Zhang v Westpac New Zealand Ltd
[2019] NZHC 2797
•1 November 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2018-404-001042
[2019] NZHC 2797
UNDER Part 12 of the High Court Rules 2016 IN THE MATTER
of an application for summary judgment
BETWEEN
YINGQIU ZHANG
Applicant
AND
WESTPAC NEW ZEALAND LIMITED
Respondent
CIV-2018-404-002589 UNDER
the Insolvency Act 2006
IN THE MATTER
of the bankruptcy of YINGQIU ZHANG
BETWEEN
WESTPAC NEW ZEALAND LIMITED
Judgment Creditor
AND
YINGQIU ZHANG
Judgment Debtor
Hearing: 8 October 2019 and 30 October 2019 Appearances:
J S Learner and L B Harrison for Respondent/Judgment Creditor Applicant/Judgment Debtor in person
A R Govind for Auckland Council (on 8 October 2019 only)
Lin Li (on 8 October 2019) and Lori Liang (on 30 October 2019) (Interpreters for Applicant/Judgment Debtor)
Judgment:
1 November 2019
JUDGMENT OF ASSOCIATE JUDGE PAULSEN
ZHANG v WESTPAC NEW ZEALAND LTD [2019] NZHC 2797 [1 November 2019]
This judgment was delivered by me at 12.00 pm on 1 November 2019 pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Introduction
[1] On 25 September 2019, I issued a judgment in these two proceedings (the judgment) and made orders:
CIV-2018-404-1042
(a)dismissing Mrs Zhang’s application to set aside Westpac New Zealand Ltd’s (Westpac) summary judgment;
(b)dismissing Mrs Zhang’s application for discovery against
Westpac and non-parties;
CIV-2018-404-2589
(c)dismissing Mrs Zhang’s application to set aside Westpac’s
bankruptcy notice;
(d)adjudicating Mrs Zhang bankrupt on Westpac’s creditor’s
application; and
In both proceedings
(e)awarding costs to Westpac and the Auckland Council (as a supporting creditor).
[2]Mrs Zhang has now filed several applications seeking:
(a)leave to appeal the dismissal of her application to set aside Westpac’s
summary judgment;
(b)an order suspending her adjudication; and
(c)a transcript of the hearing of 13 September 2019.
[3] Mrs Zhang also sought leave to appeal the adjudication order but does not require leave to do so. Following the hearing on 8 October 2019, I was advised that Mrs Zhang had filed an appeal to the Court of Appeal from the adjudication order.
Considering that development, I reconvened the hearing on 30 October 2019 to give Mrs Zhang an opportunity to make further submissions.
[4] Mrs Zhang is self-represented but has been assisted at the hearings by her partner and an interpreter. She has presented written submissions and, through her interpreter, presented oral submissions.
Dismissal of application to set aside Westpac’s judgment
[5] Mrs Zhang requires leave to appeal the decision dismissing her application to set aside Westpac’s summary judgment.1 However, her application is misconceived. Mrs Zhang has been adjudicated bankrupt. The debt owed to Westpac is provable in Mrs Zhang’s bankruptcy. A bankrupt has no standing to bring any proceeding to appeal or set aside a judgment against the bankrupt which relates to a debt provable in their bankruptcy.2
[6] In Lindsay v Vaucluse Holdings Ltd, the debtor was adjudicated bankrupt and appealed against the adjudication and the judgment upon which the bankruptcy proceeding was based.3 He also applied to suspend the adjudication until his appeals were heard. A suspension was refused. In delivering the judgment of the Court of Appeal, Tipping J said:4
Mr Dalkie suggested in oral submissions that it was more the judgment which created the debt with which the application was concerned, in the sense that Mr Lindsay’s ability to pursue an appeal against that judgment could not proceed without the suspension of the adjudication. That approach is not sound either. There was obviously no stay of the judgment. If the appeal has merit, the Official Assignee may pursue it in the name of the bankrupt. If there is a dispute as to whether that should be done the assistance of the Court may be sought.
1 Senior Courts Act 2016, ss 56(3) and (5).
2 Re Wilson ex parte UDC Finance Ltd HC Christchurch B348/89, 5 December 1989; Commissioner of Inland Revenue v Neal HC Auckland B1719/97, 2 October 1998; De Alwis v Luvit Foods International HC Auckland CIV-2002-404-1944, 24 March 2010; Spicer v Westpac Banking Corporation HC Wellington B382/94, B383/94, 3 May 1995.
3 Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999.
4 At [5].
[7] The Official Assignee may seek leave to appeal the dismissal of the application to set aside Westpac’s summary judgment (if it considers it has merit), but Mrs Zhang has no standing to do so. I therefore dismiss the application.
Suspension of adjudication
[8]Section 416 of the Insolvency Act 2006 provides:
(1)If an appeal has been filed against an order of adjudication, the bankrupt or any other interested person may apply to the court or the Court of Appeal for an order suspending the adjudication until the appeal is decided.
(2)The court or Court of Appeal may suspend the adjudication on the conditions that it thinks appropriate, including conditions as to anything done or decided, or that ought to have been done or decided, by any person in the period between the adjudication and the order suspending adjudication.
(3)The court or the Court of Appeal may at any time make an order as it thinks appropriate as to anything done or decided, or that ought to have been done or decided, by any person in the period between the adjudication and the date when the appeal is decided if—
(b) the adjudication has been suspended and the appeal fails; or
(c) the adjudication has not been suspended and the appeal succeeds.
[9] Lindsay v Vaucluse Holdings Ltd is authority for at least the two following principles in relation to an application to suspend an adjudication order under (what is now) s 416 of the Insolvency Act. These are:5
(a)A failure to suspend the adjudication of the bankrupt does not prevent the bankrupt from pursuing an appeal against the adjudication itself, thereby rendering the appeal rights nugatory …
(b)The failure to suspend the adjudication of the bankrupt does not render nugatory the right to appeal the judgment which creates the judgment debt (on which the adjudication has occurred) – if that appeal has merit, the Assignee may pursue it in the name of the bankrupt.
5 Lindsay v Vaucluse Holdings Ltd, above n 3, summarised in Harrison v Harrison [2015] NZHC 1054 at [21].
[10] In Kroon v Westpac Banking Corporation,6 Ronald Young J held that the fact that a debtor will suffer consequences of bankruptcy until an appeal is resolved is not a ground for a stay of the bankruptcy unless “something beyond the ordinary is revealed in the circumstances.”
[11] Mrs Zhang argued that a suspension was required for two reasons. First, that as a Chinese citizen she will be able to pursue a civil claim against a Mr Wu in China (where he is apparently now living) whereas the Official Assignee will not. Second, because of the adjudication order she will not get work to support her three-year-old child.
[12] As to the first matter, Mrs Zhang has commenced a claim against Mr Wu under CIV-2019-404-1327. On 16 September 2019, Mrs Zhang filed an amended statement of claim in that proceeding naming Westpac and Auckland Council as parties, along with an application for discovery.7 Any rights of action that Mrs Zhang has against Mr Wu have vested in the Official Assignee. There is no evidence before me that Chinese law would prevent the Official Assignee, but not Mrs Zhang, from pursuing Mr Wu in China.8 Furthermore, as I set out in the judgment, at [68], there is no evidence that Mrs Zhang’s claim has any reasonable prospect of success, that it can be heard soon or that she has the ability to pay any costs associated with pursuing it. It is not a basis for suspension of the adjudication order.
[13] As to the second matter, there is no evidence that Mrs Zhang will be prevented from obtaining employment due to her adjudication. She tells me she is presently working.
[14] Mrs Zhang has therefore not put before me anything to suggest that she will suffer any hardship because of her bankruptcy beyond those consequences that can normally be expected.
6 Kroon v Westpac Banking Corporation HC Auckland CIV-2006-404-4720; CIV-2006-404-1970, 15 May 2007 at [9].
7 Mrs Zhang has never obtained an Order of the Court joining Westpac and Auckland Council as parties as required by r 4.56 High Court Rules 2016.
8 Evidence Act 2006, s 144. I do not accept as evidence (or as a reliable source) Mrs Zhang’s assertions as to the law of China in her memorandum filed after the hearing.
[15] I take guidance also from Associate Judge Osborne’s judgment in Harrison v Harrison.9 He found it useful to consider the list of factors in relation to a stay of execution based on r 12 of the Court of Appeal (Civil) Rules 2005 when considering “the wider and more conventional discretionary basis” of an application for suspension.10
[16]The relevant factors are:
(a)whether the appeal may be rendered nugatory by the lack of an order suspending the adjudication;
(b)the bona fides of the applicant as to the prosecution of the appeal;
(c)whether the successful party will be injuriously affected by the stay;
(d)the effect on third parties;
(e)the novelty and importance of any questions involved;
(f)the public interest in the proceedings; and
(g)the overall balance of convenience.
[17]To these factors is to be added the strength of the appeal.11
Merits of the appeal
[18] Mrs Zhang takes a scatter-gun approach listing 25 grounds of appeal. The majority are either assertions of fact that do not challenge the order of adjudication or are attacks on Westpac’s summary judgment. They do not provide Mrs Zhang with a basis to challenge the adjudication order.
9 Harrison v Harrison, above n 5.
10 See also Kroon v Westpac Banking Corporation, above n 6; Re Parlane ex parte Young HC Auckland CIV-2010-404-5478, 25 July 2011; Westpac New Zealand Ltd v Gardiner [2013] NZHC 1243.
11 Westpac New Zealand Limited v Gardiner, above n 10, at [15].
[19] Mrs Zhang also raises her claim against Mr Wu and proposed claim against Westpac and Auckland Council. Mrs Zhang considers there was a miscarriage of justice in making the adjudication order because I did not mention her claim in my judgment. In fact, I dealt with Mrs Zhang’s claim against Mr Wu and her proposed counterclaim against Westpac at [62]-[68] of the judgment. I did not regard Mrs Zhang’s claim a proper basis to decline to make an adjudication order. My reasons are fully set out in the judgment. There was no miscarriage of justice as she alleges.
[20] Mrs Zhang has also alleged that the hearing of 13 September 2019 was not completed. This is not correct and she was unable to advise me of any matters that she did not have an opportunity to raise at that hearing.
[21] Mrs Zhang has not raised any matters that suggest she has any real prospect of success on her appeal from the adjudication order.
Will refusal of suspension render the right of appeal nugatory?
[22] The right to appeal the adjudication order will not be rendered nugatory by a lack of suspension (Lindsay v Vaucluse Holdings Ltd applies).
The applicant’s bona fides as to the prosecution of the appeal
[23] Mrs Zhang’s appeal is almost entirely underpinned by her challenge to Westpac’s judgment. Westpac obtained its judgment by default. Mrs Zhang had been in correspondence with Westpac’s solicitors and decided that she did not wish to defend the claim. She did not take any formal steps to challenge the judgment until over a year after it was obtained. It was only once bankruptcy proceedings were issued that she challenged the judgment. She has made allegations that the sales of her properties were not genuine transactions without any evidence of that. She seeks discovery orders in the hope that discovery may reveal matters that raise a defence. Her appeal does not have the hallmarks of a bona fide appeal.
Will the successful party be injuriously affected by the suspension?
[24] Mrs Zhang claims that she is impecunious but has never provided any evidence of her finances. Given the circumstances under which the debt to Westpac was incurred, involving default under mortgages of two valuable properties (one of which was unlawfully developed), her affairs should be investigated. The Official Assignee cannot begin investigating or accumulating any monies held by her, or other assets in her estate, from which to meet her debts so long as she remains in control of her assets and fails to disclose her financial circumstances through a suspension of the adjudication order. The court cannot be satisfied that Mrs Zhang does not have assets which should be made available for payment of her creditors which could be depleted during the period of any suspension. I am satisfied that the creditors may well be injuriously affected by a suspension.
The effect on third parties
[25] In addition to Westpac, Auckland Council is a substantial creditor of Mrs Zhang. It too may be prejudicially affected by a suspension order. As Mrs Zhang has failed to put before the court evidence of her financial circumstances, it is unclear to what extent other parties may be affected by a suspension of the adjudication order.
The novelty and importance of the question
[26]There are no novel or important questions of law involved in the appeal.
Public interest in the proceeding
[27] There is no public interest in the issues raised by Mrs Zhang but there is a predominant public interest which lies in the prompt commencement of the Official Assignee’s investigations into the assets and liabilities of a bankrupt. In Westpac New Zealand Limited v Gardiner, Associate Judge Gendall said:12
In my view, the fact that in this case there may be no assets in the estates of the first and second defendants for the Official Assignee to distribute is also
12 Westpac New Zealand Limited v Gardiner, above n 10, at [31].
not determinative. There is a public and community interest in ensuring the integrity of the bankruptcy process remains, and adjudication provides a number of general restrictions and protections for the benefit of creditors and the wider community.
The overall balance of convenience
[28] The balance of convenience is overwhelmingly in favour of refusing suspension of the adjudication order. Westpac has adopted the correct procedures in obtaining judgment and proceeding to bankruptcy. Mrs Zhang did not defend the claim and has only belatedly challenged the judgment. Westpac is entitled to take what steps are available to obtain payment of its judgment. If Mrs Zhang has a valid basis to challenge Westpac’s judgment that may be taken up by the Official Assignee (if it is considered appropriate). In the meantime, the Official Assignee should commence administration of her bankrupt estate.
[29] Mrs Zhang has shown no grounds to suspend the adjudication order and her application is dismissed.
Application for the transcript
[30] Mrs Zhang has applied for a copy of the transcript of the hearing of 13 September 2019. Section 173(1) of the Senior Courts Act 2006 provides any person may have access to court information of a senior court to the extent provided by, and in accordance with, rules of the court.
[31] The relevant rules are the Senior Courts (Access to Court Documents) Rules 2017 (“the Rules”). The relevant provisions of the Rules for present purposes are rr 9(1), (2) and (5) which provide:
(1)The parties to a civil proceeding and the parties’ lawyers may, under the supervision of the Registrar or a person appointed by the Registrar,—
(a) search and inspect the court file or any document relating to the proceeding, without paying a fee; and
(b) copy any part of the court file or any document relating to the proceeding on paying the prescribed fee (if any).
(2)The right under subclause (1) may be exercised at any time.
….
(5)The general rights of the parties to civil proceedings, criminal proceedings and appeals, set out in subclauses (1) to (4), are subject to the following qualifications:
(a) a record of a court proceeding in electronic form that is in the custody and control of the court may be copied only with the permission of a Judge:
(b) a Judge may direct that the court file or any document relating to the appeal not be accessed by the parties or their lawyers without the permission of a Judge.
[32] I understand the hearing of 13 September 2019 was recorded. There is a record in electronic form from which a transcript may be prepared. It may only be copied with the permission of a judge of the Court.13
[33] A request from a party is not sufficient to warrant production of a transcript. The matter remains within the discretion of the Judge. As preparing a transcript of anything but the shortest of hearings will involve a significant use of court resources, good reason should be shown before an order to prepare a transcript is made.
[34] Mrs Zhang advises me that she wants to study the transcript to determine whether the translator accurately and completely conveyed her submissions to me. She did not identify any instance where she considered the translator had failed to do so. In this regard, it is to be remembered that Mrs Zhang does speak English, as does her partner. She can converse with me in Court. Neither Mrs Zhang or her husband raised any concern about the translation during the hearing.
[35] I am not prepared to order the production of a transcript for these reasons. First, I have no reason to believe that the translator did not interpret correctly. Second, Mrs Zhang has not been able to advise me of anything she believes the interpreter did not translate or translated inaccurately. Third, Mrs Zhang is principally concerned with challenging Westpac’s judgment which, for reasons I have given above, she has no standing to do. Fourth, the judgment sets out my reasons in full for refusing Mrs Zhang’s applications. In so far as there is anything in that which is incorrect, Mrs Zhang does not need a transcript to challenge it.
13 Senior Courts (Access to Court Documents) Rules 2017, r 9(5)(a).
[36]Mrs Zhang’s request for a transcript is refused.
Result
[37] Mrs Zhang’s application for leave to appeal the dismissal of her application to set aside Westpac’s summary judgment is dismissed.
[38]Mrs Zhang’s application for a suspension of her adjudication in bankruptcy is
dismissed.
[39]Mrs Zhang’s request for a copy of a transcript of the hearing of 13 September
2019 is refused.
[40] Westpac and Auckland Council are entitled to their costs on a 2B basis, and I so order.
[41] I direct that a copy of this judgment should be provided to the Official Assignee.
O G Paulsen Associate Judge
Solicitors:
Simpson Grierson, Auckland
Auckland Council – Legal Services, Auckland cc: Official Assignee
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