Gong v Zhang
[2014] NZHC 2838
•14 November 2014
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2014-454-11 [2014] NZHC 2838
BETWEEN YAOMING GONG
Plaintiff
AND
SHIJUN ZHANG Defendant
AND
Hearing: 25 July 2014
Further submissions 8 August 2014
Counsel:
J W Maassen for the Plaintiff
K I Bond for DefendantJudgment:
14 November 2014
JUDGMENT OF ASSOCIATE JUDGE SMITH
Introduction ....................................................................................................................................... [1] Background........................................................................................................................................ [3]
Issues for determination ................................................................................................................. [25]
1. Dr Gong’s application for further discovery ..................................................................... [25]
2. Dr Gong’s application for further or better answers to interrogatories ........................... [25]
3. Mr Zhang’s application for further and better discovery by Dr Gong ............................. [25]
Issue 1: Dr Gong’s application for further discovery ................................................................... [26] Applications for particular discovery generally – legal principles .............................................. [26] The particular document categories sought by Dr Gong ............................................................. [32] Issue 1(a) Categories 1 – 9 in Dr Gong’s “targeted discovery” document ........................... [32]
Category 1 – documents relating to COFCO’s authorisation to Mr Zhang, allowing Mr Zhang to represent COFCO in New Zealand............................................................................................... [40]
Category 2 – documents relating to the relationship between Mr Zhang, Mr Lin, and Mr Zhang’s
brother-in-law. .............................................................................................................................. [42]
Category 3 – documents relating to the relationship between Shanghai Shuibei Industrial Co Ltd,
its shareholders, Mr Lin and Mr Zhang’s brother-in-law or any other COFCO personnel. ........ [45]
Category 4 – documents relating to the disclosure by Mr Lin and/or Mr Zhang’s brother-in-law to
YAOMING GONG v SHIJUN ZHANG [2014] NZHC 2838 [14 November 2014]
COFCO’s management about the shareholding matter of Shanghai Shuibei Industrial Co Ltd at
CNZKICL ..................................................................................................................................... [48]
Category 5 – documents relating to matters addressed in Dr Gong’s notice to answer
interrogatories .............................................................................................................................. [49]
Category 6 – any document relating to communications with COFCO, Mr Zhang’s brother-in-law or Mr Lin by Mr Zhang between 21 October 2011 and 31 January 2014. ................................... [51]
Category 7 – any documents relating to payment from or to Mr Lin and Mr Zhang’s brother-in-law as a result of the export of New Zealand produce to China.......................................................... [53]
Category 8 – any authorisation from COFCO for Mr Lin to sign commission agreement with
CNZKICL dated 7 March 2013 .................................................................................................... [54]
Category 9 – any documents/correspondence between Mr Zhang and other parties, relating to Confidentiality and Exclusivity Deed Mr Zhang negotiated and instructed CNZKICL to sign with Chen Meifeng in June 2013 .......................................................................................................... [55]
Issue 1(b) Additional documents relating to Dr Gong’s Interrogatories, Question No. 21 ... [56] Issue 1(c) Mr Zhang’s bank statements showing payments to SkyCity account .................... [69] Issue 1(d) Mr Zhang’s travel records for the period 13 – 25 August 2012 ............................ [79]
Issue 2 – Dr Gong’s application for further or better answers to interrogatories ..................... [86]
Principles relating to the adequacy of answers to interrogatories ............................................... [86] Issue 2(a) Should Mr Zhang be directed to file a more complete answer to Dr Gong’s Question
21 (relating to payments of $120,000 made to Mr Zhang’s SkyCity account between 13 – 15 August
2012)? .............................................................................................................................. [89]
Issue 2(b) – Should Mr Zhang be directed to file more complete answers to Dr Gong’s Questions
26(a),(b),(c),(h) and (i), and 27(a)-(c) and (e)-(m)? .................................................................... [97]
Issue 3 – Mr Zhang’s application for further discovery .............................................................[110] (a) Dr Gong’s travel and accommodation documents ............................................................ [110] (b) - Documents relating to Dr Gong’s use of third party bank accounts ................................... [117]
Summary of orders ....................................................................................................................... [127]
Introduction
[1] The plaintiff (Dr Gong) applies for an order for further discovery, and an order directing Mr Zhang to provide more complete answers to certain interrogatories. Mr Zhang applies for an order directing Dr Gong to provide further discovery.
[2] In the course of the hearing, counsel were able to resolve a number of the matters in dispute, and at the conclusion of the hearing I directed them to file a joint memorandum identifying which parts of the applications remained in dispute. That memorandum was filed on 8 August 2014. The matters which were originally in dispute have been reduced significantly.
Background
[3] Dr Gong is an immigration consultant based in Palmerston North. Mr Zhang is a businessman living in Hamilton. Mr Zhang and Dr Gong had business dealings with each other between October 2011 and mid 2013, generally relating to the export of food products from New Zealand to China. There is other litigation between them relating to disputes which have arisen out of their business dealings.
[4] The present dispute arises out of a claim by Dr Gong for recovery of what he says were a number of personal loans made to Mr Zhang. Allowing for some repayments, Dr Gong claims a total of $591,848 which he says is the balance remaining unpaid, together with Judicature Act interest and costs.
[5] Mr Zhang was a keen gambler at casinos in New Zealand, including SkyCity casino, and Dr Gong says that the purpose of the loans was to fund Mr Zhang’s gambling activities.
[6] Details of the loans allegedly made by Dr Gong to Mr Zhang are set out in detailed schedules attached to the amended statement of claim. The majority of the payments appear to have been made by bank transfer into Mr Zhang’s SkyCity casino account, but Dr Gong says that there were also numerous cash payments or cash withdrawals made to or for the benefit of Mr Zhang. Some of these cash payments were in the sum of $10,000; others were smaller sums.
[7] Dr Gong says that on or about 21 February 2012, Mr Zhang agreed to pay an additional sum of $80,000 for interest. At that time, Dr Gong says that the outstanding loan balance was $420,000, so the additional interest figure brought the balance up to $500,000.
[8] Dr Gong says that the total of all advances made to Mr Zhang was $775,000, and that repayments made by Mr Zhang have totalled $263,152. Adding the agreed interest of $80,000, Dr Gong says that the balance owing is $591,848.
[9] Mr Zhang denies that the sums paid to him by Dr Gong were loans. His evidence is that he had an arrangement with Dr Gong under which the two men
would gamble together and split the winnings equally. Mr Zhang says that he also covered the costs of Dr Gong’s accommodation, food and drinks when they were gambling together.
[10] Mr Zhang generally points to the absence of any written agreement evidencing the claimed loans. He accepts that Dr Gong was advancing money to his SkyCity account, but says there is nothing which shows Dr Gong was not participating in the gambling, or that Mr Zhang requested the sums paid as a loan.
[11] Dr Gong identifies a payment by Mr Zhang of $180,000 on 23 January 2012 as a loan repayment. Mr Zhang says that 23 January 2012 was one of his particularly successful gambling nights with Dr Gong, and the $180,000 was Dr Gong’s share in the joint winnings.
[12] Dr Gong says that in February 2012, Mr Zhang promised to sign a loan acknowledgment letter, and that he did subsequently sign a debt acknowledgment confirming the amount of the debt. Dr Gong produced a spreadsheet showing total advances to Mr Zhang at that stage of $670,000 and repayments of $77,214 (balance
$592,786). The document bears a signature which Dr Gong says is that of Mr Zhang. Mr Zhang’s evidence is that he has never seen the document before, and that the signature on it does not appear to be his. He asserts that Dr Gong “has a history of signing documents on behalf of others, and it appears to me that this is what has happened here”.
[13] Mr Zhang offers the following basis for this claim. In early 2012, he and Dr Gong were setting up a company called NZCHI International Exporting Ltd (NZCHI). Dr Gong was responsible for the administrative aspects of establishing NZCHI, and Mr Zhang was not always on hand to sign documents. For that reason, Mr Zhang signed approximately five blank papers and gave them to Dr Gong to use when Mr Zhang’s signature was required on documents used in setting up NZCHI. He speculates that Dr Gong may have used one of these signatures on the spreadsheet which Dr Gong says is an acknowledgment of debt.
[14] Mr Zhang alleges that Dr Gong has faked signatures on other occasions, including the signature of Mr Lin Feng, the general manager of a company called China Processed Food Imp. & Exp Co Ltd (COFCO). (It appears that Mr Zhang had a long standing relationship with COFCO, and that in early 2013 NZCHI was a supplier to COFCO of apples, cherries, and other agricultural products from New Zealand and elsewhere. At about that time, NZCHI and associates in New Zealand were applying to Zespri International Ltd to become an agent to market New Zealand kiwifruit in China. They intended to do that through an entity called China New Zealand Kiwifruit Investment Ltd (CNZKICL).
[15] Mr Zhang produced a COFCO letter to CNZKICL dated 3 April 2013, which purports to be signed by Mr Lin Feng. In the letter, COFCO placed an order for CNZKICL’s “liquid gold” kiwifruit. Mr Zhang alleges that Lin Feng’s signature on the 3 April 2013 letter is a fake. He contends that Dr Gong copied Mr Lin’s electronic signature from a letter which COFCO had sent to Zespri on
20 January 2013, and pasted the signature into the COFCO letter dated 3 April 2013.
[16] In response, Dr Gong says that the 3 April 2013 letter was prepared by a common business associate of Mr Zhang and himself, based on information provided by Mr Zhang, who claimed to be acting on behalf of Mr Lin. Dr Gong says the letter was intended to be used in a feasibility study, as an indicator of the size of the Chinese market for the particular type of Kiwifruit. As the project ceased for other reasons, the letter was never used.
[17] Dr Gong does not deny that he copied in Mr Lin’s signature; what he says is that Mr Zhang told him that he had authority from COFCO (and Mr Lin) in relation to “the indicative Kiwifruit order”, and that it was in order to put Mr Lin’s signature on the letter, on the basis that Mr Lin would sign an original when he returned from an overseas trip. Dr Gong alleges that Mr Zhang’s plan was to fabricate Mr Lin’s authorisation in order to mislead Dr Gong, and then avoid repaying the advances Dr Gong had made to him by using this signature against him.
[18] Mr Zhang alleges that Dr Gong did not destroy the 3 April 2012 letter, which
Lin Feng asked him to do when he found out about the forgery. Instead, Mr Zhang
claims that Dr Gong used the fake signature several times in doing business with other companies.
[19] It is necessary to refer briefly to certain other disputed matters which are relevant to the discovery or interrogatories disputes. First, Mr Zhang denies that one of the payments which Dr Gong claims was a loan repayment was in fact a loan repayment. The circumstances of this “repayment” are as follows.
[20] Dr Gong and Mr Zhang were both shareholders in a Hong Kong-based company called New Zealand Food Association Ltd (NZFA). Dr Gong held
33.6 per cent of the shares in NZFA, and Mr Zhang held 46.4 per cent. Two other shareholders held the remaining twenty per cent of the shares. Mr Zhang’s evidence is that the shareholders of NZFA agreed to provide further equity in proportion to their shareholdings. In the case of Mr Zhang and Dr Gong, that required the subscription of additional capital totalling HK$800,000. Mr Zhang says that his contribution and that of Dr Gong were made in one lump sum payment on their behalf, by way of a loan from an associate of Mr Zhang, Ms Hou Aihua.
[21] Dr Gong says that the HK$336,000 payment made to NZFA on his behalf constituted a partial repayment by Mr Zhang of the advances made by Dr Gong to Mr Zhang. Mr Zhang denies that, saying that the payment was a loan to Dr Gong from Ms Hou Aihua. He says that he also borrowed his additional capital contribution from Ms Hou Aihua, and he accepts that he will have to repay that sum to her.
[22] Secondly, Dr Gong alleges that certain advances were made to Mr Zhang while Dr Gong and Mr Zhang travelled with their families to Queenstown for New Year’s Eve 2012. On Dr Gong’s account, Mr Zhang borrowed a total of
$23,000 from Dr Gong, who made a number of cash withdrawals to cover that sum. Mr Zhang tells a quite different story. He says that Dr Gong probably withdrew the
$23,000 for himself.
[23] Finally, the tables appended to Dr Gong’s amended statement of claim show an originating bank account from which each of the advances to Mr Zhang were
allegedly made. For the most part, the bank accounts are those of Dr Gong (or a joint account in the name of Dr Gong and “T Dong”), but one advance, made on 20
October 2011, is shown as having been made from the bank account of “Wenjun Liu”. And a payment of $55,000 made on 8 December 2011 came from a bank account in the name of “Suyun Liang”.
[24] USD$20,000 (NZD$24,998) was received from Hong Kong into the account of Liang Suyun on 14 October 2012. Dr Gong says this was a partial repayment of the amounts advanced by him to Mr Zhang. Mr Zhang denies this, saying that the payment was made from the account of Ms Aihua Hou following a request made by Dr Gong on 11 October 2012. Mr Zhang says the payment was to be used for the purposes of NZCHI.
Issues for determination
[25] The following issues fall to be determined:
1. Dr Gong’s application for further discovery
(a) Are the documents listed 1 – 9 in Dr Gong’s “targeted discovery” document dated 7 May 2014 (these documents relate generally to COFCO) relevant to any issue or issues in the proceeding?
(b)Should Mr Zhang be required to disclose any additional documents which may be in his possession or power which may be relevant to question 21 in Dr Gong’s notice to answer interrogatories (including in particular the documents identified at subparas (i)-(vi) in Table 2 attached to counsel’s joint memorandum dated 8 August 2014)?
(c) Should Mr Zhang be required to disclose his bank account and Visa card statements for the date ranges 30 December 2011 –
4 January 2012, and 31 December 2012 – 2 January 2013, during which periods Dr Gong says he advanced funds to Mr Zhang in cash?
(d)Mr Zhang’s travel records – should Mr Zhang be required to provide documents relating to his departure from and re-entry into New Zealand during the period 13 – 25 August 2012 ( said to be relevant to alleged advances of $120,000 made in that period)?
2. Dr Gong’s application for further or better answers to interrogatories
(a) Should Mr Zhang be directed to file a more complete answer to Dr Gong’s Question 21 (relating to payments totalling $120,000 made into Mr Zhang’s SkyCity account by Dr Gong on 13 and 15 August
2012)?
(b)Should Mr Zhang be directed to file more complete answers to Dr Gong’s Questions 26(a), (b), (c), (h), and (i), and 27(a)-(c), and (e)-(m) (relating to COFCO and Mr Lin Feng)?
3. Mr Zhang’s application for further and better discovery by Dr Gong
(a) Are Dr Gong’s records relating to travel to Auckland in the period from 1 October 2011 to January 2013 (in particular on dates when SkyCity Casino records show that Mr Zhang was gambling at the SkyCity Casino in Auckland) relevant and discoverable by Dr Gong?
(b)Are documents setting out the basis of the arrangement between Dr Gong and Wenjun Liu and Liang Suyun authorising Dr Gong to make use of those parties’ bank accounts (and the bank accounts of all three parties insofar as they show payments from Dr Gong to Mr Liu and Ms Suyun, and from Mr Liu and Ms Suyun to Mr Zhang) relevant and discoverable by Dr Gong?
Issue 1: Dr Gong’s application for further discovery Applications for particular discovery generally – legal principles [26] Rule 8.19 of the High Court Rules provides:
8.19 Order for particular discovery against party after proceeding commenced
If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party—
(a) to file an affidavit stating—
(i) whether the documents are or have been in the party's control; and
(ii) if they have been but are no longer in the party's control, the party's best knowledge and belief as to when the documents ceased to be in the party's control and who now has control of them; and
(b) to serve the affidavit on the other party or parties; and
(c) if the documents are in the person's control, to make those documents available for inspection, in accordance with rule 8.27, to the other party or parties.
[27] The Rules provide for two kinds of discovery, namely “standard discovery” and “tailored discovery”.1 Standard discovery requires each party to disclose documents that are or have been in that party’s control and that are: 2
(a) documents on which the party relies; or
(b) documents that adversely affect that party’s own case; or (c) documents that adversely affect another party’s case; or (d) documents that support another party’s case.
[28] Tailored discovery must be ordered when the interests of justice require an order involving more or less discovery than standard discovery would involve.3
[29] In this case, an order was made on 1 May 2014 that if the parties could not agree upon tailored discovery, they were to provide standard discovery. The
1 High Court Rules, r 8.6.
2 Rule 8.7.
3 Rule 8.8.
discovery was to be provided by 13 June 2014. In the event, the parties were not able to agree on categories for tailored discovery, so the relevance of documents for discovery is to be assessed under the “adverse documents” test in r 8.7, as set out in paragraph [28] of this judgment.
[30] The starting point in assessing relevance is always the pleadings (statements of claim and defence). In Commerce Commission v Cathay Pacific Airways Ltd, Asher J said:4
Discovery categories will reflect the issues and will only be ordered for the discovery of documents that are relevant to those issues. Except in exceptional circumstances, these issues will be discernible from a review of the pleadings. Discovery orders that are essentially of a “fishing” nature are not part of tailored discovery. Orders will not be granted where the categories do not relate to a pleaded relevant issue…
[31] While the statements from the Judge in that case were directed to tailored discovery, they are equally applicable in this case.
The particular document categories sought by Dr Gong
Issue 1(a) Categories 1 – 9 in Dr Gong’s “targeted discovery” document
[32] Dr Gong asks that Mr Zhang be directed to provide discovery of the following additional documents, all of which are concerned in one or another with COFCO:
(1) Documents relating to COFCO’s authorisation to Mr Zhang, allowing
Mr Zhang to represent COFCO in New Zealand.
(2)Documents relating to the relationship between Mr Zhang, Mr Lin and Mr Zhang’s brother-in-law.
(3) Documents relating to the relationship between Shanghai Shuibei
Industrial Co. Ltd., its shareholders, Mr Lin and Mr Zhang’s brother- in-law or any other COFCO personnel.
4 Commerce Commission v Cathay Pacific Airways, [2012] NZHC 726 at [13].
(4)Documents relating to the disclosure by Mr Lin and/or Mr Zhang’s brother-in-law to COFCO’s management about the shareholding matter of Shanghai Shuibei Industrial Co Ltdat CNZKICL.
(5)Documents relating to matters addressed in Dr Gong’s notice to answer interrogatories.
(6) Any document relating to communications with COFCO, Mr Zhang’s
brother-in-law or Mr Lin by Mr Zhang between 21 October 2011 and
31 January 2014.
(7)Any documents relating to payment from or to Mr Lin and Mr Zhang’s brother-in-law as a result of the export of New Zealand produce to China.
(8)Any authorisation from COFCO for Mr Lin to sign commission agreement with CNZKICL dated 7 March 2013.
(9)Any documents/correspondences between Mr Zhang and other parties, relating to Confidentiality and Exclusivity Deed Mr Zhang negotiated and instructed New Zealand Kiwifruit Investment Ltd to sign with Chen Meifeng in June 2013.
[33] I note first that COFCO is not mentioned at all in Dr Gong’s amended statement of claim. Nor is it mentioned in Mr Zhang’s statement of defence. The claimed relevance of the COFCO-related documents arises out of Dr Gong’s pleading that Mr Zhang signed an acknowledgement of debt. Mr Zhang says in response that the signature on the claimed acknowledgment was taken from blank documents which he had signed for purposes associated with the incorporation of NZCHI, and that Dr Gong has dishonestly applied one of those signatures to the document which he says constitutes an acknowledgement of the debt. Mr Zhang points to two other instances where Dr Gong is alleged to have wrongly applied someone else’s signature to a document, apparently as evidence that Dr Gong has a propensity to act in that way.
[34] Whether or not Mr Zhang signed the claimed acknowledgement of debt is obviously relevant to Dr Gong’s claims and Mr Zhang’s defence.
[35] In essence, Dr Gong is seeking discovery of documents which he believes may assist him to rebut propensity evidence Mr Zhang will advance at trial, namely evidence tending to show that Dr Gong has a propensity to copy the signatures of others on documents when he has no authority to do so.
[36] Section 40 of the Evidence Act 2006, sets out the propensity rule:
40 Propensity rule
(1) In this section … propensity evidence—
(a) means evidence that tends to show a person’s propensity to act in a particular way or to have a particular state of mind, being evidence of acts, omissions, events, or circumstances with which a person is alleged to have been involved; but
(b) does not include evidence of an act or omission that is—
(i) 1 of the elements of the offence for which the person is being tried; or
(ii) the cause of action in the proceeding in question.
(2) A party may offer propensity evidence in a civil or criminal proceeding about any person.
…
(4) Evidence that is solely or mainly relevant to veracity is governed by the veracity rules set out in section 37 and, accordingly, this section does not apply to evidence of that kind.
[37] Of course I am not here concerned with admissibility of evidence at trial, but the extent of Mr Zhang’s discovery obligations. Under r 8.19, I must be satisfied that Mr Zhang has not discovered one or more documents in the categories identified by Dr Gong that should have been discovered. The application of r 8.19 comes back to an assessment of relevance on the pleadings, and the application of the “adverse documents” test in r 8.7. In this case, Mr Maassen refers particularly to r 8.7(b) – documents that adversely affect a party’s own case – and 8.7(c) – documents that adversely affect the other party’s case.
[38] For Mr Zhang, Mr Bond submits that Dr Gong’s application seeks documents which relate to Mr Zhang’s authority to act on behalf of Mr Lin and COFCO in New Zealand, along with various other documents regarding Mr Zhang’s dealings with those parties. Mr Bond submits that there is no basis to inquire into Mr Zhang’s unrelated business dealings with Mr Lin and COFCO.
[39] Turning to each of the documents listed in this category:
Category 1 – documents relating to COFCO’s authorisation to Mr Zhang, allowing
Mr Zhang to represent COFCO in New Zealand.
[40] Mr Zhang’s position is that he had no authorisation to represent COFCO in New Zealand, and that he never made any claim to Dr Gong that he had such authority.5 Mr Zhang therefore says that there are no documents to discover in this category.
[41] In the absence of evidence from Dr Gong that there was such an authorisation, there can be no basis for the court to find that such documents do exist, and should have been discovered by Mr Zhang. Dr Gong’s request for documents in this category is accordingly refused.
Category 2 – documents relating to the relationship between Mr Zhang, Mr Lin, and
Mr Zhang’s brother-in-law.
[42] In his affidavit in support of his further discovery application, Dr Gong did not explain the role allegedly played by Mr Zhang’s brother-in-law. However in a reply affidavit sworn on 11 July 2014, Dr Gong stated that Mr Zhang had advised him that his brother-in-law was Mr Lin Feng’s immediate manager/superior, and had a strong influence on Mr Lin’s promotion and status at COFCO. Dr Gong went on to say that Mr Zhang had told him that his brother-in-law’s relationship with Mr Lin together with the fact that a company owned by Mr Lin, Shanghai Shuibei Industrial Co Ltd, held 33 per cent of the shares in CNZKICL, were two of the major reasons Mr Zhang claimed he had authorisation from Mr Lin to represent him in COFCO’s
dealings with CNZKICL (including in respect of the April 2013 letter).
5 Mr Bond’s written submissions, para [22].
[43] Mr Bond submits that this category of documents is unacceptably wide. I agree. “Documents relating to the relationship” between Mr Zhang, Mr Lin, and Mr Zhang’s brother-in-law could conceivably catch almost any communication between those parties. However I think that if Mr Zhang is going to rely on the application of Mr Lin’s signature on the April 2013 COFCO letter as propensity evidence against Dr Gong, Dr Gong must be equally entitled to call evidence of the circumstances surrounding the act which is said to be evidence of the propensity, to put that act in its proper context. What Dr Gong is effectively saying is that, whether or not Mr Zhang had actual authority from Mr Lin for the copying of his signature on the April 2013 COFCO letter, Dr Gong had reasonable grounds for believing that such authority existed. One of those “reasonable grounds” is the family relationship which is said to exist between Mr Zhang and Mr Lin’s manager or superior within the COFCO organisation.
[44] In the circumstances, I think all that is required by way of further discovery under this heading, is any document or documents in Mr Zhang’s control which identifies his brother-in-law as an officer or employee of the COFCO company or group, and any documents in his control that show the respective ranks of Mr Lin and Mr Zhang’s brother-in-law within COFCO. I make an order accordingly. It seems to me that to the extent Dr Gong seeks more under this heading, he is on a fishing expedition.
Category 3 – documents relating to the relationship between Shanghai Shuibei Industrial Co Ltd, its shareholders, Mr Lin and Mr Zhang’s brother-in-law or any other COFCO personnel.
[45] Again, this request is far too wide and appears to be something of a fishing expedition. The request would appear to catch just about any communication between the parties named in it.
[46] However there is evidence from Dr Gong that Mr Zhang told him that Shanghai Shuibei Industrial Co Ltd is an “anonymous company” of Mr Lin, and Dr Gong says that Shanghai Shuibei Industrial Co Ltd owns 33 per cent of the shareholding in CNZKICL. As a substantial shareholder of CNZKICL, Shanghai Shuibei Industrial Co Ltd would have had an interest in the writing of the 3 April
2013 COFCO letter, as CNZKICL stood to benefit from the letter. And if Shanghai Shuibei Industrial Co Ltd is indeed Mr Lin’s company, Mr Lin would arguably have had an interest in signing the letter, or authorising his signature to be added to it.
[47] In the circumstances, Mr Zhang should disclose any documents in his control which may show (i) the extent of any ownership interest Mr Lin (or entities controlled by Mr Lin) may have in Shanghai Shuibei Industrial Co Ltd, and (ii) the extent of any ownership interest Shanghai Shuibei Industrial Co Ltd has in CNZKICL. I make an order accordingly. Beyond that, I do not consider Dr Gong has established a case for further discovery under this heading.
Category 4 – documents relating to the disclosure by Mr Lin and/or Mr Zhang’s brother-in-law to COFCO’s management about the shareholding matter of Shanghai Shuibei Industrial Co Ltd at CNZKICL
[48] This request relates to documents which appear to be far removed from the essential issues in the proceeding, and it is hard to see how documents in this category could assist Dr Gong to establish either (i) that Mr Lin authorised the placing of his signature on the 3 April 2013 COFCO letter, or (ii) that it was reasonable for Dr Gong to believe that Mr Lin had done so. The request for documents in this category is refused.
Category 5 – documents relating to matters addressed in Dr Gong’s notice to answer interrogatories
[49] The principal interrogatories which are concerned with Mr Lin and/or COFCO appear to be Nos. 26 – 31. This request is insufficiently specific, but it appears that all of the questions in those interrogatories relate to allegations made by Mr Zhang in paragraph [16] of an affidavit sworn by him on 31 March 2014. That paragraph reads:
I think that [Dr Gong] has obtained my signature from another source and applied it to the document he has created. Around early 2012, [Dr Gong] and I were setting up a company called NZCHI International Exporting Limited (“NZCHI”). [Dr Gong] was responsible for all the administrative aspects of setting up NZCHI and I would not always be readily available to sign documents. I therefore signed approximately five blank papers and gave them to [Dr Gong] to use in setting up the NZCHI. My intention was that [Dr Gong] would contact me regarding any papers that needed signing
and I would approve the application of my signature to that particular document. Obviously, I did not approve of the application of my signature to this supposed acknowledgement of debt because I have never seen it before.
[50] I am not prepared to make an order in the broad terms sought by Dr Gong under this heading. It is enough to order, as I do, that Mr Zhang is to discover any documents in his control (which have not already been included in his discovery) which are relevant to the following issues:
(i) Whether Mr Lin authorised Mr Zhang or Dr Gong to place his electronic (or other copied) signature on COFCO letters dated 21 February
2013 or 3 April 2013; and
(ii) Whether Mr Zhang communicated to Dr Gong that Mr Lin had given any such an authority.
Category 6 – any document relating to communications with COFCO, Mr Zhang’s
brother-in-law or Mr Lin by Mr Zhang between 21 October 2011 and 31 January
2014.
[51] There is no basis for this wide-ranging request for additional discovery. The only relevance of COFCO appears to be on the issue of whether Mr Lin did or did not authorise the placing of his signature on COFCO letters in February and April of
2013, and that evidence will itself only be relevant to the extent that it may tend to show that Dr Gong did or did not have a propensity to apply the signatures of other people on documents when he had no authority to do so (which may in turn be relevant to the issue of whether there was or was not a written loan agreement signed
by Mr Zhang).6
[52] This request appears to be in the “fishing” category, and is refused
accordingly.
6 As alleged at 2(c) of Dr Gong’s amended statement of claim and denied by Mr Zhang in his statement of defence.
Category 7 – any documents relating to payment from or to Mr Lin and Mr Zhang’s
brother-in-law as a result of the export of New Zealand produce to China
[53] This request seeks documents which appear to have no relevance to the principal issue of whether Dr Gong lent the claimed money to Mr Zhang or whether the payments made by Dr Gong were merely agreed contributions made to a joint gambling fund. Nor does it appear to have any real relevance to the “propensity” issue raised by Mr Zhang. It appears to be a fishing expedition designed to see if there is additional evidence that Mr Lin had a motive to authorise the placing of his signature on the April 3 2013 COFCO letter, and in my view it is too remote from the issues in the pleadings to be considered relevant for discovery purposes. The request for discovery under this heading is refused.
Category 8 – any authorisation from COFCO for Mr Lin to sign commission agreement with CNZKICL dated 7 March 2013
[54] It is not clear on the evidence that any such document exists. Even if it does, it is not at all clear how it might be considered relevant to this proceeding. Mr Bond says that the document has not been disclosed in Dr Gong’s discovery, and that any such document would be held by Mr Lin in any event. I am not satisfied that Dr Gong has established an evidential basis for a finding either that any document in this category is relevant, or that such a document is in Mr Zhang’s control and should have been discovered. The application under this heading is refused.
Category 9 – any documents/correspondence between Mr Zhang and other parties, relating to Confidentiality and Exclusivity Deed Mr Zhang negotiated and instructed CNZKICL to sign with Chen Meifeng in June 2013
[55] The relevance of these documents, if they exist, has not been explained. There is simply no evidence to support the request. It is refused accordingly.
Issue 1(b) Additional documents relating to Dr Gong’s Interrogatories, Question
No. 21
[56] Question No. 21 in Dr Gong’s interrogatories, and Mr Zhang’s answer, as
follows:
Question 21
In his Affidavit dated 31 March 2013, at paragraph 21(g) Mr Zhang denied an advance from Dr Gong of $120,000. Please state:
a. What was the useage of the fund ($120,000) paid into Mr Zhang’s Sky City account by Dr Gong on 13 and 14 August 2012 which was referred to as Loan 3 in Mr Gong’s Affidavit dated 14 February 2014?
b. If it was gambling fund, when this fund was gambled?
c. Who gambled this fund?
Answer
I have not been able to ascertain exactly what this amount was used for
because the SkyCity gambling records only cover the period to
February 2012.
[57] Question 21 relates to a claimed advance of $120,000 from Dr Gong to
Mr Zhang.
[58] Dr Gong says that he met with Mr Zhang in Taupo on 12 August 2013, and that in the course of discussions on that day Mr Zhang told him that he had borrowed
$120,000 from SkyCity Casino and had promised to repay the money to the casino within the next few days. Dr Gong says that Mr Zhang did not have the money to do so, and wanted to borrow the funds from Dr Gong. Dr Gong says that he obliged, transferring a total of $120,000 to Mr Zhang’s SkyCity account between
13 August 2012 and 15 August 2012.
[59] At paragraph [18] of his affidavit sworn on 31 March 2014, Mr Zhang denies that he ever borrowed money from SkyCity, saying that his understanding is that it would have been illegal for SkyCity to provide credit to customers for gambling purposes.
[60] In counsel’s joint memorandum dated 8 August 2014, Dr Gong has refined his request for further discovery relevant to Question 21, to the following documents:
(i) As the equivalent of SJZ1-06, Report Action Journal containing 484 pages, but for the timeframe of transactions pleaded in proceeding.
(ii) The equivalent of SJZ1-07 containing Gaming Machine Detail report for the period of 30/12/11 – 04/01/12 relating to the transactions pleaded in the proceeding.
(iii) Gambling records relevant to Question No. 21 in the Notice to
Answer Interrogatories.
(iv) Any SkyCity records during the period 30 December 2011 until
4 January 2012 relating to slot machine gambling.
(v) SkyCity records relating to cash redemption to [Mr Zhang] by
SkyCity for the period of 30 December 2011 – 4 January 2012; and
(vi) Records of gambling from 31 December 2012 to 2 January 2013 relating to both Baccarat Table games and Slot Machine Games for both Queenstown and Auckland casinos.
[61] At the hearing, I noted counsel’s advice that they agreed that documents in this category documents should be disclosed, and Mr Bond’s advice that the documents have been disclosed.
[62] In counsel’s joint memorandum of 8 August 2014, Mr Zhang’s counsel says that the documents listed at paragraph [60] above were not sought in Dr Gong’s application, and if they had been, Mr Zhang would have led evidence saying that he had discovered everything he had received from SkyCity. Mr Zhang also says that there was no evidence before the court of what is in the documents which are described as “SJZ1-06” and “SJZ1-07”, or of what is in the SkyCity records already discovered by Mr Zhang.
[63] I accept Mr Zhang’s submissions under this heading. The court can hardly direct Mr Zhang to disclose “the equivalent of SJZ1-06”, or “the equivalent of SJZ1-
07”, when the court has not been provided with those documents. I accordingly refuse to order further discovery of the documents in categories (i) and (ii) at paragraph [60] of this judgment.
[64] Item (iii) listed at paragraph [60] above is “gambling records relevant to Q 21 in the Notice to Answer Interrogatories”. In counsel’s joint memorandum, that Mr Zhang has discovered everything he has received from SkyCity. I take that to include the “gambling records” to which Dr Gong refers in this request. It appears to be accepted between the parties that such records of Mr Zhang’s gambling at SkyCity in and around the mid-August 2012 period as may be in his control are relevant and should be discovered. However I do not see that there is any evidential basis for me to find that Mr Zhang currently has documents in his control within this category which should have been discovered but had not been. I am accordingly not prepared to make any order under this heading. However Mr Zhang and his solicitors will be aware that his discovery obligation is an ongoing one, so that if further documents in this category do come into his control he must provide
supplementary discovery and offer inspection of the additional documents.7
[65] Item (iv) listed at paragraph [60] above, is “any SkyCity records during the period 30 December 2011 until 4 January 2012 relating to Slot Maching gambling”. It is not at all clear to me how slot machine gambling in this period could relate to Question 21, which is generally concerned with alleged advances from Dr Gong to Mr Zhang in the period 13 August 2012 to 15 August 2012 totalling $120,000. I accept Mr Zhang’s submission that this appears to be an additional request, going beyond the matters argued at the hearing. Futhermore, I have not been referred to any evidential basis which would justify a finding that Mr Zhang holds SkyCity records for the relevant period which have not been disclosed in the discovery he has provided to date. I decline to make any order for disclosure of these records.
[66] Item (v) in the list at paragraph [60] is “SkyCity records relating to cash
redemption to Mr Zhang by SkyCity for the period 30 December 2011 to
4 January 2012”. The same considerations apply to this request as apply to the request for SkyCity records for the same period relating to Slot Machine gambling. There is no evidential foundation for a finding that Mr Zhang has such documents in his control that he has not disclosed, nor any apparent connection with
Question No. 21.
7 High Court Rules, r 8.18.
[67] The same considerations apply to Dr Gong’s request (item (vi) at paragraph [60] above) for “records of gambling from 31 December 2012 to 2 January 2013 relating to Baccarat Table games and Slot Machine games for both Queenstown and Auckland casinos”.
[68] In the result, I decline to make an order in respect of any of the documents sought by Dr Gong under Issue 1(b).
Issue 1(c) Mr Zhang’s bank statements showing payments to SkyCity account
[69] The precise request made by Dr Gong in his formal application to the court, was for:
bank statements for the period 21 October 2011 to 31 December 2012 including:
(a) originating transfer details of the funds directly received by
Mr Zhang’s SkyCity account.
[70] In counsel’s joint memorandum, Mr Maassen refined the request as follows:
“All [Mr Zhang’s] bank account statements including Mr Zhang’s Visa card
statements relating to the date ranges of 30/12/11 – 4/01/12, and 31/12/12 –
2/01/13, during which Dr Gong is alleged to have advanced the funds to
Mr Zhang in cash, but Mr Zhang denied receipt of the funds and denied that
he gambled during these periods.”
[71] Mr Maassen stated in the joint memorandum that he is able to be more specific now, because Mr Zhang’s signed answers to interrogatories relevant to this issue were only provided shortly before the July hearing.
[72] The bank statements are also sought on the basis that they are said to come within category 10 of Dr Gong’s further discovery application (documents relevant to interrogatories – Issue 1(b) above).
[73] Mr Zhang’s counsel says that this request is an expansion on the orders
sought in Dr Gong’s application, which has been made not only after Mr Zhang filed
his evidence in opposition, but after the hearing. He submits that Mr Zhang would have been able to make submissions on the relevance or otherwise of these documents, but the lateness of the request has precluded him from doing so.
[74] In his written submissions for the hearing, Mr Bond submitted that the relevance of Mr Zhang’s bank statements is solely to support Mr Zhang’s allegation that he also was paying funds into his SkyCity account over the relevant period. He submitted that there is no basis to suggest that the ultimate source of his income and/or funds is relevant to a matter at issue in the proceedings.
[75] I accept Mr Zhang’s submission that the request made in the joint memorandum is quite different from that made at category 12(a) of the categories sought in Dr Gong’s application. Whereas before the request related to the origin of funds directly received into Mr Zhang’s SkyCity account, the request is now for access to all of Mr Zhang’s bank accounts and Visa card statements during specified periods when cash advances are said to have been made to him by Dr Gong.
[76] There can be no concern over the limiting of the period with which Dr Gong’s original request was concerned – the request is now limited to two periods of only three to four days over the New Year’s periods in each of the years ending 31 December 2011 and 31 December 2012. And the bank statements and Visa card statements are certainly documents within Mr Zhang’s control. The questions are whether they have been shown to be relevant, and whether Dr Gong’s failure to make his request in the terms now made before the hearing, should be fatal to the request.
[77] It seems to me that this request is reasonable, particularly given that Mr Zhang’s discovery obligations in the proceeding are ongoing obligations. If there are relevant entries in his bank statements or Visa card statements, he is obliged to disclose those entries regardless of whether any application has been made to the court.
[78] If there are receipts shown in Mr Zhang’s bank accounts or Visa card statements which correspond with advances which Dr Gong alleges he made during
the relevant period, the evidence of those receipts may assist Dr Gong’s case and will be relevant. In the circumstances, I think the appropriate order is to direct Mr Zhang to make discovery of his bank accounts and Visa card statements for the periods requested (30 December 2011 – 4 January 2012, and 31 December 2012 – 2 January
2013), on the basis that any entries which clearly could not relate to the receipt of the alleged advances from Dr Gong, or to gambling at one of the casinos, may be redacted. I make an order accordingly.
Issue 1(d) Mr Zhang’s travel records for the period 13 – 25 August 2012
[79] These documents were not formally sought in Dr Gong’s application. However in his written submissions prepared for the July hearing, Mr Maassen added a category:
All documents relating to [Mr Zhang’s] travel arrangements including accommodation and travel details during the periods when gambling occurred as stated in the answer to interrogatories to be provided by [Mr Zhang].
[80] In the joint memorandum of counsel, Mr Maassen refined the travel records request to documents relating to Mr Zhang’s departures from and re-entries into New Zealand during the period 13 – 25 August 2012. That period is said to be relevant to the advances totalling $120,000 allegedly made by Dr Gong between 13 and 15 August 2012.
[81] Dr Gong also seeks under this heading discovery of information about a trip apparently made by Mr Zhang to Australia between 1 March and 15 March 2012.
[82] In his statement of defence, Mr Zhang has admitted that payments totalling
$120,000 were made into his SkyCity account by or at the request of Dr Gong, between 13 – 15 August 2012. He says that the payments were Dr Gong’s contribution to the joint gambling fund.
[83] Mr Zhang says that this request is an expansion of Dr Gong’s application, and there is no evidence regarding the relevance of Mr Zhang’s international travelling during the period identified.
[84] It is not clear to me how any travel by Mr Zhang in the period 13 – 25 August
2012 is relevant to the payments of $120,000 made between 13 and 15 August 2012. First, these are funds which Mr Zhang admits that he received, and the only issue can be whether they were paid as a loan to Mr Zhang, or as a contribution to a joint gambling fund. In those circumstances, I accept the submission made for Mr Zhang that there is no evidence regarding the relevance of Mr Zhang’s international travelling in August 2012. Whether Mr Zhang was or was not outside of New Zealand in the period 13 – 25 August 2012 does not necessarily say anything about the purpose for which the $120,000 was paid. For example, there is nothing in the evidence to say that any contributions to a joint gambling fund would necessarily have been used immediately after the payments were made. Nor is there any basis in the evidence to suggest that, if the payments were loans made by Dr Gong to Mr Zhang, they would or would not have been made depending upon whether Mr Zhang was in New Zealand. I am not persuaded on the evidence that documents in this category are relevant, and I accordingly decline to make any order in respect of them.
[85] I reach the same conclusion in respect of Dr Gong’s added request for discovery of travel information relating to a trip apparently made by Mr Zhang to the Sydney casino in the period 1 – 15 March 2012. How that travel information may relate to the issues in the proceeding has not been sufficiently explained.
Issue 2 – Dr Gong’s application for further or better answers to interrogatories
Principles relating to the adequacy of answers to interrogatories
[86] Rule 8.42 of the High Court Rules states that if a party fails to answer an interrogatory sufficiently, a judge may order the party to make a further answer, or order the party to attend to be orally examined.
[87] When a defendant simply says that it does not know the answer to a question, the Court will find such answer inadequate.8 In Broadcasting Corporation of New
Zealand v Wilson & Houghton Ltd, further answers were required in order to provide
8 Cupresak v Clifton Bricks (Canberra) Pty Ltd (1984-5) 57 ACTR 32 (SC), where the defendant answered in that manner, but did not say it had made inquiry of all its servants or agents who might be in a position to supply such information. Nor did it say what its belief was.
sufficient information to the defendant to ensure a fair trial.9 If it is not possible to answer an interrogatory with complete precision, a proper attempt should be made to provide the answer as accurately as possible.10 The party answering the interrogatory should state what enquiries have been made and what belief, if any, the party has formed as a result.11
[88] A party responding to a notice to answer interrogatories may object to answering a question on the grounds that the question is not relevant.12 The test of relevance is whether the interrogatory bears on the questions in issue, and has a tendency to establish, or form a step in establishing, the allegations which have been made.13
Issue 2(a) Should Mr Zhang be directed to file a more complete answer to Dr Gong’s Question 21 (relating to payments of $120,000 made to Mr Zhang’s SkyCity account between 13 – 15 August 2012)?
[89] Question 21 relates in general terms to Mr Zhang’s gambling activities.
[90] Question 21 in Dr Gong’s interrogatories is as follows:
Question 21
In his Affidavit dated 31 March 2013, at paragraph 21(g) Mr Zhang denied an advance from Dr Gong of $120,000. Please state:
a. What was the useage of the fund ($120,000) paid into Mr Zhang’s Sky City account by Dr Gong on 13 and 14 August 2012 which was referred to as Loan 3 in Mr Gong’s Affidavit dated 14
February 2014?
b. If it was gambling fund, when this fund was gambled?
9 Broadcasting Corporation of New Zealand v Wilson & Houghton Ltd HC Auckland CP 1814/87,
21 September 1992.
10 Henwood v Radio NZ Ltd (1993) 7 PRNZ 160 (HC).
11 Sharpe v Smail (1975) 49 ALJR 130 (HCA); Girvan v Nichols HC Auckland CIV-2008-404-
2515, 29 October 2009.
12 Rule 8.40(a) of the High Court Rules.
13 BNZ v Gardner (1990) 2 PRNZ 278 (HC) at 283.
c. Who gambled this fund?
[91] Mr Zhang’s answer is:
I have not been able to ascertain exactly what this amount was used for because the SkyCity gambling records only cover the period to February 2012.
[92] In the introductory part of his affidavit in answer to the interrogatories, Mr Zhang says that he has not been able to provide precise answers to some of the interrogatories regarding his gambling. He is a keen gambler, and says that, in addition to Auckland, Hamilton and Queenstown he was also gambling at casinos in Sydney, Melbourne, Perth, and Singapore over the period relevant to Dr Gong’s claim. He deposes that it has been very difficult to recall precise details of the gambling he undertook with Dr Gong, particularly given that it was more than two years ago that the gambling took place. He describes his arrangement with Dr Gong as an arrangement between friends, and that he did not bother to keep record of any of the amounts that were paid in and out. He says that the amounts involved were small enough that Dr Gong and he could just keep track of it between them. He says that “I have therefore attempted to piece together from the SkyCity records the occasions on which Dr Gong and I gambled together”.
[93] Dr Gong completes the introductory part of his answers to the interrogatories by saying that, even on that basis, he has been unable to answer certain of the interrogatories using the information and documentation then available to him. He says that he is making enquiries with SkyCity which should assist him in answering these interrogatories.
[94] In counsel’s joint memorandum, the submission is made that Mr Zhang has discharged his responsibility to make proper enquiries, and has answered this interrogatory to the best of his ability with the information he currently has.
[95] Mr Zhang’s answer to the three subparts of Question 21 is that he has not been able to ascertain “exactly” what the $120,000 was used for, “because the SkyCity gambling records only cover the period to February 2012”. In my view, that answer is insufficient. Mr Zhang’s answer should identify what gambling records he
has requested from SkyCity, and what are the gambling records he has received which have formed the basis for his answer. His answer should also state (if Mr Zhang knows) the reason the SkyCity gambling records are apparently not available for the period after February 2012. Finally, the use of the term “exactly” in Mr Zhang’s answer suggests that Mr Zhang may know in general terms what this money was used for. His answer must set out such knowledge as he does have about the usage of the money – anything less would be a failure to provide a full and fair answer to question 21(a).
[96] There will be an order that Mr Zhang make a further answer to Question 21, by affidavit filed and served within 20 working days of the date of this order, stating the following:
(i) the full extent of what Mr Zhang does know about the extent of the usage of the $120,000;
(ii) particulars of what gambling records Mr Zhang sought from SkyCity, and what gambling records he received;
(iii) any explanation Mr Zhang may have for his apparent inability to obtain from SkyCity gambling records in respect of any period after February
2012.
Issue 2(b) – Should Mr Zhang be directed to file more complete answers to
Dr Gong’s Questions 26(a),(b),(c),(h) and (i), and 27(a)-(c) and (e)-(m)? Questions 26(a),(b),(c),(h) and (i) are as follows:
Question 26
In relation to the statements at paragraph 16 of the Affidavit of
Mr Zhang, dated 31 March 2014, please state:
a. What was the relationship between Mr Zhang and COFCO?
b.Did Mr Zhang have any relative at COFCO and if so what was that relationship and what is the position of the relative at COFCO?
c.Provide full details of the relationship between Mr Lin and Mr Zhang and Mr Zhang’s brother-in-law in terms of their working and business relationship at COFCO.
h.Did any other COFCO senior personnel visit New Zealand in around 20 February 2013 and discuss kiwifruit business with Directors of CNZKIC together with Mr Zhang? If yes, who were the personnel and what was the relationship between Mr Zhang and this personnel?
i. What are the contact details of Mr Lin and his immediate superiors?
Questions 26(a), (b), (c), (h) and (i)
[97] Mr Zhang objects to answering any of these questions on the grounds that they are not relevant to an issue in the proceeding. In respect of questions (b) and (i), he makes the additional objection that the questions appear to be designed to identify potential witnesses.
[98] Mr Zhang relies on the alleged wrongful use by Dr Gong of Mr Lin’s electronic signature on a COFCO document or documents. Dr Gong’s answer is that Mr Zhang told him that Mr Lin had authorised the use of his signature on the documents; Dr Gong goes on to imply that it was reasonable for him to have believed that such authority existed, because of a family connection Mr Zhang is alleged to have had with one of Mr Lin’s superiors at COFCO, and because of Mr Lin’s alleged personal interest in a company which had a substantial stake in CNZKICL, which would have been the effictive beneficiary of the 3 April 2013
COFCO letter. While these matters are somewhat distant from the matters which are directly in issue in the proceeding, it is Mr Zhang who has introduced the COFCO letter as propensity evidence to assist his argument that Dr Gong forged Mr Zhang’s signature on the “acknowledgment of debt” document. In those circumstances, I accept Mr Maassen’s broad submission that Dr Gong is entitled to make reasonable enquiry about the circumstances surrounding the relevant act which is said to constitute propensity evidence against Dr Gong.
[99] With those considerations in mind, I conclude that Mr Zhang should answer Question 26(a). The answer will go to the reasonableness or otherwise of Dr Gong’s reliance on Mr Zhang’s assurance that he had Mr Lin’s authority. And the
reasonableness or otherwise of that reliance will in turn go to the worth of the propensity evidence which Mr Zhang intends to call. I direct that Mr Zhang is to provide an answer to Question 26(a) within 20 working days of the date of this judgment.
[100] Similar considerations apply in respect of Questions 26(b) and (c), although these questions are in my view too broad as presently worded. Mr Zhang is to provide answers to Questions 26(b) and (c) which state the following:
(i) whether Mr Zhang has a brother-in-law who is an officer or employee within the COFCO group; and
(ii) if so, whether that brother-in-law is employed as a manager of, or otherwise in a superior position to, Mr Lin within the COFCO group.
[101] Mr Zhang is to answer Questions 26(b) and (c), with that information, within
20 working days of the date of this judgment.
[102] Question 26(h) asks whether any other COFCO senior personnel visited New Zealand in around 20 February 2013 and discussed kiwifruit business with the directors of CNZKICL together with Mr Zhang. I am not satisfied that Dr Gong has established the relevance of this, and accordingly decline the application for an order directing Mr Zhang to file an answer to Question 26(h).
[103] Question 26(i) asks for the contact details of Mr Lin and his immediate superiors. This is not a question which goes to facts relevant to any issue in the proceeding. Rather, it appears to be an illegitimate attempt to identify and locate potential witnesses. Interrogatories may not be used for that purpose.14 The application for an order that Mr Zhang provide an answer to question 26(i) is accordingly refused.
Questions 27(a)-(c), and (e)-(m), are as follows:
14 Knapp v Harvey[1911] 2 KB 725; Hooton v Dalby [1907] 2 KB 18; Crusader Meats New
Zealand v New Zealand Meat Board HC Wellington, CIV-2004-485-2147, 13 May 2008 at [30].
[104] In relation to the statements at paragraph 16 of the Affidavit of Mr Zhang dated 31 March 2014:
a. Who authorised and nominated Shanghai Shuibei Industrial Co Ltd as the representative of COFCO to hold shares at CNZKICL (33% shares)?
b. Does Mr Lin or any other persons of COFCO have association with or interest in Shanghai Shuibei Industrial Co. Ltd.?
c. Did Mr Lin disclose to COFCO that Shanghai Shuibei
Industrial Co Ltdis a major shareholder of CNZKICL (33% shares)?
…
e. Did Mr Lin make price increases to the quote provided to COFCO by the supplier, and made COFCO pay higher price than the intended quote of the supplier?
f. Did Mr Lin directly or indirectly (or prospectively) receive any benefit from payment by COFCO to CNZKICL under contractual arrangements between those parties?
g. Did Mr Lin seek any approval from COFCO before he signed the commission contractual agreement on 7 March 2013 on behalf of COFCO with CNZKICL in which Shanghai Shuibei Industrial Co Ltd is a major shareholder (33% shares)?
h. Did Mr Lin in his departmental manager capacity have the authority to sign such a document on behalf of COFCO?
i. If Mr Lin had the authorisation or delegation from his superiors, who gave him that authority or delegation?
j. Did Mr Lin disclose to his superiors about the full details of other party with whom COFCO was entering a commission contractual agreement, including Shanghai Shuibei Industrial Co Ltd had 33% shares?
k. Who was Chen Meifeng with whom Mr Zhang liaised and instructed in writing CNZKICL to sign a Confidentiality and Exclusivity Deed on 16 June 2013?
l. Who was Qin Jing who was the other party in the above Confidentiality and Exclusivity Deed initially, and was replaced by Chen Meifeng under Mr Zhang’s instruction?
m. What was the relationship between Mr Zhang, Chen Meifeng, Qin Jing and other officials?
[105] To all of these questions, Mr Zhang objects on the grounds that they are not relevant to matters in issue in the proceeding, and that the questions appear to be designed to ascertain the names of potential witnesses.
Discussion - Questions 27(a) – (c)
[106] Dr Gong is presumably able to prove without recourse to interrogatories that Shanghai Shuibei Industrial Co Ltd does hold 33 per cent of the shares in CNZKICL. If that is so, the only conceivable part of these questions which might possibly be relevant is Question 27(b), to the extent that it asks if Mr Lin has an association with, or interest in Shanghai Shuibei Industrial Co Ltd. (If Mr Lin did have a substantial interest in that company, and Dr Gong was aware of the fact, the existence of the interest would potentially assist Dr Gong’s case in answer to Mr Zhang’s claimed propensity evidence. (If Shanghai Shuibei Industrial Co Ltd stood to gain (as a shareholder of CNZKICL) if COFCO sent the letter of 3 April 2013, then Mr Lin would presumably also have stood to gain, and would arguably have been more likely to authorise the use of his signature on the letter.) Beyond that, it seems to me that questions 27(a), (b), and (c) go beyond the limits of relevance to the proceeding.
Accordingly, I direct that Mr Zhang need not answer questions 27(a) and (c), but must provide an answer to that part of question 27(b) which asks if Mr Lin had an association with, or interest in, Shanghai Shuibei Industrial Co Ltd. Mr Zhang’s answer is also to state what he knows of the nature and extent of Mr Zhang’s association with, or interest in Shanghai Shuibei Industrial Co Ltd. The answer is to be provided within 20 working days of the date of this judgment.
Questions 27(e) – (m)
[107] I will not repeat each of these questions individually.
[108] I see no basis on which Question 27(e) can be regarded as relevant to the issues in the proceeding. COFCO issues generally have a very limited relevance, namely in respect of the circumstances surrounding the act upon which Mr Zhang relies as evidence of a propensity on Dr Gong’s part to apply other people’s signatures to documents without their authority. As for Question 27(f), relating to benefits which Mr Lin may have received from any payment by COFCO to CNZKICL, this raises collateral issues which appear to be far removed from the matters which are directly in issue in the proceeding. Nor is there any evidential basis to suppose that Mr Zhang would know to the answer the question. I regard this question as going to matters which are completely collateral, and with insufficient connection to matters which are in issue between the parties.
[109] Questions 27(g)–(m) relate substantially to Mr Lin’s general signing authority at COFCO, and/or to the extent to which Mr Lin made disclosures to his superiors at COFCO. There are also questions about the individuals Chen Meifeng and Qin Jing, who have not been identified in the evidence. In my view, Dr Gong has not provided a sufficient evidential basis to show that these questions are relevant to an issue or issues in the proceeding. I accordingly decline to direct Mr Zhang to provide answers to any of Questions 27(e)–(m).
Issue 3 – Mr Zhang’s application for further discovery
(a) Dr Gong’s travel and accommodation documents
[110] Following the hearing, Mr Zhang refined the scope of his request as follows:
[Dr Gong’s] travel and accommodation records for the period from
1 October 2011 to January 2013, and in particular the dates on which Mr Zhang’s SkyCity records show that Mr Zhang was gambling at SkyCity, insofar as Dr Gong’s records relate to his travel to Auckland, including but not limited to itineraries, airline tickets, or booking confirmations, receipts and correspondence with airlines or hotels.
[111] Mr Zhang submits that the travel documents are relevant and will assist his case that he and Dr Gong gambled together at SkyCity Casino in Auckland. He submits that the documents will also adversely affect Dr Gong’s case that he was not present in Auckland on the occasions when the alleged request for advances were made and Mr Zhang’s gambling took place.
[112] Dr Gong accepts that his travel and accommodation documents are relevant, but only insofar as they relate to dates specifically identified by Mr Zhang as dates on which Dr Gong advanced the funds to Mr Zhang and Mr Zhang alleges that Dr Gong and he gambled together at SkyCity Casino in Auckland. Dr Gong agrees to discover his travel information only in relation to those dates specifically identified by Mr Zhang as dates on which Mr Zhang and Dr Gong gambled together.
[113] Dr Gong does not agree with the refined form of order sought by Mr Zhang. He says that it is not confined to dates when Mr Zhang alleges Dr Gong advanced funds to Mr Zhang’s SkyCity account and when Dr Gong and Mr Zhang were gambling together. Dr Gong claims that the discovery now sought by Mr Zhang is wider than that sought in his interlocutory application, and that he is prejudiced in that he may have called evidence in relation to his business travel which was unrelated to payment of funds to Mr Zhang.
[114] The reason behind this request is that Mr Zhang appears to be unable to identify specific dates when he gambled with Dr Gong at the SkyCity Casino in Auckland. He is able to identify some of the dates on which he himself was
gambling at the Auckland casino, because he has at least some SkyCity records identifying those dates.
[115] In my view the travel documents are relevant, as they will place Dr Gong in Auckland on particular dates which can be compared with dates on which Mr Zhang was himself gambling at the casino in Auckland. To the extent that travel documents show that he was not in Auckland on the dates when SkyCity records show that Mr Zhang was gambling at its Auckland casino, I accordingly direct that Dr Gong is to provide the further discovery sought under this heading, in the revised terms set out at Table 3, Item 1, in counsel’s joint memorandum dated 8 August 2014. In my view any change in scope from Mr Zhang’s original discovery request to the revised form of request set out in counsel’s joint memorandum is not such as to prejudice Dr Gong. The particular dates for which the discovery is sought will be limited to dates appearing in the SkyCity records, and Mr Zhang is no longer seeking discovery of the bank statements or correspondence with clients and associates which were originally sought under this heading.
[116] Accordingly, I make an order directing Dr Gong to provide documents relating to his travel and accommodation in the period 1 October 2011 to January 2013, which place Dr Gong in Auckland on dates on which Mr Zhang’s SkyCity Casino records show that Mr Zhang was gambling at SkyCity casino in Auckland. Such documents are to include any itineraries, airline tickets or booking confirmations, and receipts and correspondence with airlines or hotels. The further discovery under this heading is to be provided within 20 working days of the date of this judgment.
Issue 3(b) - Documents relating to Dr Gong’s use of third party bank accounts
[117] The precise request made by Mr Zhang in his interlocutory application was:
All documents relating to arrangements between [Dr Gong] and Wen Jun Liu and Liang Suyun, including correspondence between those parties and unredacted bank statements from all three parties showing the alleged payments from [Dr Gong] to Mr Liu and Ms Suyun and from Mr Liu and Ms Suyun to [Dr Gong].
[118] The refined form of the request, as set out in counsel’s joint memorandum
dated 8 August 2014, is:
Documents setting out the basis of the arrangement between [Dr Gong] and Win Jun Liu and Liang Suyun including all correspondence between those parties authorising [Dr Gong] to make use of Mr Liu and Ms Suyun’s bank accounts as well as bank statements from all three parties insofar as they show payments from [Dr Gong] to Mr Liu and Ms Suyun and from Mr Liu and Ms Suyun to [Mr Zhang] and any cash payments into any of these accounts.
[119] Mr Zhang submits that documents relating to this use by Dr Gong of the two third parties’ bank accounts are relevant, in that they are potentially evidence of similar facts, as they show Dr Gong using a third party bank account for his own purposes “just as he did with [Mr Zhang’s] SkyCity account.” Mr Zhang submits that the bank statements are relevant in that they show payments from these accounts to Mr Zhang’s SkyCity account, and may show similar cash payments into the accounts which would support his case that Dr Gong received cash winnings as a result of their joint gambling.
[120] Dr Gong submits that these documents are not relevant, except to the extent that they show the funds were pooled together for the sake of convenience, and were paid into Mr Zhang’s SkyCity account for Mr Zhang’s gambling.
[121] In respect of the revised version of this request set out in counsel’s joint memorandum, Dr Gong does not accept that the revised form narrows the scope of the request, because the request is not limited to the transactions pleaded in the proceedings. He submits that the request is irrelevant to the central issue (loans or joint gambling fund). Dr Gong notes that Mr Zhang admits that the funds in question were transferred out of the accounts of Mr Liu and Ms Suyun, were received into Mr Zhang’s SkyCity account, and were thereafter used for gambling.
[122] The essence of Mr Zhang’s argument for relevance of these documents is that he is entitled to discovery of documents which will assist him to establish similar facts, or propensity evidence, which will support his claims that the funds paid by Dr Gong into Mr Zhang’s SkyCity account were in fact for the benefit of Dr Gong himself (or at least for the parties’ joint benefit). Mr Bond referred in his
submissions to the High Court decision in Cook v Evatt,15 and submitted that the particular “modus operandi” adopted by Dr Gong is the putting of money intended for Dr Gong’s own purposes into a third party bank account, and then withdrawing the money from the third party account for his own purposes.
[123] In a civil case, evidence of similar facts will be admitted if the evidence is logically relevant in determining an issue before the court, provided it is not oppressive or unfair to the other side, and the other side has fair notice of the evidence and is able to deal with it.16
[124] The question is whether Dr Gong’s use of the bank accounts of Mr Liu and Ms Suyun to make payments to Mr Zhang is or may be logically relevant in determining whether Dr Gong made payments into Mr Zhang’s SkyCity account for Dr Gong’s own gambling (as Mr Zhang alleges). Dr Gong accepts that he used the bank accounts of Mr Liu and Ms Suyun to make payments to Mr Zhang, so the real questions are why he used those bank accounts, and whether the answer to that question is likely to provide propensity evidence which will assist Mr Zhang’s case. I think it may be inferred from the fact that the payments were made that Dr Gong had authority from Mr Liu and Ms Suyun to make the payments out of their accounts. If and to the extent that Dr Gong has in his control documents showing why these payments were made out of the bank accounts of Mr Liu and Ms Suyun, then of course any such documents should have been discovered. But I do not believe Mr Zhang has shown that any such documents exist and should have been discovered. In those circumstances I do not believe there is any basis in the evidence for the order which Mr Zhang seeks. The application insofar as it relates to documents showing Dr Gong’s authority to use these bank accounts is accordingly refused.
[125] As for the requests for the bank statements of Dr Gong, Mr Liu and Ms Suyun, insofar as they show payments from Dr Gong to either of the other two parties, or from Mr Liu and Ms Suyun to Mr Zhang, and any cash payments made
into any of these accounts, I am not satisfied that there is a sufficient evidential basis
15 Cook v Evatt [1992] 1 NZLR 673 (HC).
16 Cook v Evatt, citing Mood Music Publishing Co Ltd v De Wolfe [1976] 2 WLR 451 [1976] 1 All
ER 763 (CA).
for such orders to be made. Mr Zhang submits that the bank statements “may show similar cash payments” into the accounts (which would support his case that Dr Gong received cash winnings as a result of their joint gambling), but that seems to me to be purely speculative. Furthermore, there is no sufficient basis to find that the bank statements for the accounts operated by Mr Liu and Ms Suyun are within Dr Gong’s control.
[126] On a broader level, I have considerable doubt that the mere fact that Dr Gong used third party bank accounts for the purpose of making two payments to Mr Zhang could logically support an argument that Dr Gong put money into Mr Zhang’s SkyCity account for Dr Gong’s own (gambling) purposes. There may have been any number of reasons the funds in question were paid from accounts in the names of Mr Liu and Ms Suyun, and in my view this discovery request is no more than a fishing expedition.
[127] Summary of orders
Dr Gong’s application for further discovery
(a) Dr Gong’s application for particular discovery of the documents or categories of documents listed in the following subparagraphs of paragraph [32] of this judgment is refused: subparagraphs (1), (4), (6), (7), (8), and (9).
(b)Dr Gong’s application for an order for particular discovery of documents relating to the relationship between Mr Zhang, Mr Lin, and Mr Zhang’s brother-in-law (subparagraph (2) in paragraph [32] of this judgment), is granted in part. Mr Zhang is to provide further discovery of any document or documents in his control which indentify his brother-in-law as an officer or employee of the COFCO company or group, and any documents in his control that show the respective ranks of Mr Lin and Mr Zhang’s brother-in-law within COFCO.
(c) Dr Gong’s application for an order for particular discovery of documents relating to the relationship between Shanghai Shuibei Industrial Co Ltd, its shareholders, Mr Lin and Mr Zhang’s brother-in- law or any other COFCO personnel (subparagraph (3) in paragraph [32] of this judgment), is granted in part. Mr Zhang is to provide further discovery of any documents in his control which may show:
(i)the extent of any ownership interest Mr Lin (or entities controlled by Mr Lin) may have in Shanghai Shuibei Industrial Co Ltd; and
(ii) the extent of any ownership interest Shanghai Shuibei
Industrial Co Ltd has in CNZKICL.
(d)Dr Gong’s application for particular discovery of documents relating to matters addressed in his notice to answer interrogatories (subparagraph (5) in paragraph [32] of this judgment), is granted in part. Mr Zhang is to provide further discovery of any documents in his control (which have not already been included in his discovery) which are relevant to the following issues:
(i)Whether Mr Lin authorised Mr Zhang or Dr Gong to place his electronic (or other copied) signature on COFCO letters dated
21 February 2013 or 3 April 2013; and
(ii)Whether Mr Zhang communicated to Dr Gong that Mr Lin had given any such authority.
(e) Dr Gong’s application for particular discovery of documents in the category described in issue 1(b) in paragraph [25] of this judgment (additional documents relevant to Question No. 21 in Dr Gong’s interrogatories) is refused.
(f) Dr Gong’s application for particular discovery of documents in the category described in issue 1(c) in paragraph [25] of this judgment (bank accounts and Visa statements), is granted in part. Mr Zhang is to provide further discovery of his bank accounts and Visa card statements for the periods requested (30 December 2011 – 4 January 2012, and 31 December
2012 – 2 January 2013), on the basis that any entries which clearly could not relate to the receipt of the alleged advances from Dr Gong, or to gambling at one of the casinos, may be redacted.
(g) Dr Gong’s applications for particular discovery of (i) any documents in the category described in issue 1(d) in paragraph [25] of this judgment (travel documents) and (ii) any documents relating to any trip made by Mr Zhang to the Sydney Casino in the period 1 – 15 March 2012, are refused.
(h) To the extent that Mr Zhang has been ordered to provide further discovery under subparagraphs (b) to (d), and (f) above, he is directed to file and serve any affidavit deposing to the matters stated at Rule 8.19(a) of the High Court Rules, within 20 working days of the date of this judgment.
Dr Gong’s application for better answers to interrogatories
Issue 2(a) Answer to Dr Gong’s Interrogatories – Question No. 21
(a) Mr Zhang is to make a further answer to Question No. 21, stating the following:
(i)the full extent of what Mr Zhang does know about the extent of the usage of the $120,000;
(ii) particulars of what gambling records Mr Zhang sought from
SkyCity, and what gambling records he received;
(iii)any explanation Mr Zhang may have for his apparent inability to obtain from SkyCity gambling records in respect of any period after February 2012.
(b)Mr Zhang is to provide that further answer by affidavit, which is to be filed and served within 20 working days of the date of this judgment.
Issue 2(b) Answer to Dr Gong’s Interrogatories – Questions Nos.
26(a),(b),(c),(h) and (i), and Questions Nos. 27(a)-(c), and (e)-(m)
(a) In relation to Questions 26(a), (b), (c), (h) and (i):
(i) Mr Zhang is to provide an answer to Question 26(a) by affidavit filed and served within 20 working days of the date of this judgment;
(ii) Mr Zhang is to provide an answer to Questions 26(b) and (c), by affidavit (which is to be filed and served within 20 working days of this judgment) stating: (i) whether Mr Zhang has a brother-in-law who is an officer or employee within the COFCO group; and (ii) if so, whether that brother-in-law is employed as a manager of, or otherwise in a superior position to, Mr Lin within the COFCO group.
(iii) I decline to make an order that Mr Zhang provide an answer to
Question 26(h);
(iv) I decline to make an order that Mr Zhang provide an answer to
Question 26(i).
(e) In relation to Questions 27(a)-(c), and Questions (e)-(m), I make the following directions:
(i) Mr Zhang is to provide an answer to that part of Question No.
27(b) which asks if Mr Lin had an association with, or interest in, Shanghai Shuibei Industrial Co Ltd. Mr Zhang’s answer is also to state what he knows of the nature and extent of Mr Zhang’s association with, or interest in, Shanghai Shuibei Industrial Co Ltd. Mr Zhang is to file and serve an affidavit
stating his answers to those parts of Question 27(b), within 20 working days of the date of this judgment.
(ii)I decline to make an order that Mr Zhang provide an answer to any of Questions 27(a), (c), and (e)-(m).
Mr Zhang’s application for further discovery
[128] Mr Zhang’s application for particular discovery of the documents or categories of documents described in issue 3(a) in paragraph [25] of this judgment (Dr Gong’s travel and accommodation documents), is granted to the following extent:
(f) Dr Gong is to provide further discovery of any documents in his control relating to his travel and accommodation in the period 1
October 2011 to January 2013, which place him in Auckland on dates on which Mr Zhang’s SkyCity Casino records show that Mr Zhang was gambling at SkyCity casino in Auckland. Such documents are to include any itineraries, airline tickets or booking confirmations, and receipts and correspondence with airlines or hotels. Dr Gong is directed to file and serve an affidavit in respect of these documents, deposing to the matters stated at Rule 8.19(a) of the High Court Rules, within 20 working days of the date of this judgment.
(g)In relation to documents relating to Dr Gong’s use of third party bank accounts (issue 3(b) at paragraph [25] of this judgment), I decline to make an order for further discovery.
[129] The costs of all applications are reserved.
Solicitors:
Cooper Rapley, Palmerston North for Plaintiff
Harkness Henry, Hamilton for Defendant
Associate Judge Smith
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