Official Assignee v Windward Properties Limited

[2023] NZHC 2323

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-000412

[2023] NZHC 2323

UNDER

s 309 of the Insolvency Act 2006

IN THE MATTER

of the bankruptcy of Jiesong Li

BETWEEN

OFFICIAL ASSIGNEE

Applicant

AND

WINDWARD PROPERTIES LIMITED

Judgment Creditor

Hearing:	On the papers
Appearances:	D M L Dingwall for the Applicant
Judgment:	24 August 2023

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 24 August 2023 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

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

Solicitors:

Official Assignee, Christchurch

OFFICIAL ASSIGNEE v WINDWARD PROPERTIES LTD [2023] NZHC 2323 [24 August 2023]

[1]        The Official Assignee applies for an order under s 309 of the Insolvency Act 2006 annulling the adjudication of Jiesong Li bankrupt.

[2]        Ms Li was adjudicated bankrupt by this Court on the application of the judgment creditor on 26 May 2022.1 At the time of the adjudication, and unknown to the Court, Ms Li was already bankrupt. Her own bankruptcy petition had been accepted by the Assignee on 12 July 2021. In her Statement of Affairs, Ms Li listed the debt owed to the judgment creditor on which the subsequent adjudication was based.

[3]        The Assignee submits that because that debt was a provable debt in Ms Li’s extant first bankruptcy, it could not form the basis of a second bankruptcy.

[4]        The judgment creditor originally opposed the application for annulment, but subsequently withdrew their opposition.

[5]        Section 309(1)(a) of the Insolvency Act 2006 provides that the Court may, on the application of the Assignee or any person interested, annul an adjudication if the Court considers that the bankrupt should not have been adjudicated bankrupt. If the Court does annul the bankruptcy, the annulment takes effect from the date of adjudication.2

[6]        Despite  the  wide  discretion  conferred  to  it,  the  Court  has  interpreted     s 309(1)(a) narrowly and exercised the power to annul on this ground sparingly. It has been said that the Court should be “parsimonious” in the exercise of its power to annul on this ground.3

[7]        Generally,  three categories of annulment applications have succeeded under  s 309(1)(a). These are where there was some defect in procedure, abuse of process, or where subsequent evidence shows that not all the true facts were before the Court

1      Windward Properties Ltd v Li HC Auckland CIV-2021-404-002425, 26 May 2023.

2      Insolvency Act 2006, s 309(3)(a).

3      MinterEllisonRuddWatts v Hampton [2013] NZHC 2434 at [27].

making the adjudication order, provided that this would also have affected the outcome.4

[8]        The Assignee has filed affidavits from a Senior Insolvency Officer and the Deputy Assignee of Wellington, setting out the facts relevant to the application. I am satisfied, based on this affidavit evidence, that the true facts were not before the Court when the order for adjudication was made. Namely, that Ms Li was already bankrupt and the debt on which the judgment creditor’s application for adjudication was based was a provable debt in the extant bankruptcy. I am satisfied that had the Court known of these facts, it would not have adjudicated Ms Li bankrupt for a second time.

[9]        Accordingly, I order that the adjudication of Jiesong Li bankrupt by this Court on 26 May 2022 is annulled.

[10]There is no issue as to costs.

Associate Judge Gardiner

4      See Re Hunter ex parte Commissioner of Inland Revenue (2000) 19 NZTC 15,722 (HC), Kipping v UDC Finance Ltd [2012] NZHC 1707 and Holdgate v Blocassa Ltd [2007] NZCA 132.