Wu v Xing
[2023] NZHC 2409
•1 September 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-002432
[2023] NZHC 2409
BETWEEN XIAOQING WU and TOWER LAW LIMITED
Judgment CreditorsAND
ZHONG XING
Judgment Debtor
CIV-2022-404-002434 BETWEEN
ERYUN CAO and SAM C S NGU
Judgment CreditorsAND
ZHONG XING
Judgment Debtor
(cont. over page)
Hearing: 17 August 2023 Appearances:
R Parmenter for the Judgment Creditors Judgment Debtor in Person
Judgment:
1 September 2023
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 1 September 2023 at 10.30 a.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date.......................................
WU & Ors v XING [2023] NZHC 2409 [1 September 2023]
CIV-2022-404-002437
BETWEEN JICAI LI and FANG YU
Judgment Creditors
AND ZHONG XING
Judgment Debtor
CIV-2022-404-002439
BETWEEN NIKUL PANSILA and CHURTON HART
& DIVERS LIMITED
Judgment Creditors
AND ZHONG XING
Judgment Debtor
Introduction
The judgment creditors and Xing Zhong have been involved in litigation relating to a residential subdivision by Green Land Investment Ltd (Green Land) at Ormiston Road, East Tamaki, in Auckland. The principal proceeding (1511 proceeding) was the subject of a liability judgment on 4 August 20221 and a remedies judgment on 7 June 2023.2 The first to seventeenth and nineteenth plaintiffs claim that, pursuant to agreements for sale and purchase with Green Land, they each have an interest as either purchasers or their nominees in the subdivision. The eighteenth plaintiffs claim to have an interest in lots in the subdivision under a land swap agreement with Green Land. Mr Xing is the third defendant in the 1511 proceeding.
The judgment creditors in the 2437 proceeding are the first plaintiffs in the 1511 proceeding.3 Mr Xing was ordered to pay costs to them and the other plaintiffs when he unsuccessfully applied to vary the terms of an interim injunction given in that proceeding (injunction variation judgment).4
Li v Green Land Investment Ltd [2022] NZHC 1906.
Li v Green Land Investment Ltd [2023] NZHC 1399.
Jicai Li and Fang Yu.
Li v Green Land Investment Ltd [2022] NZHC 3321.
The judgment creditors in the 2432,5 2434,6 and 2439 proceedings,7 have agreements to purchase properties in the development from plaintiffs in the 1511 proceeding or their assignees. Those creditors lodged caveats to protect their interests. Mr Xing was ordered to pay costs when he applied unsuccessfully to remove the caveats (caveat judgment).8
Each judgment creditor issued a bankruptcy notice against Mr Xing based on the costs order in their favour. Mr Xing now applies to set aside those bankruptcy notices.
The principal issue in each case is whether Mr Xing has a genuine, triable cross-claim that is equal to or greater than the costs order.
Mr Xing says that in each case the bankruptcy notices should be set aside because:
(a)He will receive around $10 million in net proceeds from settlements ordered by Jagose J in the remedies judgment.
(b)He has a claim against the judgment creditors for damages that exceeds the costs sought under the bankruptcy notices.
(c)He warned the judgment creditors that he would seek indemnity costs from them if they acted on the bankruptcy notices.
Additionally, Mr Xing says that the bankruptcy notice served by the 2437 judgment creditor should be set aside because:
(a)He has applied to the Court of Appeal for leave to appeal the injunction variation judgment.
(b)He has applied for a stay of the injunction variation judgment.
Xiaoqing Wu and Tower Law Limited.
Eryun Cao and Sam Ngu.
Nikul Pansila and Churton Hart and Divers Ltd.
Zhong v Wu [2022] NZHC 3322.
(c)He has issued bankruptcy notices and liquidation proceedings against the judgment creditors based on claims that exceed the costs orders.
Further, that the bankruptcy notices served by the 2432, 2434 and 2439 judgment creditors should be set aside because:
(a)He has appealed the caveat judgment.
(b)He has applied for a stay of the caveat proceedings.
Factual and procedural background
The background to the dispute between the parties is set out in considerable detail in the liability judgment of Jagose J. Venning J summarised this background in the injunction variation judgment:9
[12] In short, the substantive proceeding relates to a residential subdivision by Green Land Investment Limited (Green Land) of property situated in Ormiston Road, East Tamaki, in Auckland. The part of the subdivision relevant to the proceeding and affected by the judgment comprises 22 lots. In their statement of claim the first to seventeenth and nineteenth plaintiffs claimed that, pursuant to unconditional agreements for sale and purchase with Green Land they each have an interest as either purchasers themselves or as nominees of purchasers in specified lots in the subdivision. The eighteenth plaintiffs are interested in three lots which they say Green Land was to transfer to them in exchange for their transfer of a driveway at 443 Ormiston Road to Green Land.
[13] On 25 September 2020, the ANZ Bank New Zealand Limited (ANZ) registered a mortgage over, inter alia, the lots in the Green Land subdivision which the plaintiffs had entered into agreements to purchase. On 16 July 2021, ANZ transferred its interests under the mortgage to Mr Xing.
[14] As Jagose J noted in his judgment, the plaintiffs alleged Green Land “schemed” to avoid settling the titles on the plaintiffs, first by capitulating to caveats lodged over various of the titles by a third party, Yutian Li, and second, by contriving mortgagee sales of the land to Mr Xing and the fourth and fifth defendants, and through them, to the sixth to eighth defendants.
[15] The plaintiffs sought, in essence, specific performance of the agreements for sale and purchase (or in relation to the eighteenth plaintiffs, the agreement to transfer land) with Green Land or damages in lieu. The plaintiffs relied on the validity of the agreements underlying the mortgagee sales and good faith in the relationship.
Li v Green Land Investment Ltd [2022] NZHC 3321.
When the proceeding was commenced in July 2021, the plaintiffs obtained an urgent without notice interim injunction. The injunction prevented the Registrar‑General of Land from registering a transfer of the ANZ Bank Limited (ANZ) mortgage to Mr Xing or transfers by Mr Xing connected to that mortgage.10
On 15 February 2022, Davison J varied the interim injunction to allow registration of the transfer of the ANZ mortgage to Mr Xing, and to exclude eight titles from any restrictions under the interim injunction.11 The plaintiffs did not claim to have any interest in these eight titles.
The substantive trial took place in March 2022 before Jagose J. In the liability judgment delivered on 4 August 2022, Jagose J held that the purported mortgagee sales of each of the plaintiffs’ lots were void and that Green Land remained liable under the agreements with the plaintiffs.12 His Honour said that he was inclined to order specific performance but reserved the question of relief.13 He continued the interim injunction as varied by Davison J pending his ultimate determination of the proceedings.14
Mr Xing appealed the liability judgment to the Court of Appeal on 1 September 2022. That appeal is undecided. Mr Xing also applied for an order staying enforcement of the judgment.
Meanwhile on 19 August 2022, Jagose J extended the scope of the interim injunction. His Honour did so on a without notice application by the plaintiffs.15
On 30 August 2022, Mr Xing applied to vary the interim injunction. He sought orders that he be free to exercise any power of sale under the mortgage that had been transferred from ANZ or under any mortgage in his favour in the subdivision. In a judgment delivered on 9 December 2022, Venning J dismissed Mr Xing’s application to
Li v Green Land Investment Ltd [2023] NZHC 1399 at [3].
Li v Green Land Investment Ltd [2022] NZHC 187.
Li v Green Land Investment Ltd [2022] NZHC 1906 at [61].
At [67] and [71].
At [74].
Li v Green Land Investment Ltd HC Auckland CIV-2021-404-1511, 23 August 2022 (Minute of Jagose
J) at [9].
vary the injunction.16 He ordered Mr Xing to pay the plaintiffs’ costs on a 2B basis and disbursements.
Mr Xing applied for orders to remove caveats on the titles of properties in the subdivision lodged by the judgment creditors in the 2432, 2434 and 2439 proceedings. The judgment creditors claimed to have beneficial interests sufficient to support the caveats pursuant to agreements for sale and purchase with vendors who in turn had prior agreements with Green Land. On 9 December 2022, Venning J dismissed Mr Xing’s application to remove the caveats.17 He ordered Mr Xing to pay each caveator’s costs on a 2B basis, plus disbursements as fixed by the Registrar.
On 16 November 2022, Mr Xing applied for an order requiring “all plaintiffs to provide security of injunction of say 5 million”. Campbell J heard that application on 21 March 2023. His Honour treated it as an application for an order that the plaintiffs provide security to support their undertakings as to damages that they had given when applying for the interim injunction. Campbell J dismissed Mr Xing’s application in a judgment dated 23 March 2023.18
On 1 May 2023 there was a hearing before Jagose J to determine remedies following the liability judgment. His Honour delivered the remedies judgment on 7 June 2023.19
The sealed orders include that:
(a)The notices of default under the Property Law Act 2007 (the PLA) issued by Mr Xing and the fourth defendant Mr Zhao are invalid and ineffective.
(b)Mr Xing’s purported exercise of a mortgagee’s power of sale to Xing Enterprises was unlawful, invalid, and ineffective.
Li v Green Land Investment Ltd [2022] NZHC 3321.
Zhong v Wu [2022] NZHC 3322.
Li v Green Land Investment Ltd [2023] NZHC 595.
Li v Green Land Investment Ltd [2023] NZHC 1399.
(c)The Registrar-General is to reject the transfers from Mr Xing to Xing Enterprises.
(d)The fifth to eighth defendants (which include Xing Enterprises) are declared to have no interest in the properties claimed by the plaintiffs in priority to the plaintiffs.
(e)The caveat lodged by Xing Enterprises is removed.
(f)Green Land is to specifically perform the agreements for sale and purchase it has with the first to seventeenth and nineteenth plaintiffs including paying penalty interest.
(g)Plaintiffs who have occupied land will pay Green Land damages for trespass to land until settlement of their purchases.
(h)Green Land is to hold the net settlement moneys in a solicitor’s stakeholder account pending further order of the Court.
(i)Mr Xing, and where required Mr Zhao, is to on demand and without payment in reduction of mortgage debt, provide a partial discharge of mortgage to enable Green Land to pass title to the plaintiffs.
(j)Green Land is to specifically perform its agreement with the eighteenth plaintiffs, the mortgage over their titles is immediately discharged, and title immediately passes to them.
(k)Mr Xing’s transfers to Liyun Chen in purported exercise of a power of sale are invalid and ineffective and the funds he received are a partial payment by Green Land to Mr Xing of the amounts he paid to ANZ for the mortgages.
(l)The sixteenth plaintiffs have leave to seek orders for damages against Green Land and/or Mr Xing if they cannot receive title.
Mr Xing appealed the remedies judgment to the Court of Appeal on 9 June 2023.
On 7 August 2023, Campbell J heard several applications made by Mr Xing, including an application for an order staying the injunction variation judgment; an application for leave to appeal his judgment of 23 March 2023; and an application for an order staying enforcement of the remedies judgment. In a judgment dated 8 August 2023 his Honour recorded that Mr Xing had withdrawn the first two applications at the hearing.20 His Honour declined to stay execution of the remedies judgment in respect of the eighteenth plaintiffs’ entitlements.21 As to the other plaintiffs, he agreed with Mr Parmenter’s suggestion that a stay of execution be given conditional on Mr Xing progressing his two appeals without delay. He observed that to date, Mr Xing appears to have used the appeals as delaying measures.
In terms of those appeals, Mr Xing’s application for an order dispensing with the requirement to pay security for costs for his appeal against the liability judgment was declined by the Deputy Registrar on 29 November 2022. An application for review of that decision was declined by Gilbert J on 14 February 2023.22 An application for leave to appeal to the Supreme Court was dismissed on 19 June 2023.23 Security for costs remains unpaid.24 On 23 August 2023 the Court of Appeal dismissed Mr Xing’s application to stay his own appeal of the liability judgment.25
Security for costs on Mr Xing’s application to appeal the remedies judgment set at $21,180 was payable by 10 July 2023. It has not been paid, nor has an application for dispensation been filed.26
Legal principles
Section 17 of the Insolvency Act 2006 (the Act) provides that a debtor commits an act of bankruptcy when they fail to comply with the requirements of a bankruptcy
Li v Green Land Investment Ltd [2023] NZHC 2098 at [19].
At [42].
Zhong v Li [2023] NZCA 18.
Xing v Yu [2023] NZSC 68.
Xing v Yu [2023] NZCA 382 at [2].
At [7].
At [3].
notice served on them by a creditor within 10 working days after the date of service of that notice (if served in New Zealand).
Rule 24.10 of the High Court Rules 2016 extends the time for compliance until an application to set aside the bankruptcy notice has been determined, where a valid application has been made within the 10 working day limit.27
To have the bankruptcy notice set aside, the debtor must satisfy the Court that they have a genuine, triable cross-claim (a counterclaim, set-off or cross-demand) that is equal to or greater than the judgment debt or amount the debtor has been ordered to pay, and could not have been used as a defence in the action in which the relevant judgment was given.28
The Court of Appeal approved this test in Sharma v ANZ Banking Group (NZ)Ltd,29 and reaffirmed it in Robertson v ASB Bank Ltd,30 with a slight qualification stating that “the better approach is to consider objectively whether it can be said a genuine ‘triable’ cross claim exists on the facts as they now stand”.31
The Court in Robertson held:32
(a)the onus is on the debtor to show that they have a genuine triable cross‑claim;
(b)the debtor must show a genuine triable claim in terms of both liability and quantum;
(c)not only the existence of a cross-claim must be established, but also that it is equal to or greater than the judgment debt, and could not have been used as a defence in the proceeding of which the judgment was entered;
High Court Rules 2016 at r 24.10 and sch 1(B2).
Insolvency Act 2006, s 17(7); and Clark v UDC Finance Ltd [1985] 2 NZLR 636 (HC) at 637.
Sharma v ANZ Banking Group (NZ) Ltd (1992) 6 PRNZ 386 at 389.
Robertson v ASB Bank Ltd [2014] NZCA 597 at [19].
At [26]–[27].
At [22] and [32].
(d)the summary nature of the procedure is wholly unsuitable for the determination of disputed questions of fact; and
(e)the Court need not accept uncritically, evidence that is inherently lacking in credibility, for example where it is inconsistent with contemporary documents, or inherently improbable.
A judgment debtor whose defence has been rejected by the court, or who has failed to raise a defence which might have been available to them, cannot deploy the failure of that defence as a cross-claim in opposition to a bankruptcy notice later issued by the judgment creditor.33 The right place for the debtor to raise the defence is by way of appeal against the judgment (or possibly, depending on the circumstances, by application for a re-hearing).34
If the debtor relies on claims in the bankruptcy proceeding that are essentially the same as those that were rejected by the court in the proceeding on which the bankruptcy notice is based, res judicata and issue estoppel may arise.35
I will now address each of the reasons advanced by Mr Xing for why the bankruptcy notices should be set aside.
He will receive around $10 million in net proceeds from settlements
Mr Xing submits that when Green Land performs the agreements for sale and purchase with the plaintiffs according to the orders of Jagose J, he will receive around
$10 million of the proceeds. And that for this reason the bankruptcy notices issued by the judgment creditors should be set aside.
I reject this submission. The agreements are between the plaintiffs as purchasers and Green Land as vendor. Green Land is the party that will receive the settlement funds. Green Land is then required to hold the net settlement funds, after paying sale-related costs, in a solicitor’s trust account to meet any claims from parties who paid in full for
Jessica Gorman (ed) McGechan on Procedure (online ed, Thomson Reuters) at [HR24.10.03].
Aluminium Plus Wellington Ltd (in liq) v Shaw [2017] NZHC 2607 at [58].
Maori Trustee v Hill [2017] NZHC 2377 at [17], citing MinterEllisonRuddWatts v Hampton [2017] NZHC 1715.
properties purchased from defendants in the 1511 proceeding whose purchases have been declared invalid. Therefore, Mr Xing’s assertion that he personally will receive
$10 million when the sale and purchase agreements settle is wrong.
He has a claim against the judgment creditors for damages that exceeds the costs orders
In October 2022, Mr Xing commenced proceedings against the 18 plaintiffs in the 1511 proceeding (including the 2437 judgment creditor), the 2432, 2434 and 2439 judgment creditors, Mr Parmenter, and his instructing solicitors, Carson Fox.
Mr Xing’s statement of claim dated 28 October 2023 is attached to his affidavits filed in support of his applications. The statement of claim is a series of assertions and is difficult to follow. I gave Mr Xing the opportunity to explain the basis for his claim at the hearing, but he was unable to assist.36
The first part of Mr Xing’s claim is:
1. The transfer from ANZ's mortgage to plaintiff had been injuncted by 1-17th defendants at 28.7.2021 and by 18th defendant as a party in October 2021.2. The transfer from ANZ's mortgage to plaintiff that injuncted by 1-18th defendants been determined by Justice Davison at 15.2.2022 under CIV 2021-404-1511 that the transfer from ANZ's mortgage to Plaintiff to be free from any restrictions.
3. Due to the injunction by 1-18th defendants of the transfer from ANZ bank's mortgage to plaintiff, the LINZ can only update the transfer say 20.2.2022 instead of say 15.8.2021.
4. Due to the injunction by 1-18th defendants, plaintiff only can rely on the Property law act notices that prepared by Mr Zhao in 2021.
5. If the injunction not imposed by 1-18th defendants, the transfer from ANZ’s mortgage to plaintiff should be able to be completed by LINZ by mid-August 2021 and the new and updated property law act notice by plaintiff should be able to be served to Green land investment (GIL) Limited and defendants that over-right the Zhao’s PLA notices that later determined by this Court to be defective under CIV 2021-404-1511.
From what I can discern, Mr Xing complains that the original interim injunction prevented registration of the ANZ mortgage transfer to him and therefore prevented him from issuing a PLA notice pursuant to that mortgage. Consequently, he was required to
Through an interpreter, Mr Chang.
rely on the two PLA notices issued by Mr Zhao (the fourth defendant who did not participate in the 1511 proceeding) which were found to be defective by Jagose J.
This claim is substantially a re-run of his August 2022 application to vary the interim injunction. On 11 March 2022, Mr Xing had purported to issue a PLA notice to Green Land pursuant to his rights as mortgagee under the novated ANZ mortgage. The notice had expired unremedied and Mr Xing asked for the injunction to be lifted so that he could proceed with the mortgagee sales. In dismissing that application, Venning J discussed the problems Mr Xing faces by attempting to rely on the novated ANZ mortgage:
[36] The short point is that at the present time the Court does not have sufficient admissible evidence before it to support Mr Xing’s argument that a proper and effective PLA notice has been served and has expired unremedied. To the extent Mr Xing’s application relies on the 11 March 2022 PLA notice it cannot succeed.
[37] Further, the practical position is this, however unsatisfactory the position may be from Mr Xing’s point of view, pending any stay of Jagose J’s judgment, Green Land and Mr Xing remain bound by the agreements with the first to the seventeenth and the nineteenth plaintiffs (Mr Parmenter’s clients) and the eighteenth plaintiffs.
[38] To the extent Mr Xing seeks to rely on his rights under the ANZ mortgage and seeks leave to vary the injunction to allow him to issue fresh PLA notices, in the present circumstances and at this point in time the Court would not be minded to exercise its discretion to lift the present injunction to enable Mr Xing to exercise the powers of sale under the ANZ mortgage. To do so would effectively frustrate and determine the parties’ rights which are currently for substantive resolution before the Court of Appeal and this Court. It would render the plaintiffs’ cross-appeal and potential relief indicated by Jagose J nugatory.
[39] To the extent Mr Xing relies on his rights under the ANZ mortgage, it remains a live issue before the Court of Appeal, whether and to what extent, Mr Xing can rely on the novated ANZ mortgage. In their statement of claim the plaintiffs pleaded:
16.The novation of ANZ’s rights and obligations:
a. Novated the ANZ mortgage over, inter alia, all the plaintiffs’ properties.
b. Was to Xing and not to Zhao — particulars: cov. 2.1(a), for example, provides: “ANZ assigns absolutely to [Xing] all its right, title and interest in the Novated Property and [Xing] agrees to accept the novated property.”
c. Contained, at cov.2.5(d)(ii), this acknowledgement by Xing: it is aware of the existence of the existing interests registered in respect of the property described and comprised in records of title
set out in Schedule 1 as at the Settlement Date (including, without limitation, the existence of mortgages, caveats and a LINZ departmental dealing).
d.Contained, at cov.7, this acknowledgement by Xing:
ZX acknowledges that any pre-sale agreements entered into before the date of this deed in respect of a Property are legally binding on him.
17.As at the date of the novation, 16 July 2021:
a. All of the pre-sale agreements on which the purchasing plaintiffs rely were in existence;
b. All of the purchasing plaintiffs had lodged, at least, one caveat protecting their interests in respect of the purchasing plaintiffs’ properties.
[40] In his statement of defence, Mr Xing admitted paras [16] and [17] of the plaintiffs’ statement of claim so it is at least arguable, that to the extent Mr Xing seeks to rely on default under the ANZ mortgage that he should cede priority to the plaintiffs’ interests in the land.
[41] Mr Xing relies on s 178(2), Property Law Act 2007. However, the mortgagee’s rights under that provision are premised on the basis the mortgagee has the right to sell the property. That is very much still in issue in the present case.
The second part of Mr Xing’s claim appears to be that the interim injunction, before variation by Davison J, prevented Mr Zhao from selling the eight sections not claimed by the plaintiffs. At para [8] of his statement of claim, Mr Xing states:
8. The agreements between Zhao and 8 unclaimed lots’ purchasers can be settled at 28.7.2021 as 1-18th defendants had no claim on these properties if 25th and 26th defendant done appropriate customer due diligence under clause 5 AML/CFT guideline 2018.
9. Unfortunately, due to the delays that caused by the injunction from 1-18th defendants on these 8 unclaimed lots, the purchasers withdraw from the purchase as per details in the paragraph 5.6 of "Affidavit of Xing Zhong in support of on notice interlocutory application to vary injunction dated 8.12.2021 under CIV-2021-404-1511.
This would seem to be a claim for Mr Zhao to bring, not Mr Xing. In any event, I cannot see any merit in it. Mr Zhao purported to sell the eight lots in May 2021 pursuant to a mortgage securing Green Land’s repayment of a loan from him, recorded in two deeds of acknowledgement.37 Mr Zhao issued a PLA notice in relation to all 22 lots in
Li v Green Land Investment Ltd [2022] NZHC 1906 at [7]–[34].
the subdivision in April 2021. He issued a second notice on 21 May 2021. But Jagose J rejected Mr Zhao’s claim to a mortgage interest in all but five lots in the subdivision. The five lots over which Mr Zhao was held to have a mortgage interest are listed at para [22] of the liability judgment.38 They do not include any of the eight lots sold by Mr Zhao in May 2021.39
The balance of the statement of claim is difficult to follow. Mr Xing appears to repeat complaints about the injunction preventing him from exercising mortgagee powers of sale over the claimed lots. He also appears to claim that he has cancelled Green Land’s sale and purchase agreements with the plaintiffs under s 178(2) of the PLA. These claims are fundamentally flawed as they ignore the effect of the liability judgment which requires Green Land to specifically perform the contracts with the plaintiffs. The Court has rejected these claims already.40
The onus is on Mr Xing to establish that he has a genuine, triable cross‑claim against each of the judgment creditors for amounts that exceed the costs orders claimed through the bankruptcy notices. I am far from persuaded that this statement of claim amounts to a genuine triable cross-claim.
He warned the judgment creditors he would seek indemnity costs
This argument is misconceived. Mr Xing is only entitled to costs against the judgment creditors if he satisfies the Court that the bankruptcy notices should be set aside. That is the matter being decided. The fact that he has warned the judgment creditors that he will seek indemnity costs if his application is successful is irrelevant.
I turn now to the grounds advanced specific to the bankruptcy notice served by the 2437 judgment creditor.
38 Lots 93, 94, 95, 96 and 132.
39 Lots 50, 107, 111, 116, 114, 130, 131 and 137.
40 Li v Green Land Investment Ltd [2022] NZHC 3321; Li v Green Land Investment Ltd HC Auckland CIV-2021-404-1511, 23 August 2022 (Minute of Jagose J); and Li v Green Land Investment Ltd [2023] NZHC 595
He has applied to the Court of Appeal for leave to appeal the injunction variation judgment
Mr Xing first applied to this Court for leave to appeal the injunction variation judgment. Venning J dismissed that application on 22 February 2023, saying:41
[6] In this case all relevant factors point heavily against the grant of leave. Mr Xing’s challenge to the judgment is a series of rambling points. It is difficult to discern a particular arguable error of law or fact arising from his papers, particularly bearing in mind the need for evidence before the Court to be admissible before it can support a submission. Mr Xing’s points are largely a series of assertions.
[7] The effect of the decision to decline to vary the interim injunction is not of general or public importance, nor is it of sufficient importance to Mr Xing bearing in mind that there is to be a further hearing to conclude the substantive proceeding before Jagose J on 1 May 2023.
[8] The Court is satisfied that the interests of justice do not support the grant of leave.
Mr Xing says that he has since applied to the Court of Appeal to appeal the injunction variation judgment.42
Mr Xing’s application to the Court of Appeal for leave to appeal does not constitute a ground to set aside the bankruptcy notice. Such an application is not a cross-claim against the judgment creditors in terms of s 17(7) of the Act. Rather, it is an application that has the potential to allow an appeal of the judgment that gave rise to the judgment debt (the costs order).
Mr Xing is effectively asking to stay the bankruptcy notice pending the outcome of his application for leave to appeal and then, if successful in obtaining leave, the appeal. The Court does not have jurisdiction under s 17 of the Act to stay a bankruptcy notice based on a potential appeal of the judgment that gave rise to the debt. The Court has jurisdiction to ‘halt’ a creditor’s application for adjudication if there is an unresolved appeal by the debtor of the judgment that gave rise to the judgment debt.43 But we are not at that point in the process now.
Li v Green Land Investment Limited [2023] NZHC 261.
CA116/2023
Insolvency Act 2006, s 42.
He has applied for a stay of the injunction variation judgment
Nor does this application represent a cross-claim against the judgment creditor. As noted earlier, Mr Xing withdrew this application at the hearing before Campbell J on 7 August 2023.44
He has issued bankruptcy notices and liquidation proceedings based on claims that exceed the costs orders
Mr Xing claims that he has issued 10 bankruptcy notices and two liquidation proceedings against 12 judgment creditors, claiming $500,000. He attaches the bankruptcy notices and notices of proceeding for company liquidation to his affidavit in support. Only one of these is potentially relevant: the bankruptcy notice issued against Fang Yu, one of the 2437 judgment creditors.
The 2437 judgment creditor successfully had this bankruptcy notice set aside on 26 May 2023 in a judgment delivered by Associate Judge Lester because it was a nullity.45
Incidentally, the other bankruptcy notices issued by Mr Xing have been set aside for the same reason;46 as have his applications for liquidation orders.47
Turning then to the grounds advanced that are specific to the bankruptcy notices served by the 2432, 2434 and 2439 judgment creditors.
He has appealed the caveat judgment
This argument does not present a reason for the bankruptcy notices to be set aside.
Mr Xing’s appeal has expired and was deemed abandoned on 9 May 2023.48
Mr Parmenter advises that Mr Xing has applied for an extension of time to pay security costs for the appeal. The judgment creditors oppose the extension. Even if
44 Li v Green Land Investment Ltd [2023] NZHC 2098 at [19].
45 Xing v Wang [2023] NZHC 1273 as applied in Xing v Yu [2023] NZHC 1291.
46 Xing v Zhou [2023] NZHC 1296; Xing v Zhao [2023] NZHC 1295; Xing v Zheng [2023] NZHC 1298; Xing v Lin [2023] NZHC 1300; Xing v Chen [2023] 1308; Xing v Zeng [2023] NZHC 1306; Xing v Ding [2023] NZHC 1292; and Xing v Wu [2023] NZHC 1311.
47 Xing v WMW Trustees Ltd [2023] NZHC 1332.
48 Notice of Result CA68/2023 9 May 2023.
Mr Xing is given an extension of time to pursue his appeal, the appeal does not represent a cross-claim against these judgment creditors. I refer to the reasons given above at para [48].
He has applied for a stay of the caveat proceedings
This ground fails because on 9 March 2023 Venning J dismissed Mr Xing’s application for a stay of the proceedings. 49 The Judge confirmed that, subject to Mr Xing’s right of appeal, the proceedings were at an end with the Court’s determination that there was an arguable caveatable interest.
In a Minute dated 16 March 2023, Venning J recorded that Mr Xing had filed a memorandum complaining that in his judgment he had forgotten to “stay the costs matters” in the caveat judgment. Mr Xing stated that he “would like to stay the costs issues of above matters until the appeal at Court of Appeal under CA68/2023 to be fully determined”.
Venning J said:
[4] As counsel for the respondent points out in his memorandum in response, Mr Zhong is under a misapprehension. The judgment of 9 March 2023 dealt with Mr Zhong’s application for stay of proceedings. A stay of execution of the costs order is of quite a different nature.
[5] Mr Zhong is entitled to represent himself, but he must comply with the Rules. If he wishes to pursue an application for stay of the execution of the costs award a formal application (with filing fee) is required: r 12 Court of Appeal (Civil) Rules 2005.
[6] The Registrar is directed not to receive any more memoranda from Mr Zhong on these files. If Mr Zhong files a proper formal application with the required filing fee the application can be referred to me to be dealt with on the papers.
Mr Xing did not contend that he had applied for a stay of execution of the costs order or refer the Court to any such application.
Therefore, there is no merit in this ground for setting aside the bankruptcy notices.
Zhong v Wu [2023] NZHC 439.
Result
Mr Xing’s applications to set aside the bankruptcy notices are dismissed.
If the bankruptcy notices remain unmet at the end of today, Mr Xing will have committed acts of bankruptcy in each case entitling each judgment creditor to file proceedings to have him adjudicated bankrupt.
Mr Parmenter has requested a “main” costs order on the 2432 proceeding which deals with the steps which were shared among the four applications, on a 2B basis. He requests 2A costs on the three other applications for filing the notices of opposition and sealing the judgments only. That approach seems reasonable.
Therefore, I order Mr Xing to pay:
(a)the judgment creditor in the 2432 proceeding costs on a 2B basis of
$8,484.50 and disbursements of $871 .67; and
(b)the judgment creditors in the 2434, 2439 and 2437 proceedings costs on a 2A basis of $1,195.00 and disbursements of $160.00.
Associate Judge Gardiner
Solicitors:
Carson Fox Bradley Ltd, Auckland R O Parmenter, Auckland
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