Hearing:	17 August 2021
Court:	William Young, Glazebrook, O’Regan, Ellen France and Williams JJ
Counsel:	J D Turner and L X Huang for Appellant D Zhang and E Tie for Respondent J F Anderson QC, M Chen and Y Y Mortimer-Wang for New Zealand Law Society as Intervener
Judgment:	20 June 2022

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BMr Deng must pay Mr Zheng costs of $25,000 plus usual disbursements (including travelling expenses for two counsel), to be fixed by the Registrar if necessary.

____________________________________________________________________

REASONS

(Given by William Young J)

Table of Contents

Para No.
The appeal	[1]
Background	[6]
The proceedings in the High Court	[26]
The competing claims	[26]
High Court trial	[30]
The High Court judgment	[32]
The judgment of the Court of Appeal	[38]
The basis of Mr Deng’s appeal	[49]
Evaluation	[52]
Our primary conclusions on the key facts	[52]
Was there a partnership?	[62]
The significance of the High Court Judge’s findings of fact	[70]
Cultural considerations	[75]
Disposition	[85]

The appeal

Messrs Donglin Deng, the appellant, and Lu Zheng, the respondent, had a working relationship which commenced in the late 1990s. In 2015, they agreed to end their association. Primarily in issue is the nature of their business relationship between 2010 and 2015. Mr Zheng says that from March 2010 he and Mr Deng were partners engaged in property development and construction projects which were conducted in the names of a number of companies. Mr Deng denies this and argues that there was no overarching partnership. Instead, he contends that the projects in which they engaged were carried out through companies in which the two men had interests that were reflected in their shareholdings and account balances.
It is common ground that Messrs Deng and Zheng agreed on 31 May 2015 to end their business relationship (whatever it was). Attempts at a complete and amicable separation of their interests were unsuccessful and this litigation followed.
In the High Court, Mr Deng was successful, with Downs J concluding (inter alia) that there was no partnership.[1] On appeal, the Court of Appeal concluded that the relationship had been a partnership and, on that footing, granted relief to Mr Zheng which included remitting the proceeding to the High Court for a taking of accounts.[2]
[1]Zheng v Deng [2019] NZHC 3236 [HC judgment].
[2]Zheng v Deng [2020] NZCA 614 (Goddard, Duffy and Nation JJ) [CA judgment].
In granting leave to appeal from the Court of Appeal judgment, this Court said:[3]
[1] The appeal raises potential issues about the interpretation of documents translated from Mandarin and the cultural setting in an arrangement between two Chinese parties whose business relationship appears to have been conducted in Mandarin. The Court of Appeal noted that it was conscious that language is used in a broader linguistic and cultural setting,…

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 Deng v Zheng

Details

AGLC: Deng v Zheng [2022] NZSC 76
Case: [2022] NZSC 76
Decision Date: 20 June 2022

CaseChat Overview and Summary

The Supreme Court of New Zealand considered an appeal by Donglin Deng against a decision of the Court of Appeal that found a partnership existed between him and Lu Zheng. The primary issue was whether the relationship between Deng and Zheng was a partnership as claimed by Zheng, or a series of corporate and contractual arrangements as argued by Deng. The Court of Appeal found in favour of Zheng, concluding that the relationship was a partnership and remitted the matter to the High Court for a taking of accounts.

The Supreme Court, after reviewing the evidence and the judgments of the lower courts, found that the Court of Appeal was correct in its judgment. The contemporaneous documents, particularly the internal accounts and the Principles in Separation document, provided clear evidence of a shared understanding between Deng and Zheng that they were carrying on a business in common with a view to profit. The internal accounts, which were prepared on a running basis and looked through the structure of the various companies to reveal an intention to share profits equally, were a significant piece of evidence. The Court also considered the cultural context, noting the importance of "guanxi" (interpersonal connections) in Chinese business practices, though it found this did not alter the outcome.

The Supreme Court dismissed Deng's appeal and ordered him to pay Zheng's costs of $25,000 plus usual disbursements. The Court also made an order for the Registrar to fix the amount of the disbursements, including travel expenses for two counsel, if necessary.

Orders