Westpac New Zealand Limited v Chen - [2023] NZHC 998

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2074

[2023] NZHC 998

IN THE MATTER of the Insolvency Act 2006

AND

IN THE MATTER

of the bankruptcy of Jiayuan (Georgia) Chen

BETWEEN

WESTPAC NEW ZEALAND LIMITED

Judgment Creditor

AND

JIAYUAN (GEORGIA) CHEN

Judgment Debtor

Hearing: 17 April 2023

Appearances:

J J K Spring and E Johnston for Judgment Creditor No appearance for Judgment Debtor

Judgment:

1 May 2023

JUDGMENT OF ASSOCIATE JUDGE LESTER

This Judgment was delivered by me on 1 May 2023 at 3:00pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date: …..

WESTPAC NEW ZEALAND LIMITED v CHEN [2023] NZHC 998 [1 May 2023]

[1] Westpac New Zealand Limited (Westpac) applies for an order adjudicating Ms Chen bankrupt. Ms Chen opposes the application.

[2] Westpac served a bankruptcy notice on Ms Chen in December 2021. At that time, the amount owed by Ms Chen was $365,849.80. Ms Chen unsuccessfully applied to set aside the bankruptcy notice.1 While Ms Chen has filed affidavits and submissions in support of her opposition, she did not appear at the hearing on 17 April 2023, apparently due to her residency in Dubai. Ms Chen did not apply to appear by AVL.

Background

[3] The following is largely taken from Lang J’s decision of 28 July 2022 declining Ms Chen’s application to set aside Westpac’s bankruptcy notice.

[4] Ms Chen and a Mr McKenzie were the shareholders in a company known as J & MWM Holdings Limited (the company). In December 2017, the company obtained a loan from Westpac to enable it to purchase a property in Millwater (the property). The loan was secured by way of mortgage over the property. The company was unable to meet the mortgage payments and fell into default.

[5] Ms Chen and Mr McKenzie had guaranteed the company’s obligations under the loan agreement. The agreement named them as principal debtors along with the company.

[6] Westpac did not take steps to exercise its power of sale under the mortgage. Instead, it withheld action whilst Ms Chen took steps to sell the property herself. After marketing the property for several months, she sold it in November 2020 for the sum of $1.17 million. After the net sale proceeds were applied against the loan, there was a shortfall of approximately $350,000.

[7] Westpac then sought summary judgment against Ms Chen and Mr McKenzie. Mr McKenzie ultimately came to an arrangement with Westpac whereas Ms Chen did

1 Westpac New Zealand Ltd v Chen [2022] NZHC 1834.

not. She took no steps to defend the summary judgment proceeding and summary judgment was entered against her on 10 August 2021 for the sum of $365,849.80.

[8]Ms Chen sought to have the bankruptcy notice set aside on the grounds:

(i)that the property was sold at an undervalue because of inappropriate pressure from Westpac;

(ii)that Westpac has unjustifiably refused to accept reasonable payment…

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 Westpac New Zealand Limited v Chen

Details

AGLC: Westpac New Zealand Limited v Chen [2023] NZHC 998
Case: [2023] NZHC 998
Decision Date: 1 May 2023

CaseChat Overview and Summary

Westpac New Zealand Limited applied for an order adjudicating Ms Chen bankrupt. Ms Chen opposed the application. The court considered whether the grounds for opposition were valid and whether it was just and equitable to make the order. The court found that Ms Chen's opposition was without merit. She did not dispute the basic requirements for adjudication were met. The court found that the reasons for opposing adjudication were based on assertions that were not supported by evidence. The court held that it was just and equitable to make the order as Ms Chen had failed to make any payments towards the debt and had no genuine intention to do so. The court made an order adjudicating Ms Chen bankrupt and ordered that the judgment creditor was entitled to costs.

The court found that Ms Chen's opposition to the application for adjudication was not supported by evidence. She claimed that Westpac had pressured her to sell the property at an undervalue and that Westpac had unfairly rejected her repayment proposals. However, the court found that there was no evidence to support these claims. The court also found that Westpac was not required to agree to repayment proposals and that Ms Chen had failed to make any payments towards the debt. The court held that it was just and equitable to make the order as Ms Chen had not made any genuine attempt to satisfy the judgment and had failed to recognise her obligation under the guarantee. The court made an order adjudicating Ms Chen bankrupt and ordered that the judgment creditor was entitled to costs.

Orders