Eight Mile Investments Limited v Liu

[2024] NZHC 846

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-761

[2024] NZHC 846

IN THE MATTER

of enforcement of foreign judgment

BETWEEN

EIGHT MILE INVESTMENTS LIMITED

First Applicant

TAT BOR LEUNG
Second Applicant

AND

CHAOQIAN LIU

First Respondent

LL FUTURE LIMITED

Second Respondent

Hearing:	On the papers
Counsel:	K Sun for the Plaintiffs
Judgment:	18 April 2024

JUDGMENT OF WOOLFORD J

[Freezing orders]

This judgment was delivered by me on Thursday, 18 April 2024 at 2:30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:           Capstone Law Limited (K Sun), Auckland

EIGHT MILE INVESTMENTS LIMITED v LIU [2024] NZHC 846 [18 April 2024]

[1]                 In substantive proceedings filed on 28 March 2024, the applicants seek judgment in the sum of CNY 28,026,788.54 plus interest against the first respondent. This is on the basis of a 30 May 2022 judgment issued by the Guangzhou Intermediate People’s Court against the first respondent in favour of the applicants, in the sum of CNY 28,337,812.28 plus interest.

[2]                 The Guangzhou Intermediate People’s Court subsequently took enforcement action against the first respondent, recovering the sum of CNY 315,658.74 from the first respondent’s Industrial and Commercial Bank of China bank account, of which CNY 311,023.74 was transferred to the applicants and CNY 4,635 was applied towards an enforcement fee.

[3]                 The applicants now make a without notice interlocutory application for freezing orders in respect of property in New Zealand owned or controlled by the first respondent, on the basis that they have a good arguable case against the first respondent, who may abscond or dissipate his assets in New Zealand should he have notice of this application.

Property sought to be frozen

[4]The applicants seek to freeze four assets:

(a)a residential property at 82 Orakei Road, Remuera, Auckland 1050, jointly owned with Rong Su;

(b)499 shares (a 55.4 per cent shareholding) in the second respondent, LL Future Limited, jointly owned with Rong Su;

(c)a residential property at 42 Clara Road, Silverdale, Auckland 0932, owned by LL Future Limited; and

(d)any bank account or deposit account in the name of the first respondent or over which the first respondent has control.

Application for freezing order

[5]                 The applicants  seek  a  freezing  order against  the respondents  pursuant  to  r 32.5(4) and (5) of the High Court Rules 2016, which provide:

32.5Order against judgment debtor or prospective judgment debtor or third party

…

(4)The court may make a freezing order or an ancillary order or both against a judgment debtor or prospective judgment debtor if the court is satisfied, having regard to all the circumstances, that there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—

(a)the judgment debtor, prospective judgment debtor, or another person might abscond; or

(b)the assets of the judgment debtor, prospective judgment debtor, or another person might be—

(i)removed from New Zealand or from a place inside or outside New Zealand; or

(ii)disposed of, dealt with, or diminished in value (whether the assets are in or outside New Zealand).

(5)The court may make a freezing order or an ancillary order or both against a person other than a judgment debtor or prospective judgment debtor (a third party) if the court is satisfied, having regard to all the circumstances, that—

(a)there is a danger that a judgment or prospective judgment will be wholly or partly unsatisfied because—

(i)the third party holds or is using, or has exercised or is exercising, a power of disposition over assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or

(ii)the third party is in possession of, or in a position of control or influence concerning, assets (including claims and expectancies) of the judgment debtor or prospective judgment debtor; or

(b)a process in the court is or may ultimately be available to the applicant, as a result of a judgment or prospective judgment, under which the third party may be obliged to disgorge assets or contribute toward satisfying the judgment or prospective judgment.

Prospective judgment debtor

[6]                 The first respondent is a prospective judgment debtor. The applicants seek to enforce a judgment issued by the Guangzhou Intermediate People’s Court by way of judgment in New Zealand.

[7]I am satisfied that the applicants have a good arguable case that:1

(a)the Guangzhou Intermediate People’s Court had jurisdiction to give judgment against the first respondent;

(b)the judgment is for a definite sum of money; and

(c)it is final and conclusive.

[8]                 I am also satisfied that the first respondent is unlikely to have an arguable defence because the judgment of the Guangzhou Intermediate People’s Court:2

(a)complies with New Zealand’s standards of natural justice;

(b)was not obtained by fraud; and

(c)is not contrary to public policy.

[9]                 I am so satisfied by the affidavit of evidence of Dr Zhixiong (Leo) Liao, a senior lecturer in law at the University of Waikato.

Risk of absconding

[10]             I am also satisfied that there is a risk of the first respondent absconding. He failed to pay the judgment debt within 10 days of the issue of judgment by the Guangzhou Intermediate People’s Court. His Chinese bank account remains frozen by the Guangzhou Intermediate People’s Court. He is listed as a Dishonest Person Subject to Enforcement, which restricts him from high-value spending and was restricted from leaving China until 20 August 2023. I am advised that the first respondent attempted to leave China on 28 February 2023, but was intercepted at Customs. However, he now appears to reside in New Zealand.

1      Eilenberg v Gardia [2017] NZCA 270 at [30], affirming Kemp v Kemp [1996] 2 NZLR 454 (HC) at 458.

2      Ross v Ross [2010] NZCA 447; [2011] NZAR 30 at [13], citing Kemp v Kemp, above n 1, at 458.

Risk of dissipating assets

[11]             I am also satisfied that there is a risk of dissipating assets.   On 18 and        22 October 2018, the first respondent received funds totalling CNY 48,956,040.92 into his Bank of China account, of which he was obliged to pay the applicants the minimum sum of CNY 22,000,000. These funds were not available when the Guangzhou Intermediate People’s Court came to take enforcement action.

[12]             I am advised that two to three weeks after receiving the funds, the first respondent bought two properties on Nugent Street, Grafton, Auckland, without obtaining a mortgage. These were then transferred to a third party shortly after the Court hearing in China. Further, the Clara Road property is currently listed for sale.

Discussion

[13]The freezing order sought by the applicants will:

(a)preserve the position pending determination of the substantive proceeding (which has been commenced by the applicants);

(b)prevent any judgment in favour of the applicants from being rendered nugatory through further dissipation of the first respondent’s assets; and

(c)allow the respondents to apply to discharge or vary the freezing order on 48 hours’ notice.

[14]The balance of convenience also clearly favours the applicants.

Result

[15]             There will be orders in terms of [1(a)–(e)] of the application. This proceeding is to be listed in the Duty Judge list at 10 am on Wednesday, 1 May 2024 for review of the freezing orders. The respondents are to be served with a copy of the proceedings and this judgment to enable them to appear on 1 May 2024 and seek variation or recission of the orders.

Woolford J