Zhang v Westpac New Zealand Limited [2019] NZCA 682 (20 December 2019)

Last Updated: 20 December 2019

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA591/2019 [2019] NZCA 682

	BETWEEN	YINGQIU ZHANG Applicant
	AND	WESTPAC NEW ZEALAND LIMITED Respondent

Court:	Kós P, Brown and Goddard JJ
Counsel:	Applicant in person B J Upton and L B Harrison for Respondent
Judgment: (On the papers)	20 December 2019 at 10 am

JUDGMENT OF THE COURT

1. The application for stay of execution is declined.
2. Costs are reserved, and are to be determined in the context of the applicant’s appeal in due course.

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REASONS OF THE COURT

(Given by Kós P)

[1] Ms Zhang defaulted in the repayment of loans to Westpac. The properties securing the loans were sold by Westpac as mortgagee. It obtained summary judgment against Ms Zhang for the shortfall and then commenced bankruptcy proceedings.
[2] In a comprehensive judgment dated 25 September 2019 Associate Judge Paulsen:^[1]

(a) dismissed Ms Zhang’s application to set aside Westpac’s bankruptcy notice;
(b) dismissed Ms Zhang’s application to set aside Westpac’s summary judgment;
(c) dismissed Ms Zhang’s application for discovery against Westpac and non-parties; and
(d) granted Westpac’s application to adjudicate Ms Zhang bankrupt.
[3] Ms Zhang is, and remains, bankrupt.
[4] In a subsequent judgment dated 1 November 2019 Associate Judge Paulsen:^[2]

• (a) dismissed Ms Zhang’s application for leave to appeal on the summary judgment application;
• (b) dismissed Ms Zhang’s application for suspension of bankruptcy; and
• (c) refused her application for a copy of a hearing transcript.

[5] Ms Zhang, acting again for herself, has at the eleventh hour filed a “notice of leave to civil appeal/stay against Justice Paulsen’s decision determined as at 25.9.2019” and a further “application to stay Justice Paulsen’s decision determined as at 25.9.2019 and dated 1.11.2019”.
[6] On its face the “application to stay” seeks a stay of the whole of the judgments delivered on 25 September 2019 and 1 November 2019, but as we understand it what is sought is a stay of the order adjudicating Ms Zhang bankrupt. That is the sole matter with which this judgment is concerned. There is no other order in respect of which Ms Zhang could seek a stay. So far as the underlying proceeding filed by Westpac is concerned, no leave to appeal is required. So far as the underlying proceeding filed by Ms Zhang is concerned, her status in bankruptcy means she has no standing to pursue an appeal as all rights in that proceeding vest in the Official Assignee. So we will deal here only with the application for a stay of the order adjudicating her bankrupt.

Principles governing stay applications

[7] The principles governing the determination of an application for a stay of execution of a judgment were restated by this Court in Keung v GBR Investment Ltd:^[3]

In determining whether or not to grant a stay, the Court must weigh the factors “in the balance” between the successful litigant’s rights to the fruits of a judgment and “the need to preserve the position in case the appeal is successful”. Factors to be taken into account in this balancing exercise include:

(a) Whether the appeal may be rendered nugatory by the lack of a stay;
(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 questions involved;
(f) The public interest in the proceeding; and
(g) The overall balance of convenience.

That list does not include the apparent strength of the appeal but that has been treated as an additional factor.

Application of principles in this case

[8] These same factors were considered by Associate Judge Paulsen in his second judgment, when addressing the application filed by Ms Zhang to suspend adjudication under s 416 of the Insolvency Act 2006.^[4] Nothing material has been advanced in the application before this Court that would suggest the Judge’s analysis was in error.
[9] First, Ms Zhang’s appeal rights against the bankruptcy order are not rendered nugatory by the order remaining in place. Ms Zhang is entitled to pursue her appeal against the making of the order.^[5] No special (or indeed, any) prejudice is apparent to us from her doing so while remaining bankrupt. The rights Ms Zhang asserts against Westpac and others in a third proceeding have been disclaimed by the Official Assignee. The effect of that is to end the rights of both the Official Assignee and Ms Zhang in that proceeding.^[6] So Ms Zhang cannot pursue the third proceeding unless she succeeds in overturning the bankruptcy order — which she may continue to pursue without a stay. To the extent a circular argument might be made that recovery under the third proceeding is essential to overturn or avert bankruptcy, there is insufficient cogent evidence before us to suggest that proceeding has real merit or that Ms Zhang has the capacity to pursue it or the prospect of recovering material sums under it.
[10] Secondly, we accept that Ms Zhang genuinely intends to pursue her appeal against the bankruptcy order. But a stay is not necessary for that purpose.
[11] Thirdly, Westpac contends that bankruptcy should proceed in the ordinary way absent a compelling case of prejudice demonstrated by the applicant. It points to prejudice if the Official Assignee is prevented from undertaking investigation into the assets of Ms Zhang in New Zealand. We accept that submission as sound. Ms Zhang has not provided the Court with any material information as to her financial position or ability to obtain third party assistance. The affidavit filed in support of her application does no more than make uncorroborated assertions as to her capacity to enforce a judgment in the third proceeding against a particular third party in China, and her belief that the Official Assignee could not do so. No expert evidence is provided to support that view. And the ability of the Official Assignee to enforce a judgment in the third proceeding in China is not a material factor, in circumstances where the Official Assignee has disclaimed the rights asserted in that proceeding.
[12] Fourthly, Westpac is not the only creditor concerned in Ms Zhang’s estate. As noted a moment ago, there is no evidence of her financial circumstances (which is what the Official Assignee is tasked with ascertaining). No security has been offered.
[13] Fifthly, the proposed appeal is based largely on a re-run of arguments made before Associate Judge Paulsen. The points are intensely fact-based, and raise no issues of either legal novelty or wider public interest. None of this displaces the wider public interest in the orderly conduct of the examination of this bankrupt as to the extent of her estate, which will be the primary task of the Official Assignee in the time before the hearing of the appeal against the making of the bankruptcy order.
[14] Finally, the balance of convenience therefore lies clearly against the making of an order for stay of the bankruptcy order made in September 2019.

Result

[15] The application for stay of execution is declined.
[16] Costs are reserved, and are to be determined in the context of the applicant’s appeal in due course.

Solicitors:
Simpson Grierson, Auckland for Respondent

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^[1] Zhang v Westpac New Zealand Ltd [2019] NZHC 2422 [First High Court judgment].

^[2] Zhang v Westpac New Zealand Ltd [2019] NZHC 2797 [Second High Court judgment].

^[3] Keung v GBR Investment Ltd [2010] NZCA 396, [2012] NZAR 17 at [11] (footnotes omitted).

^[4] Second High Court judgment, above n 2, at [8]–[29].

^[5] Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999 at [4] and [6].

^[6] Insolvency Act 2006, s 118.