ZHANG v HU [2021] NZHC 2034

ZHANG v HU [2021] NZHC 2034

Although the judgment debtor cannot demonstrate capacity to pay the debt within a reasonable time, the Court exercised its discretion under s38 to halt the adjudication because the adjudication would likely prevent continuation of related defamation proceedings against a party related to the creditor (the director), the debt is relatively small, and the equitable balance weighs in favour of halting until the Defamation Proceedings (CIV-2019-404-925) are determined.

Citation
[2021] NZHC 2034
Parties
Judgment Creditor: Ally Tong Zhang; Judgment Debtor: Wei Hu
Court
High Court
Jurisdiction
New Zealand
Judgment Date
6 August 2021
Procedural Posture
Bankruptcy Adjudication Under the Insolvency Act 2006 / Application for Adjudication Heard and Judgment on Whether to Adjudicate or Halt Proceedings (hearing and Judgment)
Outcome
Application for adjudication halted pending determination of the Defamation Proceedings CIV-2019-404-925; application not dismissed and bankruptcy not refused on just and equitable grounds
Legal Topics
Ability to Pay Under S13, Court Discretion Under Ss36 38, Stay/halt of Adjudication, Just and Equitable Refusal (s37), Interaction of Related Civil Litigation With Bankruptcy
Insolvency Bankruptcy Civil Procedure Defamation Costs Ability to Pay Under S13 Court Discretion Under Ss36 38 Stay/halt of Adjudication +2 more

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Parties

Ally Tong Zhang

Judgment Creditor

Wei Hu

Judgment Debtor

Procedural Posture

Bankruptcy Adjudication Under the Insolvency Act 2006 / Application for Adjudication Heard and Judgment on Whether to Adjudicate or Halt Proceedings (hearing and Judgment)

Legal Issues

  1. 1 Whether the debtor is able to pay his debts within a reasonable time under s13
  2. 2 Whether ongoing Defamation or Deceit Proceedings justify dismissal of adjudication under s37 or halting under s38
  3. 3 How to exercise the Court's discretionary balancing function in light of the parties' interests

Ratio Decidendi

Although the judgment debtor cannot demonstrate capacity to pay the debt within a reasonable time, the Court exercised its discretion under s38 to halt the adjudication because the adjudication would likely prevent continuation of related defamation proceedings against a party related to the creditor (the director), the debt is relatively small, and the equitable balance weighs in favour of halting until the Defamation Proceedings (CIV-2019-404-925) are determined.

Court Disposition

Application for adjudication halted pending determination of the Defamation Proceedings CIV-2019-404-925; application not dismissed and bankruptcy not refused on just and equitable grounds

Orders

  • Application for adjudication is halted pending determination of the Defamation Proceedings, CIV-2019-404-925
  • Costs lie where they fall