice to   Mr Jiang of the absence of an address in China in the bankruptcy notice.

(b)If I am incorrect and there is a defect in the bankruptcy notice, then any such defect is corrected pursuant to s 418 of the Insolvency Act 2006 and the proceeding is not invalidated or set aside.

(c)The allegation by Mr Jiang that the respondents’ solicitors may be acting without instructions from the respondents is unsubstantiated. The allegations that Ms Liu, because she did not appear to give

evidence as a result of the subpoena, is using the bankruptcy notice procedure as an abuse of process, and that Mr Li might not be alive to give instructions, are also unsubstantiated. I therefore give no credence to these allegations.

(d)Mr Jiang has not produced any evidence that he will be prevented from practising as a lawyer if made bankrupt, nor any evidence that he will be dismissed from his employment if made bankrupt.

(e)Factors relating to the economic circumstances affecting the trade in Manuka honey and the overall economic conditions in New Zealand are irrelevant. The judgment debt arose through a costs order against Mr Jiang who had been unsuccessful in Court actions he brought.

(f)Mr Jiang, on his own evidence, acknowledges that he is insolvent and unable to pay the respondents or other creditors. Mr Jiang has not filed any evidence of his financial position, and it is therefore appropriate that the Official Assignee investigate his financial position and assets.

[29]   The applicant has not established the issue of the bankruptcy notice by the respondents involved an abuse of process by the respondents. Accordingly, the grounds for the Court to exercise its inherent jurisdiction to set aside the bankruptcy notice are not established and Mr Jiang’s application should be dismissed.

Orders

[30]I make the following orders:

(a)Mr Jiang’s application to set aside the bankruptcy notice is dismissed;

(b)as the respondents are the successful parties, costs should follow the event. Counsel for the respondents are to submit a memorandum as to costs within 10 working days of the date of this judgment, and counsel for Mr Jiang is to file any response within five working days of receipt

of counsel for the respondent’s memorandum. A decision as to costs will then be made on the papers.

……………………………………..

Associate Judge C B Taylor