Liu v Delamere

[2025] NZHC 2556

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1

[2025] NZHC 2556

UNDER AND

IN THE MATTER OF

the Insolvency Act 2006

the bankruptcy of TUARIKI JOHN EDWARD DELAMERE

BETWEEN

YINGHENG LIU

Judgment Creditor

AND

TUARIKI JOHN EDWARD DELAMERE

Judgment Debtor

Hearing:

5 May 2025

Appearances:

D Hickson for the Judgment Creditor

TJE Delamere, Judgment Debtor in person

Judgment:

5 September 2025

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 5 September 2025 at 4 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

LIU v DELAMERE [2025] NZHC 2556 [5 September 2025]

Introduction

[1]    Yingheng Liu has applied to adjudicate Tuariki Delamere bankrupt. The judgment debt upon which the application is brought is a judgment issued by the High Court in December 2021 for $459,209.87.

[2]    The High Court judgment was appealed by Mr Delamere to the Court of Appeal1 and to the Supreme Court2 but without success.

[3]    Following a hearing before van Bohemen J on 7 November 2024, in which contempt proceedings  were  dismissed,3  the  parties  came  to  an  agreement  for  Mr Delamere to transfer funds still held in a term deposit account to the trust account of Mr Liu’s solicitors. The sum transferred was $94,791.47. Mr Delamere’s indebtedness to Mr Liu has therefore reduced to $364,418.40.

[4]    Mr Delamere opposes a bankruptcy order being made on the basis that he has now filed separate proceedings against Mr Liu alleging breach of contract, fraudulent misrepresentation, deceit, unjust enrichment and breaches of the Fair Trading Act 1986.4 These claims rely on an alleged admission by Mr Liu in the High Court proceedings in which the judgment debt arose that Mr Liu never intended to fulfil his obligations to live and work in New Zealand, contrary to the signed agreements between Mr Liu and Mr Delamere and his associated entities (including TDA Botany), and Mr Liu’s visa declarations. Mr Delamere asserts that Mr Liu’s alleged fraudulent misrepresentations induced the agreements under which he has now been found liable and that it is in the interests of justice for his separate claim to be determined prior to any bankruptcy order being made.

[5]    Once the requirements in the Insolvency Act 2006 are met, the Court retains a discretion to decline to make a bankruptcy order if it is just and equitable, or if there is another reason, for an order not to be made.5 In addition, s 38 of the Insolvency Act

1      Delamere v Liu [2023] NZCA 427.

2      Delamere v Liu [2023] NZSC 163.

3      Liu v Delamere [2024] NZHC 3320.

4      Delamere v Liu HC Auckland CIV-2024-404-3114.

5      Insolvency Act 2006, s 37(c) and (d).

provides the Court with the power to halt an application for adjudication on any terms or conditions the Court thinks appropriate.

[6]The issues to be determined are:

(a)Has Mr Liu established that the requirements of the Insolvency Act have been met?

(b)If so, is it just and equitable or is there some other reason for the Court not to adjudicate Mr Delamere bankrupt?

(c)Alternatively, would it be appropriate for the bankruptcy proceedings to be halted?

Requirements of the Insolvency Act and applicable legal principles

[7]    Section 36 of the Insolvency Act provides that the Court may, at its discretion, adjudicate a debtor bankrupt if the creditor has established the requirements as set out in s 13 of the Act that:

(a)the debtor owes the creditor $1,000 or more … ; and

(b)the debtor has committed an act of bankruptcy within the period of 3 months before the filing of the application; and

(c)the debt is a certain amount; and

(d)the debt is payable either immediately or at a date in the future that is certain.

[8]    Even where the requirements of s 13 are satisfied, adjudication does not follow automatically. Section 37 of the Act provides that the Court may exercise its discretion to decline to make an order adjudicating the judgment 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.

[9]    In Baker v Westpac Banking Corporation, the Court of Appeal held in respect of the exercise of the Court’s discretion:6

It is proper for the Court to consider not only the interests of those directly concerned — the petitioner, other creditors, the debtor — but also the wider public interest.  A creditor who establishes the jurisdictional facts set out in  s 23 [the equivalent of s 13] is not automatically entitled to an order. On the other hand, it is for an opposing debtor to show why an order should not be made. The Court will give proper weight to the commercial judgment of the petitioner but the oppressive use of the bankruptcy process may be a ground for refusing an order. Another ground may be the undoubted absence of assets but that will not necessarily preclude an order given the range of interests involved including the public interest in the continuing oversight of a bankrupt’s affairs and the disqualifications that go with bankruptcy. In the end the Court must balance the various considerations relevant to the case and determine whether the debtor has succeeded in showing that an order ought not to be made.

[10]   In Rabobank Australia Ltd v Tootell, Associate Judge Osborne (as he then was) referred with approval to the factors listed in Re Epirosa, ex parte Diner’s Club NZ Ltd7 and set out the following as a combined list:8

·What are the wishes of all affected parties, including the applying creditor, other creditors and the debtor?

·Does the debtor have the ability to meet his or her debts over time and, if so, does that meet the requirements of achieving finality within a reasonable period?

·What were the circumstances in which the debt [was] incurred and do those circumstances suggest that the creditor is acting unreasonably in pursuing adjudication?

·Will adjudication be pointless?

·Will the debtor, if adjudicated, be rendered unable to support himself or herself?

·Does the debtor have such a standing in the community that significant issues of stigma or embarrassment will result?

6      Baker v Westpac Banking Corporation CA212/92, 13 July 1993 at 4.

7      Rabobank Australia Ltd v Tootell [2013] NZHC 2975 at [7], citing Re Epirosa, ex parte Diners Club (NZ) Ltd and American Express International Inc HC Wellington B498/91, 6 March 1992 at 5–8.

8 At [8].

[11]   If the Court considers that the case falls within s 37(c) or (d) (see above at [8]), then the application for adjudication is dismissed. A fresh application would then need to be made if the debt remained unpaid and adjudication was sought.

[12]   Section 38 provides the Court with a general power to halt, rather than dismiss, a bankruptcy application.

[13]   The cases considering s 38 emphasise that the final decision should balance all of the relevant factors to achieve a just outcome. In Bank of New Zealand v Koroniadis, it was held that the lack of any particular matters which the Court must take into account makes it clear that Parliament intended the discretion to be flexible, allowing the courts to respond to varying circumstances by affording differing weight according to each case.9

[14]   In Anderson v DeMarco, Associate Judge Johnston held that the broad thrust of previous authorities appeared to be that the Court will only halt proceedings under s 38 if:10

(a)the judgment debtor can point to a particular course of action that [they are] taking or [are] proposing to take which if successful would have the effect of undermining the indebtedness upon which the proceedings are based;

(b)the Court is satisfied that the judgment debtor is bona fide in their intention;

(c)the Court is able to discern that there is some merit in the course of action;

(d)the judgment debtor has acted candidly by putting all relevant information before the Court; and

(e)the granting of a halt will not operate unjustly on the judgment creditor.

[15]   The Court is therefore required to undertake a balancing exercise for applications pursuant to both ss 37 and 38 of the Insolvency Act. This exercise seeks to recognise and reconcile the conflicting interests of the parties.

9      Bank of New Zealand v Koroniadis [2013] NZHC 2865 at [11].

10     Anderson v DeMarco [2021] NZHC 1757 at [16].

Has the judgment creditor satisfied the prima facie requirements for adjudication?

[16]   As noted, the prima facie requirements are set out in s 13 of the Insolvency Act.

Section 13(a)

[17]   The first requirement is that the debt relied on is for more than $1,000 and that it is currently owing to the judgment creditor. Both are satisfied. There is a High Court judgment that has been appealed unsuccessfully to the Supreme Court for

$459,209.87. It is accepted that $94,791.47 of this has been paid but $364,418.40 remains owing. There is no question, therefore, that the debt is for more than $1,000 and is owing to the judgment creditor.

Section 13(b)

[18]   The second requirement is that the judgment debtor has committed an act of bankruptcy. The judgment creditor relies on s 17 of the Insolvency Act, which provides that failure to comply with a bankruptcy notice is an act of bankruptcy.

[19]   The judgment creditor has filed an affidavit of service of the bankruptcy notice on Mr Delamere on 30 January 2024. The bankruptcy notice has not been complied with so an act of bankruptcy will have occurred 10 working days from service of the notice. The evidence therefore confirms a failure to comply with the bankruptcy notice.

Section 13(c)

[20]   The next requirement is that the debt is for a certain amount. The judgment debt is recorded in the sealed order dated 6 December 2021, which Mr Delamere has not challenged. There is no dispute as to the amount of the debt that has been paid and therefore no question that the debt is for a certain amount.

Section 13(d)

[21]   The final requirement, that “the debt is payable either immediately or at a date in the future that is certain”. This is also satisfied because the judgment debt has been sealed as an order of the Court and all rights to appeal have been exhausted.

Conclusion on prima facie case for adjudication

[22]   The four elements in s 13 of the Insolvency Act have therefore been established, so there is a prima facie case for adjudication.

Is there any reason not to adjudicate or to halt the adjudication?

[23]   Where the Court exercises its discretion to refuse adjudication under any of the limbs of s 37, the bankruptcy proceedings will be at an end.

[24]   Mr Delamere’s submissions are drafted in terms of being an application to set aside the bankruptcy notice. As discussed at the hearing, no application to set aside the bankruptcy notice was made within the ten working day period required.11 The opposition must therefore be considered in terms of either being an opposition to a bankruptcy order or seeking a halt of these proceedings to allow Mr Delamere’s separate proceedings against Mr Liu to be determined.

[25]   The sole ground for Mr Delamere’s opposition is to allow him to bring the December 2024 proceedings. In these circumstances, it would be more appropriate to halt, rather than dismiss, the application. I therefore consider below whether the bankruptcy application ought to be halted under s 38 in terms of the factors identified in Anderson v Demarco, as set out above.

Can Mr Delamere point to a particular course of action that he is taking or proposing to take which, if successful, would have the effect of undermining the indebtedness upon which the proceedings are based?

[26]   Mr Delamere seeks a halt of these bankruptcy proceedings to allow his proceedings filed in December 2024 to be determined. Those proceedings have not

11     Insolvency Act, s 17.

yet been served on Mr Liu because Mr Hickson (counsel for Mr Liu) does not have instructions to accept service of those proceedings and Mr Liu is in China. As discussed at the hearing, in these circumstances, it is likely the issues of service will be surmountable.

[27]   If the December 2024 proceedings are successful, then that would undermine the indebtedness on which these bankruptcy proceedings is based and so this first factor is satisfied.

Is the Court satisfied that Mr Delamere is bona fide in his intention?

[28]   Mr Delamere has already filed his proceeding and has attempted to serve it. He has not applied for substituted service orders yet, but he is acting for himself so this does not indicate any lack of good faith in his intention.

[29]   I am therefore satisfied he intends to progress the new proceeding. In any event, this could be made a condition of the halt to protect against any lack of intention.

Is the Court able to discern there is some merit in the proposed course of action?

[30]   As set out in the introduction, Mr Delamere filed his new proceedings in December 2024, pleading five causes of action alleging breach of contract, fraudulent misrepresentation, deceit, unjust enrichment and breaches of the Fair Trading Act. Various forms of relief are claimed, including damages of $152,553 in compensation for salary payments and of $228,176 for occupancy and administration costs, as well as orders rescinding the three agreements entered into between the parties and an award of damages to recognise the losses suffered by Mr Delamere as a result of the alleged fraudulent misrepresentation by the defendant.

[31]   All causes of action rely on a passage from the transcript of the High Court trial. Mr Delamere pleads in the statement of claim in the new proceeding as follows:

(d)During the hearing of Liu v Delamere, CIV 2018-404-001822, Mr Liu admitted to Justice Lang when giving his evidence that he had no intention from day one of ever performing any of the commitments he had agreed to in any of his work visa applications with Immigration New Zealand, or agreements he had signed with Mr Delamere or TDA Botany of TDA Immigration. Following is the extract from the High

Court Notes of Evidence at page 14. “Q” refers to Mr. Beck. “A” refers to Mr Liu.

Q. If you go to the following page and look at L6 it says: “Mr Liu intends to work full-time in the business as a shareholder director”?

A. I can see that.

Q. The plan was for you to work full-time in the business?

A. This business plan was prepared by Mr Delamere. I did not know whether or not he wrote so in order to meet the Immigration requirements or not. He was well aware that I was unable to work full-time for TDA because I was managing the domestic company for my parents.

Q. You never intended to work full-time for TDA?

A. That's right.

[32]   When the transcript is considered as a whole, Mr Liu does not appear to say what Mr Delamere contends. Mr Liu did say that he was not intending to work full time in New Zealand, but that was expressly only until his residency application had been granted. I set out the relevant passage from his transcript below:12

Q. Did you ask Mr Delamere what was involved in the role of director?

A. I never did because Mr Delamere told me that only if I worked as a overseas or international sales person would I be able to stay overseas. In any other circumstances I would have to stay in New Zealand to work full-time. He was aware at that point of time I was working for my parents in their company and could not just put it aside. That was why my role in the company at the time was the international sales manager, along that line.

Q. You were planning to move to New Zealand though?

A. According to Mr Delamere this was the speediest way to immigrate. My intention was to consider whether I was going to actually move to New Zealand or not after I received – after my residency application has been granted.

Q.If you look at the following page, page 121, in (b) it says:   “Once the visa has been approved a nine month visa will be granted to enable Yingheng Liu to move to New Zealand and invest in TDA Botany.”?

A. I was advised by Mr Delamere that  the  business  visa  application will take as long as six months and within that nine months I will have my long term business visa an my residency visa granted altogether.

Q. The proposal was for you to move to New Zealand though, wasn’t it?

12     High Court Notes of Evidence, 9 August 2021 at 17–18.

A.I need to put it this way, my goal was to get a residency visa  and my family and I would not be coming to New Zealand and staying on our long term business visa. The family and I would only come over once my residency visa has been granted. I would not stay for a lengthy period of time in  New Zealand before I got my residency visa. I would however come here, come to New Zealand, if that was part of the immigration requirements. Mr Delamere was aware of that. It would only be after my residency visa has been granted that I will consider employing people domestically in China to replace myself in the role of a sales manager.

[33]   Mr Delamere raised the argument based on alleged fraudulent misrepresentations by Mr Liu in his appeal to the Supreme Court. The Supreme Court held in response:13

There is no indication in the Court of Appeal judgment that any such allegation was made either in the High Court or the Court of Appeal. It is inappropriate to seek to advance a new allegation, especially one of such seriousness, in a second appeal. In effect, this Court would be required to address that argument as a first and last Court, something which is obviously inappropriate, when the allegation could have been made in the High Court if it had any evidential foundation. The allegation is of a factual nature, is strongly disputed by the respondent, does not appear to have an evidential foundation in the evidence adduced in the High Court and does not appear to have been advanced in the Court of Appeal either. No matter of general or public importance, or any arguable matter relating to the Treaty of Waitangi arises, and we see no appearance of a miscarriage if leave to appeal on this entirely new ground is refused. Accordingly, it is not in the interests of justice to grant leave on this ground.

[34]   Having considered the pleading now filed and the transcript of the High Court hearing, I agree that there does not appear to be an evidential foundation in the transcript of the High Court trial as Mr Delamere contends. I am not able therefore to discern any merit in the proceedings that Mr Delamere has now filed.

[35]   In addition, Mr Delamere submits that the claims in his new proceeding could not be raised in the original proceeding because TDA Botany Ltd, which suffered the losses, was not a party to the original proceeding (referring to the Court of Appeal’s confirmation of this in its decision).

13     Delamere v Liu, above n 2, at [6] (emphasis added, footnotes omitted).

[36]   However, the Court of Appeal’s comment was only in relation to claims under one of the three agreements entered into, the client sourcing agreement.14 The parties to that agreement were Mr Liu and TDA Botany so only TDA Botany could bring a claim for loss under that agreement. However, this did not prevent claims being brought by Mr Delamere under the other two agreements, which he appears to seek to do again in the new proceeding.

Will the granting of a halt operate unjustly on Mr Liu?

[37]   Mr Liu first obtained the High Court judgment on which the bankruptcy application is based in December 2021. Mr Delamere then appealed it unsuccessfully to the Court of Appeal and then to the Supreme Court. Against this background, a halt of the bankruptcy proceedings would operate unjustly on Mr Liu.

Final weighing of the factors

[38]   Weighing all of the above factors, I do not consider it would be a just outcome if the bankruptcy application were halted. Mr Liu first obtained the judgment on which these bankruptcy proceedings are based in December 2021 and there appears no merit in the new proceeding filed by Mr Delamere in December 2024. In any event, making a bankruptcy order will not necessarily prevent Mr Delamere’s new claim progressing. The Official Assignee may decide it is appropriate to continue if Mr Delamere can convince the Assignee that there is merit in the claim or that the claim should be assigned to him. If the claim were then successful, an application to annul the bankruptcy order could be made. In these circumstances, it does not fairly balance the conflicting interests of the parties to halt the bankruptcy proceedings in the meantime.

Prospect of payment

[39]   At the hearing, Mr Delamere advised that he would not be in a position either to pay the outstanding debt if granted a short period within which to do so or to agree an instalment arrangement. I do not therefore allow for either of these options in the orders made.

14     Delamere v Liu, above n 1, at [32].

Result

[40]    The application for adjudication of Mr Delamare in bankruptcy is granted. The order is to take effect at 4 pm on the date of issue of this judgment.

Costs

[41]   Mr Liu has succeeded in his application for adjudication in bankruptcy of   Mr Delamere and is entitled to 2B costs and disbursements to be fixed by the Registrar.

Associate Judge Sussock