Loan Investment Trustees v Ding - [2023] NZHC 3288

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-000462

[2023] NZHC 3288

BETWEEN LOAN INVESTMENT TRUSTEES LIMITED
Judgment Creditor

AND

ZHAOHAI DING

Judgment Debtor

Hearing: 20 November 2023

Appearances:

J J K Spring / E Powell for the Judgment Creditor Judgment Debtor in Person

Judgment:

20 November 2023

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 20 November 2023 pursuant to Rule 11.3 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

MinterEllisonRuddWatts, Auckland

LOAN INVESTMENT TRUSTEES LTD v DING [2023] NZHC 3288 [20 November 2023]

Introduction

[1] Zhaohai Ding applies to set aside a bankruptcy notice issued by this Court on 23 March 2023 for $3,277,383.97 he owes on a judgment Loan Investment Trustees Limited (LITL) obtained against him on an unopposed summary judgment application on 14 March 2023 (the Judgment). LITL opposes the application.

[2] The judgment sum concerns Mr Ding’s debt to LITL as guarantor of funds advanced by LITL to Annecy Holding Limited (in liquidation) and secured by a mortgage granted by that entity over the property at 389 Dominion Road, Mt Eden, Auckland (the Property).

[3] After the bankruptcy notice was issued, LITL, as mortgagee and in the exercise of its power of sale as mortgagee, accepted an unconditional offer to purchase the Property for $3,050,000, which settled on 27 June 2023.

[4] Completion of the sale has left a shortfall for which Mr Ding remains liable under the Judgment. The amount of the judgment sum which remains owing is
$391,730.11, including costs and interest under the Interest on Money Claims Act 2016.

[5]Execution of the Judgment has not been halted by the Court.

[6]Mr Ding was served with the Bankruptcy Notice on 26 April 2023.

[7] Mr Ding filed this application on 9 May 2023 together with a supporting affidavit sworn on 10 May 2023. Mr Ding filed further affidavits sworn on 14 June and 16 August 2023. On 17 August 2023, at a call in the bankruptcy list, Mr Ding’s (then) counsel requested an opportunity for Mr Ding to file further evidence, which was granted. Mr Ding did not file any further evidence or submissions, as directed at the call.

[8] At a Duty Judge List Mention on 9 November 2023, Mr Ding advised that he was now representing himself in this matter. His then counsel, Mr R Wang, was given leave to withdraw. The Court granted Mr Ding until 5.00 pm on 16 November 2023

to file written submissions. On 16 November 2023 Mr Ding filed a fourth affidavit. He did not file any written submissions but made oral submissions today.

The law

[9] Section 13 of the Insolvency Act 2006 (the Act) provides that a creditor may apply for a debtor to be adjudicated bankrupt if, among other things, the debtor has committed an act of bankruptcy within the period of three months before the filing of the application.

Section 17 of…

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.

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Details

Case: [2023] NZHC 3288
Decision Date: 20 November 2023

CaseChat Overview and Summary

Zhaohai Ding applied to the High Court of New Zealand to set aside a bankruptcy notice issued by Loan Investment Trustees Limited (LITL) for $3,277,383.97, which he owed as a guarantor for funds advanced to Annecy Holding Limited. LITL opposed the application. The debt arose from a judgment LITL obtained on an unopposed summary judgment application. The judgment sum related to the guarantor's obligation secured by a mortgage over property at 389 Dominion Road, Mt Eden, Auckland. After the bankruptcy notice was issued, LITL sold the property, resulting in a shortfall of $391,730.11, including costs and interest. Mr Ding sought to set aside the bankruptcy notice, arguing that he would be able to pay the shortfall upon completion of property developments in Henderson and/or by obtaining refunds for deposits paid. However, the Court found that Mr Ding's intention to pay the judgment sum was not a legitimate reason for setting aside the bankruptcy notice under the Insolvency Act 2006.

The Court considered whether Mr Ding had a genuine, triable cross-claim that was equal to or greater than the judgment debt and could not have been used as a defence in the proceeding. However, Mr Ding did not claim to have such a cross-claim. Instead, he sought to set aside the bankruptcy notice to give him time to secure funds to pay LITL. The Court held that this was not a legitimate reason for setting aside the bankruptcy notice. The Court also noted that if Mr Ding did not comply with the bankruptcy notice, he would commit an act of bankruptcy, and LITL could apply to the Court for an order adjudicating him bankrupt. Mr Ding would then have the opportunity to oppose that application and persuade the Court not to make an order of adjudication.

The Court dismissed Mr Ding's application to set aside the bankruptcy notice and ordered that Mr Ding pay LITL's costs and reasonable disbursements. LITL sought solicitor/client costs, and Mr Ding could file a response to LITL's submissions on costs within 10 working days.

Orders