Wang v Lu - [2020] NZCA 673

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA556/2020
[2020] NZCA 673

BETWEEN	JIANPING WANG Appellant
AND	BIN LU First Respondent WEIHUA ZHANG Second Respondent

Hearing:	25 November 2020
Court:	Brown, Clifford and Gilbert JJ
Counsel:	G P Blanchard QC and G E Slevin for Appellant A L Harlowe for First Respondent
Judgment:	21 December 2020 at 4.00 pm

JUDGMENT OF THE COURT

AThe appeal is allowed. The application for pt 6 administration of the estate is amended as sought in the appellant’s oral application of 30 July 2020.
BThe first respondent is to pay the appellant costs for a standard appeal on a band A basis and usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Clifford J)

Introduction

Jianping Wang, the appellant, is a judgment creditor of Jihong Lu. Mr Lu is now deceased. Mr Wang applied to the High Court for an order that Mr Lu’s estate be administered under pt 6 of the Insolvency Act 2006 as an insolvent deceased’s estate. That application came before Wylie J in the High Court on 30 July this year. At the hearing of that application the Judge declined an oral interlocutory application made on Mr Wang’s behalf to amend the orders he sought, and the substantive application proceeded no further that day.[1] Nor has it since then.
[1]Re Lu [2020] NZHC 1894 [Judgment under appeal].
With leave granted by Wylie J,[2] Mr Wang now appeals the Judge’s interlocutory order declining Mr Wang’s application to amend.

Background

[2]Re Lu [2020] NZHC 2415 [Judgment granting leave].

On 6 August 2019 Mr Wang obtained summary judgment against Mr Lu in the sum of $1.5 million.[3] That same day Mr Lu transferred his interest in a property to the second respondent, his mother Mrs Weihua Zhang for, Mr Wang says, no consideration. Mr Wang has since obtained freezing orders and commenced a proceeding to recover compensation from Mrs Zhang.[4] Mr Wang also issued a bankruptcy notice against Mr Lu in December 2019, which Mr Lu did not comply with.
[3]Wang v Lu HC Auckland CIV-2019-404-545.
[4]Wang v Zhang HC Auckland CIV-2019-404-2583.
Mr Lu died in Taipei, Taiwan, on or about 21 January 2020. Mr Wang commenced his application for a pt 6 order on 7 May 2020. At that point in time, Mr Wang had no formal evidence of Mr Lu’s death nor of the existence of any will.
Pursuant to the orders Mr Wang sought, his interlocutory application was served on the first and second respondents, Bin Lu (Mr Lu’s brother) and Mrs Zhang. In his affidavit in support of his opposition to Mr Wang’s application for a pt 6 administration, Bin Lu deposed that Mr Lu had indeed died and that he had made a will. Bin Lu appended a copy of that will (written in Mandarin) to his affidavit, together with a certified translation thereof.
That will provides, amongst other things, for the payment of a debt or other sum…

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: [2020] NZCA 673
Decision Date: 21 December 2020 at 4.00 pm

CaseChat Overview and Summary

Jianping Wang, the judgment creditor of the deceased Jihong Lu, appealed against the High Court's refusal to amend his originating application for the administration of Mr Lu's estate under Part 6 of the Insolvency Act 2006. The High Court had declined Mr Wang's application on the basis that it would be prejudicial to the beneficiaries and creditors of Mr Lu's estate to not serve them with the application. Mr Wang argued that the High Court had erred in declining the application to amend because there was no requirement under Part 6 of the Insolvency Act to serve the application on creditors or beneficiaries. The Court of Appeal allowed the appeal, finding that there was no requirement under Part 6 to serve the application on creditors or beneficiaries. The Court held that the appropriate person to serve the application on would be the person appointed by the deceased as administrator, in this case Bin Lu. The Court also held that the potential beneficiaries could only have an interest if the estate actually yielded a surplus after the satisfaction of creditors' claims.

The Court of Appeal held that the High Court's concerns about prejudice to the beneficiaries and creditors of the estate were unfounded. The Court held that the effect of an insolvent administration was to treat the deceased's estate as if it were the estate of a bankrupt, except that the automatic appointment of the Official Assignee as trustee in bankruptcy did not apply. The appointee was required to administer the estate consistently with the principles of insolvency law generally. The Court also held that the potential beneficiaries could only have an interest if the estate actually yielded a surplus after the satisfaction of creditors' claims. The Court held that the only obvious source of possible prejudice in both situations would be the unsuitability of the proposed appointee in terms of their ability and willingness to administer the insolvent estate lawfully and efficiently.

The Court of Appeal allowed Mr Wang's appeal and amended his application for the administration of Mr Lu's estate as sought in his oral application of 30 July 2020. The first respondent, Bin Lu, was to pay the appellant costs for a standard appeal on a band A basis and usual disbursements. The Court also held that the question of service would be for the High Court when Mr Wang pursued his amended Part 6 application.

Orders