Gong v Zhang - [2016] NZHC 705

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2014-454-11

CIV 2014-454-28 [2016] NZHC 705

BETWEEN
YAOMING GONG

Plaintiff

AND

SHIJUN ZHANG Defendant

Hearing: 11 April 2016

Counsel:

J W Maassen for Plaintiff
R Reed and A Manuson for Defendant

Judgment:

15 April 2016

JUDGMENT OF BROWN J

Introduction

[1] The substantive claims in these two proceedings are set down for hearing in the High Court at Wellington for several days commencing 7 June 2016. In the first proceeding the plaintiff seeks to recover a debt allegedly owed to him by the defendant in the sum of $591,848. In the second proceeding the plaintiff seeks to recover from the defendant the sum of $164,082.58, being a half share of an amount for which they were jointly obligated and which the plaintiff claims to have paid in full.

[2] On 23 November 2015 the plaintiff applied without notice for a freezing order and an ancillary order against the defendant on the grounds that there was a significant danger that judgment in favour of the plaintiff in the proceedings would be wholly or partly unsatisfied because the defendant might abscond or because
certain of his property had allegedly been transferred to a trust.

GONG v ZHANG [2016] NZHC 705 [15 April 2016]

[3] By a Minute dated 27 November 2015 I made orders in terms of a draft freezing order and a draft ancillary order which had been submitted by the plaintiff. A new freezing order was issued by me in a Minute dated 18 December 2015. That freezing order was amended by Dobson J in a Minute dated 1 February 2016.

[4] On 4 February 2016 the defendant filed an application to set aside or in the alternative to vary the freezing and ancillary orders of 27 November 2015. On
18 February 2016 the plaintiff filed an application to strike out the defence in both proceedings on the grounds that the defendant had not complied with the original ancillary order dated 27 November 2015, the freezing order dated 18 December 2015 or the amended freezing order dated 1 February 2016. This judgment addresses those two applications.

Background

[5] The plaintiff’s original application of 23 November 2015 sought an order to freeze the property at 25D Riverglade Drive, Hamilton which was said to have a capital value of $2,060,000, albeit subject to a mortgage. An ancillary order was sought requiring the defendant to disclose a list of his assets in New Zealand.

[6] As the likely maximum amount of the applicant’s claim was in the order of

$1,000,000, I considered, given the values of assets referred to in the application, that there was a potential issue with r 32.6(2). I requested a memorandum addressing the issue together with a draft order. Ultimately the freezing order made on 27 November 2015 related only to the property at 25D Riverglade Drive, Hamilton. An ancillary order required the defendant to provide the Court with a list of all New Zealand-based assets owned by the…

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 705
Decision Date: 15 April 2016

CaseChat Overview and Summary

The case of Gong v Zhang [2016] NZHC 705 is a dispute between Yaoming Gong, the plaintiff, and Shijun Zhang, the defendant, heard in the High Court at Wellington. The plaintiff is seeking to recover a debt of $591,848 from the defendant, while in a separate proceeding, the plaintiff seeks to recover $164,082.58, which is a half share of an amount for which the plaintiff and defendant were jointly obligated. The defendant has filed an application to set aside or vary the freezing and ancillary orders that were initially granted without notice. The plaintiff has also filed an application to strike out the defendant's defences on the grounds of non-compliance with the Court's orders. The court must decide whether the freezing and ancillary orders should be discharged or varied, and whether the plaintiff's application to strike out the defences should be granted.

The court found that there was a good arguable case for the plaintiff's claims in both proceedings and that there was a real risk that the defendant would dissipate or dispose of his assets. The court determined that the continuation of the freezing order was justified and required. The terms of the freezing order were found to be reasonable, and the amendment made by Dobson J was intended to provide the defendant with an alternative mode of complying with the Court's direction. The court concluded that the criticisms of the defendant's counsel were not valid, and the freezing order would continue in respect of the specified New Zealand assets of the defendant. The court decided not to grant the plaintiff's application to strike out the defences at that time, but warned the defendant to comply with the orders made in the judgment. The defendant was given 15 working days to file an affidavit containing specific details of his New Zealand and overseas assets to the value of NZ$400,000, which would then be included in the freezing order. If the defendant failed to comply with the freezing order and direction within the specified timeframe, the defences in both proceedings would be struck out.

In summary, the court declined the defendant's application for an order discharging the freezing order, but granted the plaintiff's request for an unless order if the defendant failed to comply with the freezing order and direction within 15 working days. The plaintiff was successful on both applications and was entitled to costs on each on a 2B basis.

Orders