Kim v Mao - [2023] NZHC 3671

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-1881

[2023] NZHC 3671

UNDER the Insolvency Act 2006

IN THE MATTER OF

of the bankruptcy of JIAWEN MAO

BETWEEN

HYUN BIN KIM and DUK YOUNG LEE

Plaintiff

AND

JIAWEN MAO

Defendant

Hearing: 12 December 2023

Counsel:

C Fourie/S Cartwright for Judgment Creditors D Zhang for Judgment Debtor

Date of Judgment:

13 December 2023

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 13 December 2023 at 12 midday.
Pursuant to Rule 11.5 of the High Court Rules.

…………………..
Registrar/Deputy Registrar

Solicitors:
Hesketh Henry, Auckland Advent Ark, Auckland

KIM v MAO [2023] NZHC 3671 [13 December 2023]

Introduction

[1] Hyun Bin Kim and Duk Young Lee (the creditors) apply for an order adjudicating Jiawen Mao bankrupt. Ms Mao opposes the application.

[2] The creditors’ application rests on a bankruptcy notice served on Ms Mao on 19 April 2022. Ms Mao unsuccessfully applied to set the bankruptcy notice aside.1 The relevant background to this proceeding is set out in Associate Judge Gardiner’s judgment dated 1 November 2022.2

[3] The bankruptcy notice is in respect of a judgment debt for an award of indemnity costs of $21,414.20 made in this proceeding, in respect of an earlier bankruptcy notice.

[4] Ms Mao says that she has claims against the creditors and third parties as a result of their conduct in respect of a mortgagee sale, which is the genesis of this long- running saga. Ms Mao was liable for the shortfall following the mortgagee sale. Ms Mao says that she should not be adjudicated bankrupt so that she can pursue her claims against the creditors and third parties.

[5] There is no direct challenge to the judgment debt for indemnity costs. There is no evidence that Ms Mao is able to pay the judgment debt. The issue that I need to determine is whether Ms Mao can establish that it is just and equitable that this Court does not make an order adjudicating her bankrupt.

[6] Alternatively, if I am not persuaded to exercise my discretion in Ms Mao’s favour, she asks for a final opportunity to pay the judgment debt.

Legal principles

[7]Section 36 of the Act provides:

36 Court may adjudicate debtor bankrupt
The court may, at its discretion, adjudicate the debtor bankrupt if the creditor has established the requirements set out in section 13.

1 Mao v Kim [2022] NZHC 2836.
2 Above at [3] to [19].

[8] Section 13 requires that the debtor owes the creditor a debt for a certain amount of $1,000 or more, payable immediately or at a date in the future that is certain, and that the debtor has committed an act of bankruptcy within a period of three months before the filing of the application for an order for adjudication.

[9] The Commissioner has met the jurisdictional requirements of ss 13 and 36 of the Act.

[10] Section 37 of the Act…

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 Kim v Mao

Details

AGLC: Kim v Mao [2023] NZHC 3671
Case: [2023] NZHC 3671
Decision Date: 13 December 2023

CaseChat Overview and Summary

The case of Kim v Mao involves an application by Hyun Bin Kim and Duk Young Lee (the creditors) for an order adjudicating Jiawen Mao bankrupt. Ms Mao opposes the application. The creditors' application is based on a bankruptcy notice served on Ms Mao, which she unsuccessfully sought to set aside. The underlying dispute involves a judgment debt for indemnity costs of $21,414.20, stemming from an earlier bankruptcy notice. Ms Mao argues that she should not be adjudicated bankrupt to pursue claims against the creditors and third parties arising from a mortgagee sale. The court had to determine whether it was just and equitable to not make an order for adjudication of Ms Mao as bankrupt.

The legal issues before the court were whether Ms Mao could establish that it was just and equitable for the court to not make an order of adjudication and whether she should be granted a final opportunity to pay the judgment debt. The court considered the relevant statutory provisions under the Insolvency Act 2006, particularly sections 36 and 37, which confer discretion on the court to adjudicate a debtor bankrupt if certain conditions are met and to refuse adjudication if it is just and equitable not to do so. The court also considered the broader purposes of bankruptcy, including administration of the debtor’s estate, holding the debtor accountable, and protecting the community. The onus was on Ms Mao to show why an adjudication order should not be made.

The court found that Ms Mao had not discharged the onus to show that an adjudication order should not be made. It was satisfied that Ms Mao no longer had a viable basis to bring a claim against the creditors or third parties. The court acknowledged that the creditors had established the jurisdictional requirements for adjudication. The court concluded that it was an appropriate case for an award of indemnity costs to the creditors, totaling $96,432.74. The court halted the creditors' application on the condition that Ms Mao pay the creditors this sum by 5 pm on 20 December 2023. If she failed to do so, the halt would be lifted, and the court would make an order for adjudication.

The court ordered that the creditors' application for adjudication is halted on the condition that Ms Mao pay the creditors $96,432.74 in full by 5 pm on 20 December 2023. If this condition is not met, the halt on the proceeding is lifted, and the court will immediately make an order for adjudication.

Orders