Xing v WMW Trustees Limited - [2023] NZHC 1332

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-002405

[2023] NZHC 1332

BETWEEN
ZHONG XING

Plaintiff

AND

WMW TRUSTEES LIMITED

Defendant

CIV-2022-404-002406

BETWEEN

ZHONG XING
Plaintiff

AND

LOVE HOMES LIMITED

Defendant

Hearing: 11 May 2023

Appearances:

Plaintiff in Person

R O Parmener for the Defendant

Judgment:

31 May 2023

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 31 May 2023 at 4.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

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

Solicitors:

Carson Fox Bradley Ltd, Auckland R O Parmenter, Auckland

XING v WMW TRUSTEES LTD [2023] NZHC 1332 [31 May 2023]

[1] WMW Trustees Limited (WMW) and Love Homes Limited (Love Homes) apply to restrain advertising of liquidation proceedings brought against them by Zhong Xing (Mr Xing), and to stay the proceedings.

[2] Mr Xing brings separate, identical liquidation proceedings against WMW and Love Homes on the basis that the companies are presumed to be insolvent having failed to pay a debt demanded in statutory demands served on them on 25 November 2022.1

[3] WMW and Love Homes defend the liquidation proceedings,2 and apply to restrain advertising of and to stay the proceedings on identical grounds.3

[4]Those grounds are that:

(a)they are not indebted to Mr Xing; and

(b)no statutory demand was served on them before the liquidation proceedings were issued.

Legal principles

[5] The Court has the power under r 31.11 and its inherent jurisdiction to stay liquidation proceedings and restrain advertising.4 The relevant principles are:5

(a)The Court has an inherent jurisdiction to stay liquidation proceedings where there is a genuine dispute about the debt.

(b)The inherent jurisdiction is to prevent an abuse of process.

(c)The governing consideration is whether the proceedings suggest unfairness or undue pressure.

1      Statements of claim dated 19 December 2022.
2      Statements of defence dated 10 January 2023.
3      Interlocutory applications filed by WMW and Love Homes dated 10 January 2023.
4      High Court Rules 2016, r 31.11.
5      Nemesis Holdings Ltd v North Harbour Industrial Holdings Ltd (1989) 1 PRNZ 379 (HC); and
Taxi Trucks Ltd v Nicholson [1989] 2 NZLR 297, (1989) 1 PRNZ 390 (CA).

(d)The onus is on the applicant to establish a strong prima facie case of the existence of a genuine dispute on substantial grounds, or that there are clear and persuasive grounds for a stay.

The judgment debt relied on by Mr Xing

[6] WMW, Love Homes and 17 others were purchasers of sections from a company called Green Land Investments Ltd (Green Land). A liability judgment, essentially in favour of the purchasers’ claim for specific performance of the sale and purchase agreements, was delivered on 4 August 2022.6 That judgment sets out the detailed history between Green Land, Mr Xing, the defendants, and the other purchasers.

[7] Green Land raised a counterclaim relating to the fact that some of the purchasers had, even though they had not settled,…

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: [2023] NZHC 1332
Decision Date: 31 May 2023

CaseChat Overview and Summary

Zhong Xing commenced liquidation proceedings against WMW Trustees Limited and Love Homes Limited. The basis for these proceedings was that the defendants had failed to respond to statutory demands issued by Mr Xing, which he claimed were in respect of a debt that was due. WMW and Love Homes applied to the High Court of New Zealand to stay these proceedings and restrain Mr Xing from advertising them. The defendants argued that there was no debt owed by them to Mr Xing and that the statutory demands did not comply with the requirements of the Companies Act 1993. The court found in favour of the defendants on both grounds. There was no final order in the earlier proceedings for the defendants to pay any sum of money to Green Land Investments Ltd, which was the party who could have made the claim against the defendants. Any order made in the future would be in favour of Green Land, not Mr Xing, and so Mr Xing had no standing to bring the current proceedings. Further, the statutory demands did not comply with the requirements of the Companies Act, as they were not in respect of a debt that was due when they were issued and were not served in the correct manner. The court stayed the proceedings and restrained Mr Xing from advertising them. The court also ordered that the proceedings be struck out if Mr Xing did not file amended statements of claim and evidence with an alternative basis for the proceedings within 10 working days. The defendants were awarded costs on a scale basis.

Orders