Chen v He - [2015] NZHC 1593

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-005671 [2015] NZHC 1593

BETWEEN
ZHIXIONG CHEN

Plaintiff

AND

YAO WEI HE Defendant

Hearing: 3 and 4 February 2015

Appearances:

Neil Campbell QC for the Plaintiff
Paul Sills for the Defendant

Judgment:

8 July 2015

RESERVED JUDGMENT OF MOORE J

This judgment was delivered by me on 8 July 2015 at 3:30pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/ Deputy Registrar
Date:

CHEN v HE [2015] NZHC 1593 [8 July 2015]

Introduction

[1] On 16 August 2010 Yao Wei He (“Mr He”) signed an acknowledgement of debt (“the document”). In this document he acknowledged he had borrowed
$300,000 from Zhixiong Chen (“Mr Chen”).

[2] Mr Chen sues on this document. He has demanded payment of the full amount together with interest from Mr He and he claims Mr He has defaulted.

[3] Mr He says this was not a personal loan. He says he received the $300,000 as an advance to be held on trust for a joint venture company which Mr He and Mr Chen’s son, Youngzhou (“Chen Jnr”), had recently formed. Mr He claims that Mr Chen agreed the advance could be “rolled over” and treated as one repayable by the joint venture company if, within six months, Mr Chen was satisfied the venture was profitable. Otherwise the advance was to be repaid within six months.

[4] Mr Chen denies such an arrangement ever existed. He says there was no joint venture. He says the document speaks for itself. The loan was a personal one and Mr He owes him $300,000 plus interest.

Background

[5] Mr Chen is a wealthy man who immigrated to New Zealand from China with his family in 2004. He now lives and works in Guangzhou, China.

[6] In about 2006, while in New Zealand, Mr Chen and Mr He met and became friends. Mr He’s financial circumstances were, and remain, a good deal more modest than Mr Chen’s. From about mid-2009, Mr He had been trading on his own, exporting New Zealand-made dairy and health products to Hong Kong and China. He had identified a niche market in Hong Kong and China where consumers were prepared to pay a premium for products manufactured and packaged in New Zealand.

[7] Mr He’s business involved purchasing these products from retail shelves at retail prices. He then freighted them to customers in Hong Kong and China. A gross

profit margin of between 6 and 9 per cent could be achieved after freight costs were deducted.

[8] It is common ground that the $300,000 was advanced to Mr He by Mr Chen in three tranches.

[9] The first was on 15 June 2010. That advance was, in fact, $120,000 of which

$20,000 was described by Mr Chen as “a gift”.1 On this first advance Mr He wrote out an acknowledgement of debt in the form of an IOU for $100,000.

[10] On 18 June 2010, three days after the first advance, the new company, New…

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.

Continue reading Chen v He

Details

AGLC: Chen v He [2015] NZHC 1593
Case: [2015] NZHC 1593
Decision Date: 8 July 2015

CaseChat Overview and Summary

The plaintiff, Zhixiong Chen, brought an action against the defendant, Yao Wei He, for the repayment of $300,000 which Mr He had borrowed from Mr Chen. The terms of the loan were recorded in an acknowledgement of debt which Mr He had signed on 16 August 2010. Mr Chen claimed that this was a personal loan and that Mr He had defaulted on his obligation to repay it. Mr He denied this, claiming that the $300,000 was an advance to be held on trust for a joint venture company which Mr He and Mr Chen’s son, Youngzhou, had formed. The court had to decide whether the acknowledgement of debt correctly reflected the contractual arrangement existing between the parties. The court found that the document reflected a separate and personal arrangement between the parties. Judgment was entered in favour of the plaintiff in the sum of $300,000. Interest is to be paid on $200,000 at 6 per cent per annum from 16 August 2011. Interest is to be paid on $100,000 at the applicable rate under the Judicature Act 1908 from 16 February 2011. Costs are awarded in favour of the plaintiff on a 2B basis with disbursements as fixed by the Registrar.

Orders