Lister v Begum

[2025] NZHC 2331

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-3092

[2025] NZHC 2331

UNDER

The Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of Shamina Begum

BETWEEN

ANDREW ROSS LISTER and ZHANNA LISTER

Judgment Creditors

AND

SHAMINA BEGUM

Judgment Debtor

CIV-2024-404-3106

IN THE MATTER OF

The Bankruptcy of Mohammed Sadiq

BETWEEN

ANDREW ROSS LISTER and ZHANNA LISTER

Judgment Creditors

AND

MOHAMMED SADIQ

Judgment Debtor

Hearing:	15 August 2025
Counsel:	Ms Y Lee for the Judgment Creditors Ms Bergh for the Judgment Debtors
Date of Judgment:	18 August 2025

JUDGMENT OF ASSOCIATE JUDGE BRITTAIN

This judgment was delivered by me on 18 August 2025 at 3 pm.

Pursuant to Rule 11.5 of the High Court Rules.

Solicitors:
Killian & Associates, Auckland

…………………..

Registrar/Deputy Registrar

LISTER v BEGUM [2025] NZHC 2331 [18 August 2025]

Introduction

[1]    The judgment debtors, Mohammed Sadiq and Shamina Begum (Mr Sadiq and Ms Begum) contracted to purchase a property from the  judgment  creditors,  Andrew Lister and Zhanna Lister (Mr and Mrs Lister). Mr Sadiq and Ms Begum failed to pay the deposit. On 17 September 2024, Gault J entered summary judgment for Mr and Mrs Lister against Mr Sadiq and Ms Begum for the deposit together with interest and costs.1

[2]    Mr and Mrs Lister served bankruptcy notices on Mr Sadiq and Ms Begum on 13 December 2024, requiring payment of the amount of $286,094.50 due under the judgment.   Mr Sadiq and Ms Begum failed to satisfy the bankruptcy notices and   Mr and Mrs Lister have filed applications for orders adjudicating them bankrupt.

[3]    Mr Sadiq and Ms Begum oppose bankruptcy, on the ground that they are solvent and will shortly be able to settle the judgement debt. The sole issue to be determined is whether the Court should exercise its discretion not to adjudicate     Mr Sadiq and Ms Begum bankrupt.

[4]    At the hearing on 15 August 2025, I determined that this is not an appropriate case for an exercise of the discretion in favour of the debtors. At the conclusion of the hearing on 15 August 2025, I made orders adjudicating Mr Sadiq and Ms Begum bankrupt, on the basis that I would subsequently deliver a judgment confirming my reasons, which I now do.

Legal principles

[5]Section 36 of the Insolvency Act 2006 (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.

[6]    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

1      Lister v Sadiq HC Auckland CIV-2024-404-1720, 17 September 2024 (Minute of Gault J).

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.

[7]    Mr and Mrs Lister have met the jurisdictional requirements of ss 13 and 36 of the Act. Section 37 of the Act confers a discretion on the Court to decline to make an order for adjudication:

37       Court may refuse adjudication

The court may, at its discretion, refuse to adjudicate the debtor bankrupt if—

(a)the applicant creditor has not established the requirements set out in section 13; or

(b)the debtor is able to pay his or her debts; or

(c)it is just and equitable that the court does not make an order of adjudication; or

(d)for any other reason an order of adjudication should not be made.

[8]    The following general principles, extracted from the case law, are relevant to the Court’s discretion to refuse adjudication:

(a)The onus is on the debtor to show why an adjudication order should not be made.2

(b)It is not common practice to engage in an analysis of the correctness or otherwise of the underlying judgment. However, the Court can exercise its discretion to refuse to adjudicate a debtor bankrupt if there is good reason to doubt the liability established by the underlying judgment.3

(c)In exercising its discretion, the Court may consider, inter alia, the following factors:

(i)the views of all affected parties, including the petitioner, other creditors and the debtor;4

2      McHardy v Wilkins & Davies Marinas Ltd (in rec) CA54/93, 7 April 1993 at 3.

3      Nightingale v James [2018] NZHC 965 at [5]–[22]; Keung v Official Assignee [2020] NZHC 32 at [51].

4      Re Sturdee [1985] 2 NZLR 627 (HC) at 635.

(ii)the wider public interest, including whether adjudication is “conducive or detrimental to commercial morality and the interests of the general public”;5

(iii)the circumstances in which the debt was incurred and whether those circumstances suggest that the creditor is acting unreasonably in pursing adjudication;6

(iv)whether the debtor is able to pay their debts over a reasonable period of time;7

(v)whether adjudication would be pointless in the sense that the creditors are unlikely to receive payment;8 and

(vi)whether adjudication would render the debtor unable to support him or herself.9

(d)Where a creditor is able to obtain payment by execution against the assets of the debtor, an order for adjudication is often not appropriate.10

(e)In exercising its discretion, the Court should also remain cognisant of the broader purposes of bankruptcy which include:11

(i)allowing for administration of the debtor’s estate in the interests of creditors;

(ii)holding the debtor accountable for his or her debts;

(iii)punishing or stigmatising the debtor for misconduct;

5      Re Nisbett, ex parte Vala [1934] GLR 553 (SC) at 556.

6      Re Epirosa, ex parte Diners Club (NZ) Ltd HC Wellington B498/91, 6 March 1992 at 6.

7      Body Corporate 68792 v Memelink [2018] NZCA 509, [2019] NZAR 127 at [15].

8      Re Fidow [1989] 2 NZLR 431 (HC) at 444.

9      Re Epirosa, above n 6, at 7.

10     Lawson v Perkins [2009] NZFLR 330 (HC) at [20].

11     Sheppard v Blanchett [2012] NZHC 789, (2012) 3 NZTR 22-014 at [35]–[43].

(iv)protecting the community from a debtor who runs up credit without being able to honour it; and

(v)allowing the debtor to eventually take up commercial activity once freed from his or her liabilities after the discharge of their bankruptcy.

(f)Ultimately, the Court must balance the various considerations relevant to an application when concluding whether the debtor has succeeded in showing that the order sought should not be made.12

Discussion

[9]    Mr Sadiq and Ms Begum rely on an affidavit from Mr Sadiq dated 14 May 2025 and an updating memorandum of counsel dated 14 August 2025.

[10]In summary, Mr Sadiq’s affidavit evidence is that:

(a)He owns and has access to “various historical assets being repatriated through the United Nations Historical Asset Relocation and Repatriation Program.”

(b)He has entered into contractual arrangements with various sovereign entities to have historical assets repatriated, and these contracts have been ongoing over the last 12 years.

(c)The transactions are being dealt with through a “newly developed financial system called the Quantum Financial System”, which is not “fully operational in the current trading bank level but is being used in sovereign accounts.”

(d)Due to the confidentiality of the transactions and the parties involved, a transaction will be placed on hold if any person “other than an authorised person” attempts to obtain any information about a transaction.

12     McHardy v Wilkins & Davies Marinas Ltd (in rec), above n 2, at 4.

(e)He is in the process of finalising the payment of a series of agreements. He is unable to provide a copy of the contract due to confidentiality, and the only  person  authorised  to  view  the  contract,  other  than Mr Sadiq, is his unspecified legal counsel. Payments to Mr Sadiq were due to commence in May 2025.

(f)He is currently “contracted in more than 60 international sovereign contracts dealing with historical assets arounds the world”, and if he is adjudicated bankrupt all of these contracts will be terminated and the repatriation programme will be halted.

[11]   The documents produced by Mr Sadiq to support his evidence are scant and unconvincing. They include:

(a)A document said to evidence an example of an historical asset, issued by “MR. JUAN JOSE VALDES ESCALES”, a “Sovereign Buyer & Authorized Payer of Historic and Exotic Assets”.

(b)What purports to be a statement  of  an  offshore  bank  account  in  Mr Sadiq’s name, suggesting a balance of USD 1 billion.

(c)A communication dated 2 May 2025 to Mr Sadiq, advising that the “paymaster” was to inform Mr Sadiq of the details of his payment through the “denominated Quantum Financial System”.

(d)An email to Mr Sadiq on 13 May 2025 purporting to confirm a pending transfer of USD 15 million.

[12]   Counsel for Mr Sadiq and Ms Begum, Mr Killian, filed a memorandum late on 14 August 2025, producing further documents said to evidence a pending payment to Mr Sadiq of USD 2 million. Mr Killian produces three documents with his memorandum. One purports to be on the letterhead of “United States Historical Asset Program”, advising that a United States attorney, Michael Rubin, is “an invaluable part of our operation”, and a “paymaster for U.S.H.A.R”. An  email, purportedly from  Mr Rubin, states that he is acting for Mr Sadiq and that Mr Sadiq is entitled to receive a payment that exceeds the judgment debt. These documents are again unconvincing.

[13]   Contrary to Mr Sadiq’s assertions and the documents produced, there is no evidence that Mr Sadiq has received any funds or that he and Ms Begum are in a position to satisfy the judgment against them. There is no reliable evidence that a payment to them is pending.

[14]   This is not an appropriate case for an exercise of the Court’s discretion in favour of Mr Sadiq and Ms Begum. There is no credible evidence that they are solvent or able to pay the judgment debt now, in the near future or at all.

[15]   If Mr Sadiq receives a substantial payment from a third party after he is adjudicated bankrupt, then Mr Sadiq and Ms Begum will be able to apply for an annulment of their bankruptcies.

Orders

[16]   The judgment debtors, Mohammed Sadiq and Shamina Begum (also known as Shamina Begum Sadiq), are adjudicated bankrupt. The orders are timed at 10.05 am on 15 August 2025.

[17]   In CIV-2024-404-3092, the judgment debtor shall pay the judgment creditors’ costs on a 2B basis, except that costs for all shared steps (including preparing for the hearing and attending the hearing) shall be divided equally with CIV-2024-404-3106. The judgment debtor shall also pay the judgment creditors’ disbursements as fixed by the Registrar.

[18]   In CIV-2024-404-3106, the judgment debtor shall pay the judgment creditors’ costs on a 2B basis, except that costs for all shared steps (including preparing for the hearing and attending the hearing) shall be divided equally with CIV-2024-404-3092. The judgment debtor shall also pay the judgment creditors’ disbursements as fixed by the Registrar.

Associate Judge Brittain