Mao v Kim - [2022] NZHC 2836

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-001881

[2022] NZHC 2836

UNDER the Insolvency Act 2006

IN THE MATTER OF

the bankruptcy of JIAWEN MAO

BETWEEN

JIAWEN MAO

Applicant

AND

HYUN BIN KIM and DUK YOUNG LEE

Respondents

Hearing: 15 September 2022

Appearances:

Applicant in person

C Fourie for the Respondents

Judgment:

1 November 2022

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 1 November 2022 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Hesketh Henry, Auckland Copy for: J Mao

MAO v KIM & LEE [2022] NZHC 2836 [1 November 2022]

Introduction

[1] The applicant, Jiawen Mao, applies to set aside a bankruptcy notice served on her by the respondents, Hyun Bin Kim and Duk Young Lee. Ms Mao also applies to disqualify Hesketh Henry from acting for the respondents and for a stay of this proceeding.1

[2]The respondents oppose all three applications.

Background

[3] In 2016, the respondents advanced funds to Yintian Co Ltd under a Development Loan Agreement (the Loan Agreement). Ms Mao and her father, Liansen Mao, guaranteed the loan under a Deed of Guarantee and Indemnity (the Guarantee). Yintian Co granted a mortgage over 31 Chester Avenue, Greenhithe in favour of the respondents.

[4] Yintian Co defaulted under the Loan Agreement and Ms Mao and her father defaulted under the Guarantee.

[5] On or about 2 February 2018, the respondents sold 31 Chester Avenue by way of mortgagee sale. The mortgagee sale was conducted on the basis that the vendor and the purchaser were registered for the purposes of GST which required the respondents to account to the IRD for GST. After the proceeds of sale were applied to the amount owing to the respondents under the Loan Agreement, there was a shortfall of $193,143.32.

[6] On 27 February 2018, the respondents filed proceedings in the District Court against Yintian Co, and Ms Mao and her father as guarantors, to recover the shortfall. On 3 October 2018, the respondents sought and obtained a default judgment in the sum of $209,931.92 together with interests and costs on the basis that no defences had

1 Applicant’s memorandum filed 6 September 2022.

been filed (the Default Judgment). By that time, the claim had been amended to update the amount owing to $216,773.92 (including interest and costs).

[7] On 6 June 2019, a bankruptcy notice was issued in respect of the Default Judgment in the amount of $216,723.92 (the First Bankruptcy Notice). The bankruptcy notice was served on Ms Mao on 13 September 2019.

[8] On 11 October 2019, Ms Mao and her father commenced proceedings against Best Capital Ltd and the respondents in this Court (the First Mao Proceedings).2 The first two causes of action concerned 31 Chester Avenue, and alleged that the respondents breached s 176 of the Property Law Act 2007 when they sold the property by failing…

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 Mao v Kim

Details

AGLC: Mao v Kim [2022] NZHC 2836
Case: [2022] NZHC 2836
Decision Date: 1 November 2022

CaseChat Overview and Summary

The case of Mao v Kim and Lee involves an application by Jiawen Mao to set aside a bankruptcy notice served on her by Hyun Bin Kim and Duk Young Lee. Ms Mao also seeks to disqualify Hesketh Henry from acting for the respondents and for a stay of the proceedings. The respondents oppose all three applications. Ms Mao and her father had guaranteed a loan to Yintian Co Ltd, which defaulted, resulting in a shortfall after a mortgagee sale. A bankruptcy notice was issued in respect of this shortfall, leading to further proceedings and costs being awarded against Ms Mao. Ms Mao argues she has a genuine triable cross claim against the respondents, which she seeks to set aside by way of a counterclaim in the District Court. The court found that the application to set aside the Default Judgment and the purported counterclaim are not genuine triable cross claims as they do not meet the requirements of s 17(7) of the Insolvency Act 2006. The court also found that there is no jurisdiction to stay a bankruptcy notice under the Act, and no grounds to disqualify Hesketh Henry from acting for the respondents. The applications are dismissed, and the respondents are entitled to their costs and reasonable disbursements.

The key legal issues in this case were whether Ms Mao had a genuine triable cross claim against the respondents, whether the proceedings should be stayed, and whether Hesketh Henry should be disqualified from acting for the respondents. The court found that Ms Mao did not have a genuine triable cross claim as her counterclaim was not a money claim and had no prospect of success. The court also found that there was no jurisdiction to stay a bankruptcy notice and no grounds to disqualify Hesketh Henry from acting for the respondents. The applications were dismissed and the respondents were awarded their costs and reasonable disbursements.

Orders