Forest Holdings (NZ) Limited v Sheung
[2020] NZHC 1529
•1 July 2020
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV 2019-419-72
[2020] NZHC 1529
BETWEEN FOREST HOLDINGS (NZ) LIMITED
Plaintiff
AND
THEAN KAI SHEUNG
Defendant
Hearing: 24 February 2020
Further submissions 24 March 2020
Appearances:
K Lomas for the Plaintiff
Judgment:
1 July 2020
JUDGMENT OF DUFFY J
This judgment was delivered by me on 1 July 2020 at 4.00 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors:
Braun Bond & Lomas, Hamilton
FOREST HOLDINGS (NZ) LIMITED v SHEUNG [2020] NZHC 1529 [1 July 2020]
[1] The plaintiff, Forest Holdings New Zealand Limited (Forest Holdings), is the holder of forestry rights on a property in Kaimai which permit it to harvest Rimu and Tawa timber (the forestry rights).
[2] In its first cause of action Forest Holdings pleads that on or about 29 August 2017 it entered into a Joint Venture Agreement (the JV Agreement) with Pristine Timber Company Limited (Pristine Timber) and the defendant, Thean Kai Sheung. Forest Holdings alleges that Mr Sheung has breached the terms of the JV Agreement by failing to make a payment of $1,170,000, and therefore it seeks an order for specific performance to obtain this payment.
[3] Mr Sheung resides in Malaysia. Because Mr Sheung has failed to file a statement of defence Forest Holdings seeks to proceed against him by way of formal proof.
[4] There is also a second cause of action in which Forest Holdings seeks compensatory damages for loss of profit arising from the respondent’s breach of contract, however, Forest Holdings only seeks formal proof in respect of the first cause of action.
[5]The key matters for determination are as follows:
(a)Is there an enforceable JV Agreement?
(b)If there is such agreement, does Mr Sheung owe an obligation under this agreement to pay $1,170,000 to Forest Holdings?
(c)Can Forest holdings obtain an order for specific performance against a defendant who resides in Malaysia?
[6] If any of these questions is answered in the negative, then Forest Holdings cannot obtain judgment by way of formal proof and the proceeding should be dismissed.
Background
[7] In 2017 Forest Holdings prepared a proposal for the harvesting of Rimu and Tawa timber in accordance with the forestry rights. This proposal provided that Forest Holdings would sell 50 per cent of the forestry rights to an investor for a sum of $1.17 million and each would share in the profits from the sale of the timber. Forest Holdings was to manage the forest including harvesting, timber milling, kiln drying and timber processing, as well as the sale of timber at the local market.
[8] Chee Kin Sum, the sole director and shareholder of Pristine Timber invited Mr Sheung to invest in this proposal. It was agreed that Mr Sheung would be responsible for the payment of the $1.17 million as well as a further $330,000 for administration and general operational costs. Upon payment Mr Sheung would become a director of Pristine Timber. Pristine Timber would then be the vehicle for the joint venture to operate.
[9] Mr Sheung elected to invest and take part in the joint venture together with Forest Holdings and Pristine Timber.
The agreement
[10] In its amended statement of claim Forest Holdings pleads that on or about 29 August 2017, it entered into a JV Agreement with Pristine Timber and Mr Sheung. The JV Agreement is alleged to have included the following relevant terms:
(a)Forest Holdings and Pristine Timber were to jointly own the forestry right and undertake the maintenance, harvesting and sale of the timber produced;
(b)The parties to the JV Agreement agreed that Forest Holdings would be paid $1,170,000 in exchange for transferring 50 per cent of the forestry right to Pristine Timber;
(c)Mr Sheung was obliged to make payment of the $1,170,000 to either Forest Holdings directly or to Pristine Timber;
(d)Upon payment of the $1,170,000 by Mr Sheung:
(i)If paid to Pristine Timber, Pristine Timber was obliged to immediately pay the $1,170,000 to Forest holdings; and
(ii)Ms Sum agreed to transfer 90 per cent of the shares in Pristine Timber to Mr Sheung and to appoint him as director of Pristine Timber ; and
(e)Mr Sheung was to make payment of the $1,170,000 on or before 29 September 2017.
[11]The amended statement of claim then alleges that:
(a)Mr Sheung breached his obligations under the JV Agreement by failing to pay the $1,170,000 in cleared funds on or before 29 September 2017.
(b)In or about August 2018 or early September 2018 Forest Holdings and Pristine Timber agreed that the $1,170,000 was to be paid directly to Forest Holdings.
(c)On or about 6 September 2018 Mr Sheung agreed with Forest holdings that Mr Sheung would pay the $1,170,000 to Forest Holdings by making immediate payment of $585,000 and a further payment of
$585,000 in 10 days’ time.
(d)In reliance on Mr Sheung’s promise to pay, Forest Holdings refrained from taking enforcement steps against him.
(e)The agreement between Forest Holdings and Pristine Timber coupled with Mr Sheung’s promise to pay constituted a variation to the JV Agreement which required him to make direct payment of the
$1,170,000 to Forest Holdings.
(f)Mr Sheung failed to make payment directly to Forest holdings.
(g)Despite the letter of demand Forest Holdings’ solicitor sent to Mr Sheung he has failed to make payment and the sum of $1,170,000 remains outstanding.
[12] Before filing the amended pleading Forest Holdings had sought summary judgment in respect of the first cause of action. However, the application was declined by Smith AJ as he was not satisfied that Mr Sheung’s duty under the JV Agreement extended beyond a duty to tender the purchase price to Pristine Timber.1
[13] This led to Forest Holdings amending its pleading. It now relies on the JV Agreement and a subsequent variation made between Forest Holdings and Pristine Timber in August/September 2018, and subsequently agreed to by Mr Sheung in September 2018. This is the only way that Forest Holdings can bring the claim for payment of the $1,170,000 against Mr Sheung.
Legal principles
[14] A case may be set down for formal proof where the defendant fails to provide a statement of defence within the number of working days required by the notice of proceeding, and the plaintiff seeks judgment by default for other than a liquidated demand.2 Mr Sheung has not filed a statement of defence within the proscribed time satisfying the first of the two requirements to make this claim eligible for formal proof.
[15] As to the second requirement, Mr Lomas, counsel for Forest Holdings, submits that this is also satisfied, and that Forest Holdings is not making a liquidated demand. Rule 15.7 of the High Court Rules provides that a liquidated demand is a sum that “has been quantified in, or can be precisely calculated on the basis of, a contract relied on by the plaintiff”. On the face of it this appears to include the sum sought by way of specific performance in this case, it being a sum specified in the JV Agreement. However, Mr Lomas says that it is not a liquidated demand because this is not a case where the entirety of the contract had been performed other than the payment of
1 Forest Holdings (NZ) Ltd v Sheung [2019] NZHC 2090.
2 High Court Rules 2016, r 15.9(1).
money. I agree that is the case and that the sum sought does not therefore qualify as a liquidated demand.
Is the JV Agreement enforceable?
[16] To be enforceable the JV Agreement must have legal effect. The issue here is whether the JV Agreement was intended to have legal effect when executed by the parties, or whether such effect was not to happen until Forest Holdings received the sum of $1,170,000 in cleared funds in its bank account.
[17] The parties have chosen to reduce their agreement to written form. Clause 23.1 provides that the entire terms of the parties’ JV Agreement is to be found in the written JV Agreement:
23.1 This Agreement constitutes the sole understanding of the Joint Venturers with respect to the subject matter hereof and supersedes all prior understandings, written and oral, which shall be of no further force or effect. No modification, alteration or waiver of the terms of this Agreement shall be binding unless the same shall be in writing dated subsequent to the date of this Agreement and duly executed by both Joint Venturers.
[18] Clause 2.1 of the JV Agreement provides for when this written contract will have legal effect:
2.1 This Agreement shall commence upon its execution by the parties and [Forest Holdings] receiving in its NZ ASB bank account NZ $1,170,000 … plus GST if applicable in cleared funds. The parties agree this will occur on or before 29 September 2017… Chee Kin Sum will transfer 90% of [Pristine Timber] shares to [Mr Sheung] and will appoint [Mr Sheung] as director of [Pristine Timber] on the same day payment is made to [Forest Holdings] for the forestry right as provided in this clause.
[19] When read literally clause 2.1 has two apparent ambiguities: (a) it does not identify who is responsible for making the payment of $1,170,000; and (b) the commencement of the JV Agreement appears to hinge on two events, namely execution of the written agreement and when cleared funds ($1,170,000) are paid into the bank account of Forest Holdings. If that is the case, then the JV Agreement is yet to come into force, as the $1,170,000 was never paid. Accordingly, Mr Sheung cannot owe any obligations pursuant to the JV Agreement, and so specific performance should be refused.
[20] However, Forest Holdings contends that: (a) it is Mr Sheung who is to make the payment of $1,170,000 to Forest Holdings; and (b) the JV Agreement commences from the date of its execution. The first ambiguity falls within the second question for determination and I shall deal with it then. The second question will be dealt with now.
[21] Mr Lomas, for Forest Holdings, submits that the JV Agreement was enforceable immediately upon its execution, which happened on 6 October 2017, and that this is particularly so, given that the specified payment date (29 September 2017) had already passed by then. Mr Lomas argues that payment of the purchase price was merely a trigger event that gave rise to obligations on the part of Forest Holdings and Pristine Timber.
[22] Mr Lomas further submits that an interpretation of the JV Agreement that would see it as only being legally enforceable after Mr Sheung had paid the purchase price would make no commercial sense, because this would leave Forest Holdings in a state of limbo, uncertain as to whether it could market and sell its forestry rights to others without the risk of finding itself suddenly and without warning being contractually bound to transfer 50 percent of those rights to Pristine Timber. Mr Lomas argues this cannot have been what was intended, and it is not what a reasonable person in the position of the parties to the agreement would have thought cl 2.1 meant at the time of execution.
[23] The date on which the JV Agreement commenced is a matter of contractual interpretation. Essentially, Mr Lomas is asking the Court to adopt an interpretation of the agreement that would seem to counter the ordinary and natural meaning of cl 2.1 where the use of the word and suggests that commencement would not be triggered until execution and payment of the $1,170,000 had occurred.
[24] When the court is faced with a matter of interpretation it is clear that it is not bound to adopt the ordinary or natural meaning of the words. This would result in the
court adopting an entirely textual approach,3 which has been long since abandoned.4 Rather, regard must be had to context, and the words of the contract “must be set in the landscape of the instrument as a whole”.5 The question then is what cl 2.1 would convey to a reasonable person having all the background knowledge that would reasonably have been available to the parties in the situation they were in at the time of the agreement.6
[25] Looking at the JV Agreement as a whole, it provides for a joint venture between Forest Holdings and Pristine Timber to harvest, sell and share in the profits of the timber generated from the forestry rights. This joint venture required the injection of capital from an investor, presumably because Forest Holdings did not have the funds to undertake the venture alone. Once the money was received by Forest Holdings, obligations arose under the JV Agreement, including the obligation for Ms Sum to transfer 90 percent of the shares in Pristine Timber to Mr Sheung and for Forest Holdings to transfer 50 per cent of the shares in the forestry right to Pristine Timber. In this respect I agree that payment of the $1,170,000 was a trigger event, however, I diverge from Mr Lomas as to it consequences.
[26] I accept that without payment of the $1,170,000 none of the other obligations under cl 2.1 of the JV Agreement would eventuate. However, I regard all the cl 2.1 obligations as being contingent on each other rather than the other obligations being sequential to the payment of the $1,170,000.
[27] The layout and language of clause 2.1 suggest the intention that execution, payment and property transfers would take place on the same day. The references in clause 2.1 to execution and payment occurring on or before 29 September 2017 are followed by the reference to the property transfers happening on the same day that payment is made. This reinforces the point that the parties intention was for execution,
3 For examples of a purely textual approach see, Shore v Wilson (1842) 9 Cl & F 355 at 565–566, 8 ER 450 at 532–533; A & J Inglis v Buttery (1878) 3 App Cas 552 (HL) at 577; Great Western Railway and Midland Railway v Bristol Corp (1918) 87 LJ Ch 414 (HL) at 418–4199 per Lord Atkinson and 424–425 per Lord Shaw.
4 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL).
5 Charter Reinsurance Co Ltd v Fagan [1997] 1 AC 313 (HL) at 384.
6 Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL) at 912 per Lord Hoffman.
payment and the transfer of 90 per cent of shares in Pristine Timber by Ms Sum (the director and shareholder of Pristine Timber) and the transfer by Forest Holdings of the 50 pre cent share in the forestry rights to Pristine Timber to all occur on the same day.
[28] Mr Lomas contends that unless the JV Agreement is read as having legal effect from the date of execution any alternative interpretation would see Forest Holdings in a state of limbo, unsure as to whether it would have to sell the 50 per cent share in the forestry right to Pristine Timber or not. I reject that argument.
[29] The JV Agreement specified a date (29 September 2017) and any limitation on Forest Holdings ability to deal with the forestry rights was for that finite period. Because execution of the JV Agreement and payment of cleared funds in Forest Holdings’ bank account were to happen on the same day, Forest Holdings would have known whether the transfer of the forestry rights under the JV Agreement was to occur or not. Until these two events occurred on the same day, (and subject to any enforceable oral promises Forest Holdings may have made to Pristine Timber and Mr Sheung to Forest Holdings – which is a separate legal issue) Forest Holdings would have been free to deal with the forestry rights as it saw fit. Certainly, on this interpretation, the JV Agreement could not have constrained Forest Holdings from selling elsewhere, because until execution and payment of the $1,170,000 the agreement was legally ineffective.
[30] Indeed, it would only be if the JV Agreement took effect solely on execution that Forest Holdings then would find itself in the invidious position of being constrained from selling the forestry rights elsewhere if payment of the $1,170,000 was delayed or not forthcoming. In such circumstances Forest Holdings’ only remedy would be cancellation of the JV Agreement or seeking to enforce it. Accordingly, the interpretation that Mr Lomas argues against is actually the more helpful interpretation for Forest Holdings in the event of a default by Mr Sheung.
[31] Seemingly the parties were not ready to proceed to perform their various obligations under clause 2.1 on or before the specified date of 29 September 2017. Thus, by the time they executed the JV Agreement the specified date had passed. I note that there is no evidence that either Forest Holdings or Ms Sum were ready and
able to discharge their obligations under clause 2.1 either on 29 September 2017 or 6 October 2017, being the day the JV Agreement was executed.
[32] The execution of the JV Agreement on 6 October 2017 without more is a departure from what clause 2.1 required. However, whilst the parties’ conduct reflects a departure from clause 2.1, such departure or its consequences have not been pleaded as an alteration to the form of the written JV Agreement, nor is there evidence before me to suggest what form any such alteration might have taken. It would have been a simple matter on the date of execution to alter and initial the written date of 29 September 2017 to conform to the date of 6 October 2017, when execution actually took place. But this did not happen. No explanation was provided for why that did not occur.
[33] Once the date specified in clause 2.1 (29 September 2017) had passed without the JV Agreement being executed the parties could have: (a) altered the yet to be executed JV Agreement to specify a new prospective date in clause 2.1; and/or (b) agreed on different language for clause 2.1 to change the intent for all obligations in that clause to be performed on the same date. Their failure to take either of these steps has left the legal effect of clause 2.1 as to legal commencement as originally intended.
[34] I acknowledge that the document the parties executed stipulated a date for execution and performance of other obligations that had already passed, however, their failure to recognise they needed to address that matter cannot alter the meaning of clause 2.1, when it comes to determining when the JV Agreement commenced.
[35] Despite the actual execution date being different from the date specified in clause 2.1, it remains possible to make commercial sense of the JV Agreement by reading the reference to 29 September 2017 as also permitting a later date on which all parties performed their various obligations. To do that makes little if any real change to the parties’ bargain. Further clause 24 would allow for this. It provides:
24.Partial Invalidity
24.1 If any provision of this Agreement is invalid, void or unenforceable at law, such provision shall:
24.1.1be severable;
24.1.2be deemed to be deleted from this Agreement; and
24.1.3 not affect the validity, existence, legality or enforceability of the remaining provisions,
but only if the severance does not materially affect the purpose of, or frustrate, this Agreement.
[36] Thus, I consider that once time had passed beyond 29 September 2017 cl 24 would permit the reference in clause 2.1 to 29 September 2017 to be severed from the JV Agreement if in all other respects the parties had complied with its terms.
[37] On the other hand, to read the JV Agreement as legally enforceable on execution alone simply because the parties executed the written agreement on 6 October 2017, rather than on or before 29 September 2017 and without doing more,7 imposes a substantially different bargain on them. Had they all wanted to achieve that change they could easily have done so by altering the language of clause 2.1 to make it clear that the JV Agreement was legally effective from the time of its execution.
[38] As matters currently stand, I am satisfied that the JV Agreement has no legal effect and it has never had any legal effect. Forest Holdings has been free to dispose of its forestry rights as it saw fit. That it has not done so has nothing to do with Mr Sheung.
Is Mr Sheung obliged to pay $1,170,000 to Forest Holdings?
[39] Despite the JV Agreement executed on 6 October 2017 not expressly providing that Mr Sheung was legally obliged to pay the $1,170,000 to Forest Holdings, Mr Lomas submits that this is how that agreement should be read. He further submits that any concerns about doing this are now overcome through the pleaded variation to the JV Agreement made in the amended statement of claim. I reject both submissions.
[40] The finding I have made that the JV Agreement had no legal effect when it was executed on 6 October 2017 means there was nothing in existence in 2018 that could
7 This is an argument that Mr Lomas seemed to make because in promoting his interpretation of clause 2.1 he placed some weight on the fact the execution post dated the time specified in that clause.
be varied. However, and in case I have erred in that finding, I propose to go on and to consider, on the basis the JV Agreement did have legal effect on execution alone, whether it would then have required Mr Sheung to pay the $1,170,000 directly to Forest Holdings?’. I would answer this question in the negative for the following reasons.
[41] First, the purchase price for the 50 per cent share in the forestry right is specified in clause 2.1 of the JV Agreement (as set out above at [18] herein) and is tied to the commencement date. In this clause however, there is no clear and express statement as to who is obliged to pay the $1.17 million to Forest Holdings.
[42] Mr Lomas submits, that whilst not expressly stated, it is clear from the context that the ultimate source of the purchase price was Mr Sheung, who would in return receive a 90 per cent shareholding in Pristine Timber upon Forest Holdings receiving the purchase price. Mr Lomas then refers to clauses A and D set out in the background to the JV Agreement, which provide that Forest Holdings is to transfer 50 per cent of the forestry rights to Pristine Timber, and he argues that together clause 2.1 and the relevant background clauses render it implicit that Mr Sheung was to be the source of the purchase price.
[43] When this proceeding was before Associate Judge Smith for summary judgment he concluded that having regard to the JV Agreement “the intention was that [Mr Sheung] would pay the $1,170,000 not to [Forest Holdings], but to Pristine Timber”.8 Smith AJ went on to say “That makes some sense, as [Mr Sheung] was entitled to receive 90 per cent of the shares in Pristine Timber on the same day payment was made to [Forest Holdings]”.9 This led Smith AJ to find that the proper plaintiff in any claim against Mr Sheung would be Pristine Timber, and any claim by Forest Holdings should have been against the party liable to pay the purchase price, namely Pristine Timber.10
8 Forest Holdings (NZ) Ltd v Sheung [2019] NZHC 2090 at [33].
9 At [33].
10 At [34].
[44] Following the decision of Associate Judge Smith, Forest Holdings has now amended its statement of claim to allege that the JV Agreement was varied by an agreement made between Forest Holdings and Pristine Timber in August/September 2018 that the purchase price was to be paid directly to Forest Holdings.
[45] Forest Holdings contends that an email of Mr Sheung dated 6 September 2018 acknowledged and agreed to this. That email was addressed to Forest Holdings and said, “as I mention once settle here I’ll go back to KL and hv organize my account there then can deliver the 50% to u and balance 50% within another 10 days”.
[46] Although Associate Judge Smith was missing some of the context behind the email, it was also put before him and he held:11
I do not think [Mr Sheung’s] email of 6 September 2018 advances [Forest Holdings’] case on the summary judgment application. First, [Forest Holdings] does not appear to have offered any explanation for the lengthy delay between the time payment of the [purchase price] was due (29 September 2017) and the attempts to recover the money from [Mr Sheung] almost a year later. What was happening in that period? Surely something. Secondly, [Mr Sheung’s email] … is ambiguous on the critical point as to whether [Mr Sheung] had an ongoing obligation to pay the money… The wording of the email is not sufficiently clear for me to be certain.
[47] Like Associate Judge Smith I do not find Mr Sheung’s email sufficiently clear to be satisfied that he was acknowledging the existence of contractual obligations that he was required to pay Forest Holdings instead of Pristine Timber. It is possible that Mr Sheung was simply agreeing to make the payment in accordance with the JV Agreement and used “u” in a general sense. Or, it could be that “u” did refer to Forest Holdings but simply as a way of acknowledging that the purchase price would end up with the plaintiff once Mr Sheung had paid it to Pristine Timber. The brevity and informality of the email do not lend it to an interpretation that suggest any in depth analysis by Mr Sheung. Moreover, Mr Sheung is responding to an email that says “please reply to my below email urgently. I have a meeting in the morning to update everyone”. The “below email” is not provided and as a result Mr Sheung’s response is devoid of any meaningful context, hampering the ability of this Court to interpret who “u” was referring to.
11 At [39].
[48] Given those circumstances I am not satisfied that Mr Sheung possessed a contractual obligation as agreed in August/September 2018 to pay the $1,170,000 to Forest Holdings. Any obligation to pay this sum, if it existed, was owed only to Pristine Timber. Thus, even if I had found the JV Agreement had commenced on its execution on 6 October 2017 with a legal obligation to pay the $1,170,000, I would have found that no such obligation was owed directly Forest Holdings. Thus, this is another basis on which this proceeding can be dismissed.
[49] There is a second obstacle to Mr Lomas’s argument based on the alleged variation of 2018. The JV Agreement makes specific provision for how its terms are to be varied. Clause 17 provides:
17.Variation
17.1 No modification, alteration of or addition to this Agreement shall be binding on the parties unless in writing and signed or acknowledged by each of the parties. (emphasis added)
[50] The amended statement of claim at paragraphs 6 to 9 pleads there was a variation of the JV Agreement agreed between Forest holdings and Pristine Timber in August/September 2018 which Mr Sheung is alleged to have agreed to later in September 2018. However, how the variation was agreed is not pleaded. Nothing in paragraphs 6 to 9 confirms there was compliance with cl 17. Without that and without proof of such written agreement no variation would be legally effective let alone enforceable.
[51] If in 2018 the parties agreed to vary the JV Agreement based on the same terms as the written JV Agreement they executed on 6 October 2017, but with Mr Sheung now paying Forest Holdings directly that all needed to be expressly pleaded.
[52] Also, if Mr Sheung was, because of the alleged variation, to become legally responsible for paying the $1,170,000 directly to Forest Holdings there needed to be a legal reconciliation done of the parties’ various legal entitlements such that if Mr Sheung was to pay $1,170,000 directly to Forest Holdings, who would then legally receive the 50 percent interest in the forestry rights, Mr Sheung or Pristine Timber?
The requisite exchange of contractual burden and benefit needed to be outlined in the amended statement of claim.
[53] Further, it is difficult to see how the alleged variation could have been made when nothing else was done to vary the JV Agreement. For example, how would the benefits under the JV Agreement then be distributed. As it stands, under the JV Agreement no provision is made for Mr Sheung to enjoy a distribution of the proceeds of the joint venture, despite the alleged obligation he is the party that is obliged to pay Forest Holdings the sum of $1,170,000. In this regard cl 10 of the JV Agreement provides for the distributions to be shared between Forest holdings and Pristine Timber:
10.1.5 The net proceeds of the Joint Venture shall be used as a priority to repay the interest-free advances specified in clause 5. The remaining balance will be distributed between the Joint Venturers in the ratio of 40% to [Forest Holdings] and 60% to [Pristine Timber].
[54] Nowhere in the JV Agreement is provision made for any benefits from this agreement to be paid directly to Mr Sheung.
[55] In short, the idea the JV Agreement was varied so that Mr Sheung was obliged to pay $1,170,000 directly to Forest holdings has not been well thought through.
[56] Accordingly, I am satisfied that on any view there can be no obligation under the JV Agreement requiring Mr Sheung to pay $1,170,000 directly to Forest Holdings.
[57] It follows that on any basis the claim against Mr Sheung is without merit and should be dismissed and judgment entered in his favour.
Enforcement in Malaysia
[58] Mr Sheung is a businessman located in Malaysia. At the hearing I queried with counsel whether any judgment granting specific performance would be enforceable in Malaysia. Mr Lomas has since filed a memorandum with the Court confirming that the JV Agreement provides that it is governed by New Zealand law, that the parties submit to the jurisdiction of the New Zealand courts, and that if Forest Holdings was unable to obtain specific performance in New Zealand, it would be unable to obtain
specific performance at all as any proceedings issued in Malaysia could have readily been defended on the basis the Malaysian Courts did not have jurisdiction.
[59] Mr Lomas has also filed an affidavit from Forest Holdings’ Malaysian lawyers which confirms that a New Zealand made order for specific performance could be enforced in Malaysia by the filing of a common-law based action. Accordingly, I am satisfied that it would not have been futile to award specific performance had I been satisfied that Mr Sheung had a contractual obligation to pay $1,170,000 to Forest Holdings. Given I did not, this matter is largely redundant and is noted purely for the sake of completeness.
Result
[60]The proceeding by way of formal proof is dismissed.
[61]Judgment is entered for the defendant.
Duffy J
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