Americhip, Inc v Dean - [2016] NZHC 1864

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2013-404-4247 [2016] NZHC 1864

BETWEEN
AMERICHIP, INC

Plaintiff

AND

JASON CHARLES DEAN First Defendant

AND

JUAN CHEN Second Defendant

Hearing: 4 August 2016

Counsel:

D J Goddard QC and L Theron for Plaintiff
(C Cross in attendance)
No Appearance for Defendants

Judgment:

11 August 2016

JUDGMENT OF BROWN J

Introduction

[1] The plaintiff, Americhip, claims that the defendants, Mr Jason Dean and Ms Zita Chan (to whom I will refer by her Chinese name, Juan Chen) have defrauded it of more than USD 12 million by means of a number of dishonest schemes, but primarily through an elaborate scheme involving submission of false or inflated invoices for manufacturing work done for Americhip by various companies in China.

[2] Americhip also claims that Mr Dean used some NZD 2 million of the proceeds to purchase a property in Auckland (the Mairangi Bay property).

AMERICHIP, INC v DEAN [2016] NZHC 1864 [11 August 2016]

[3] Americhip seeks an order that the defendants pay to it the sum of USD 12.9 million plus interest by way of an account of profits and/or by way of equitable compensation. This amount is calculated by reference to the gains made by the defendants from their breaches of the fiduciary duties it is alleged they owed to Americhip, which gains are contended in this case to be the same as (and possibly greater than) the loss to Americhip as a result of the inflated payments. In the alternative Americhip seeks damages in tort for the same amount.

[4] Americhip also seeks declarations that the defendants hold the proceeds of the fraud, including the Mairangi Bay property, on constructive trust for Americhip.

Formal proof hearing

[5] The proceeding was filed in September 2013. During the following two years there were a number of interlocutory hearings in this Court and in the Court of Appeal.

[6] In due course freezing and disclosure orders were obtained in Hong Kong and Singapore. The defendants’ failure to comply with such orders ultimately led to the making of unless orders and an order appointing receivers of the Mairangi Bay property.

[7] By September 2015 the defendants had ceased participation in the proceeding. Their counsel was granted leave to withdraw by Heath J on
15 September 2015. Their solicitor was granted leave to withdraw as solicitor on the record by Woolford J on 14 October 2015.

[8] On 2 October 2015 an order was made that the proceeding be listed for formal proof. That order was sent to the defendants’ solicitor on 2 October 2015 prior to his being granted leave to withdraw. On 14 October 2015 Woolford J requested that the defendants’ solicitor notify the defendants that service of any future documents in this proceeding would be on Mr Dean’s mother at her postal address.

[9] The present application is governed by r 15.9 of the High Court Rules which relevantly states:

(4) The plaintiff must, before or at the formal proof hearing,…

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.

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Details

Case: [2016] NZHC 1864
Decision Date: 11 August 2016

CaseChat Overview and Summary

The case of Americhip, Inc v Dean was heard in the High Court of New Zealand Auckland Registry, where the plaintiff, Americhip, claimed that the defendants, Mr Jason Dean and Ms Juan Chen, had defrauded it of more than USD 12 million through an elaborate scheme involving submission of false or inflated invoices for manufacturing work done for Americhip by various companies in China. Americhip sought an order that the defendants pay the sum of USD 12.9 million plus interest, by way of an account of profits and/or by way of equitable compensation. The court found that both Mr Dean and Ms Chen owed fiduciary duties to Americhip during their employment and that they breached those duties by engaging in the fraudulent activities. The court also found that Ms Chen was personally liable for the sums she received, and that she was liable for dishonest accessory liability. The court made orders in respect of the Mairangi Bay property and other assets, as well as awarding interest and costs. The judgment sum of USD 15,796,253.02 was expressed in US dollars, as the most appropriate currency for the judgment.

Orders