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Zhang v Official Assignee

Zhang v Official Assignee

Case [2022] NZHC 3052 22 November 2022

Breach of Contract

Causation

Unconscionable Conduct

Deficiency in the bankruptcy

Unpaid Costs

Statutory Interpretation

Insolvency Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-001367

[2022] NZHC 3052

BETWEEN
YINGQIU ZHANG

Applicant

AND

OFFICIAL ASSIGNEE

First Respondent

WESTPAC NEW ZEALAND LIMITED

Second Respondent

Hearing: 11 November 2022

Appearances:

Applicant in Person

C T Jones for the Official Assignee
L Harrison for the Second Respondent

Judgment:

22 November 2022

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 22 November 2022 at 3.00 p.m. pursuant to Rule 11.5 of the High Court Rules.

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

Solicitors:

Simpson Grierson, Auckland

Insolvency & Trustee Service, Auckland

ZHANG v OFFICIAL ASSIGNEE & Anor [2022] NZHC 3052 [22 November 2022]

Introduction

[1] The applicant, Yingqiu Zhang, applies for early discharge from bankruptcy under s 294 of the Insolvency Act 2006 (the Act).

[2] Under the Act, a bankrupt is entitled to automatic discharge from bankruptcy three years after they file their statement of affairs.1 Ms Zhang has been bankrupt for three years and six weeks, but because she only filed her statement of affairs on 4 August 2022, she is not entitled to an automatic discharge until 4 August 2025.

[3] The second respondent, Westpac New Zealand Limited (Westpac), opposes Ms Zhang’s application for early discharge.

[4] The Official Assignee has filed a report pursuant to s 296 of the Act, indicating that it considers it appropriate that the Court declines to exercise its discretion to discharge Ms Zhang.

[5] The essential question for this Court is whether Ms Zhang has established a good reason for her early discharge from bankruptcy.

Legal principles

[6] Under the Insolvency Act 1967, bankrupts were discharged from bankruptcy "upon the expiration of 3 years from the date of adjudication" unless the Court ordered that they be discharged sooner, or an objection to discharge was filed.2

[7] Discharge did not, therefore, depend on the filing of a statement of affairs and, if a bankrupt failed to do so, the Official Assignee's remedy was to object to discharge. This necessitated summoning the bankrupt for public examination on expiry of the three-year period.3

1      Insolvency Act 2006, ss 67 and 290.
2      Insolvency Act 1967, s 107(1) and (3).
3      Insolvency Act 1967, s 109(1).

[8] The provision in the 2006 Act stating that the three-year period for automatic discharge only starts running once a statement of affairs is filed was introduced to incentivise bankrupts to file a statement of affairs promptly.4

[9]The obligation to file a statement of affairs is found in s 67 of the Act:

67 Bankrupt must file statement of affairs with Assignee

(1) After adjudication, the bankrupt must file with the Assignee a statement of the bankrupt’s affairs in the prescribed form, unless the bankrupt has already filed a statement under section 46.

(2) The Assignee may reject a statement of affairs that in the Assignee’s opinion is incorrect or incomplete.

[10]Section 290 provides for automatic discharge after three years:

290 Automatic discharge 3 years after…

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 Zhang v Official Assignee

Details

AGLC: Zhang v Official Assignee [2022] NZHC 3052
Case: [2022] NZHC 3052
Decision Date: 22 November 2022

CaseChat Overview and Summary

Yingqiu Zhang applied for early discharge from bankruptcy under the Insolvency Act 2006. Ms Zhang had been bankrupt for three years and six weeks but did not file her statement of affairs until 4 August 2022, meaning she was not eligible for automatic discharge until 4 August 2025. Westpac New Zealand Limited opposed the application. The Official Assignee filed a report indicating it was appropriate for the Court to decline Ms Zhang’s application. The primary issue before the Court was whether Ms Zhang had established good cause for her early discharge from bankruptcy. Ms Zhang argued she had been living the lifestyle of a bankrupt for three years, had been monitored by the Official Assignee for three years, and had not been objected to by the Official Assignee. Westpac and the Official Assignee argued that Ms Zhang had not accepted responsibility for her bankruptcy, had incurred additional debts to Westpac through costs awards, had delayed filing her statement of affairs for her own benefit, and had not advertised her application as required. The Court found that Ms Zhang deliberately disregarded her legal obligations and had no good reason for her delay in filing her statement of affairs. The Court dismissed Ms Zhang’s application for early discharge and ordered that she could not apply again for discharge until one year had expired. Ms Zhang was ordered to pay Westpac’s costs on a 2B basis, and reasonable disbursements as fixed by the Registrar.

Orders