ZHANG v WESTPAC NEW ZEALAND LIMITED [2019] NZCA 682

ZHANG v WESTPAC NEW ZEALAND LIMITED [2019] NZCA 682 [20 December 2019]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA591/2019[2019] NZCA 682BETWEEN YINGQIU ZHANGApplicantAND WESTPAC NEW ZEALAND LIMITEDRespondentCourt: Kós P, Brown and Goddard JJCounsel: Applicant in personB J Upton and L B Harrison for RespondentJudgment:(On the papers)20 December 2019 at 10 amJUDGMENT OF THE COURTA The application for stay of execution is declined.B Costs are reserved, and are to be determined in the context of the applicant'sappeal in due course.____________________________________________________________________REASONS OF THE COURT(Given by Kós P)[1] Ms Zhang defaulted in the repayment of loans to Westpac. The propertiessecuring the loans were sold by Westpac as mortgagee. It obtained summary judgmentagainst Ms Zhang for the shortfall and then commenced bankruptcy proceedings.[2] In a comprehensive judgment dated 25 September 2019 Associate JudgePaulsen:1(a) dismissed Ms Zhang's application to set aside Westpac's bankruptcynotice;(b) dismissed Ms Zhang's application to set aside Westpac's summaryjudgment;(c) dismissed Ms Zhang's application for discovery against Westpac andnon-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 summaryjudgment 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 ofleave to civil appeal/stay against Justice Paulsen's decision determined as at25.9.2019" and a further "application to stay Justice Paulsen's decision determined asat 25.9.2019 and dated 1.11.2019".[6] On its face the "application to stay" seeks a stay of the whole of the judgmentsdelivered on 25 September 2019 and 1 November 2019, but as we understand it whatis sought is a stay of the order adjudicating Ms Zhang bankrupt. That is the sole matterwith which this judgment is concerned. There is no other order in respect of which1 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].Ms Zhang could seek a stay. So far as the underlying proceeding filed by Westpac isconcerned, no leave to appeal is required. So far as the underlying proceeding filedby Ms Zhang is concerned, her status in bankruptcy means she has no standing topursue an appeal as all rights in that proceeding vest in the Official Assignee. So wewill deal here only with the application for a stay of the order adjudicating herbankrupt.Principles governing stay applications[7] The principles governing the determination of an application for a stay ofexecution of a judgment were restated by this Court in Keung v GBR Investment Ltd:3In 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 ofa judgment and "the need to preserve the position in case the appeal issuccessful". Factors to be taken into account in this balancing exerciseinclude:(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 beentreated as an additional factor.Application of principles in this case[8] These same factors were considered by Associate Judge Paulsen in his secondjudgment, when addressing the application filed by Ms Zhang to suspend adjudicationunder s 416 of the Insolvency Act 2006.4 Nothing material has been advanced inthe application before this Court that would suggest the Judge's analysis was in error.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].[9] First, Ms Zhang's appeal rights against the bankruptcy order are not renderednugatory by the order remaining in place. Ms Zhang is entitled to pursue her appealagainst the making of the order.5 No special (or indeed, any) prejudice is apparent tous from her doing so while remaining bankrupt. The rights Ms Zhang asserts againstWestpac and others in a third proceeding have been disclaimed bythe Official Assignee. The effect of that is to end the rights of boththe Official Assignee and Ms Zhang in that proceeding.6 So Ms Zhang cannot pursuethe third proceeding unless she succeeds in overturning the bankruptcy order — whichshe may continue to pursue without a stay. To the extent a circular argument might bemade that recovery under the third proceeding is essential to overturn or avertbankruptcy, there is insufficient cogent evidence before us to suggest that proceedinghas real merit or that Ms Zhang has the capacity to pursue it or the prospect ofrecovering material sums under it.[10] Secondly, we accept that Ms Zhang genuinely intends to pursue her appealagainst the bankruptcy order. But a stay is not necessary for that purpose.[11] Thirdly, Westpac contends that bankruptcy should proceed in the ordinary wayabsent a compelling case of prejudice demonstrated by the applicant. It points toprejudice if the Official Assignee is prevented from undertaking investigation into theassets of Ms Zhang in New Zealand. We accept that submission as sound. Ms Zhanghas not provided the Court with any material information as to her financial positionor ability to obtain third party assistance. The affidavit filed in support of herapplication does no more than make uncorroborated assertions as to her capacity toenforce 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 isprovided to support that view. And the ability of the Official Assignee to enforcea judgment in the third proceeding in China is not a material factor, in circumstanceswhere the Official Assignee has disclaimed the rights asserted in that proceeding.5 Lindsay v Vaucluse Holdings Ltd CA272/99, 13 December 1999 at [4] and [6].6 Insolvency Act 2006, s 118.[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 iswhat 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 madebefore Associate Judge Paulsen. The points are intensely fact-based, and raise noissues of either legal novelty or wider public interest. None of this displaces the widerpublic interest in the orderly conduct of the examination of this bankrupt as to theextent of her estate, which will be the primary task of the Official Assignee in the timebefore the hearing of the appeal against the making of the bankruptcy order.[14] Finally, the balance of convenience therefore lies clearly against the making ofan 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'sappeal in due course.Solicitors:Simpson Grierson, Auckland for Respondent