He v Chen

Case [2016] NZCA 340

IN THE COURT OF APPEAL OF NEW ZEALAND
CA435/2015
[2016] NZCA 340
BETWEEN

YAO WEI HE
Appellant

AND

ZHIXIONG CHEN
Respondent
Hearing:

14 April 2016

Court:

Kós, Clifford and Brewer JJ

Counsel:

P D Sills for Appellant
N R Campbell QC and A J Sinclair for Respondent

Judgment:

19 July 2016 at 3.30 pm

JUDGMENT OF THE COURT

AThe application to adduce further evidence is declined.

BThe appeal is dismissed.

CThe appellant is to pay the respondent’s costs for a standard appeal on a band A basis plus usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Brewer J)

Introduction

  1. Mr Chen sued Mr He for $300,000, plus interest.  He pleaded that he lent $300,000 to Mr He and that Mr He failed to repay it.  Mr He defended the claim on the basis that the money was advanced to him on trust “in respect of and to have implemented a commercial joint venture (‘CJV’) agreement the terms and conditions of which have been agreed to by the parties and subsequently implemented by the parties”.

  2. Following trial, Moore J found for Mr Chen.[1]  Mr He now appeals the decision.

Background

  1. Mr Chen had the onus of satisfying Moore J, on the balance of probabilities, that he lent $300,000 to Mr He, that Mr He failed to repay it and that interest was due also.  Mr Chen gave evidence to that effect and relied on a document that was handwritten by Mr He and signed by him.  The document, in English translation, reads:

    Acknowledgement of Debt

    I, HE Yao Wei, hereby borrow three hundred thousand New Zealand dollars in total from CHEN Zhixiong.  The annual interest rate is 6 percent, which only applies to the sum of two hundred thousand New Zealand dollars of the whole amount of the loan.  The remaining amount of one hundred thousand dollars is free of interest.  The whole amount of the loan must be paid off within half a year.

    The borrower: HE Yao Wei

    16 August 2010

  2. Mr He accepted the authenticity of the acknowledgement of debt.  He accepted that Mr Chen paid him $300,000 (in three tranches of $100,000 paid 15 June 2010, 16 August 2010 and 20 August 2010) and that he had not repaid it.  Nor had he paid any interest.  However, he pleaded, and gave evidence, to the effect:

    (a)The advance was not a loan to him personally.  Mr Chen and Mr He agreed that a joint venture company (NZPIL) would be established, to include Mr Chen’s son, to export goods from New Zealand for sale in China.

    (b)The advance was made to enable the joint venture to be implemented and Mr He held the money in trust for that purpose.

    (c)Mr He was to apply the $300,000 through NZPIL to purchase goods for export by the company.

    (d)Mr Chen could pull out of the arrangement if, within six months, he was dissatisfied with Mr He’s “credibility and ability in executing the…

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AGLC
He v Chen [2016] NZCA 340
Case
[2016] NZCA 340
Decision Date

CaseChat Overview and Summary

In He v Chen, the appeal arose from a dispute over the interpretation of an acknowledgement of debt and the admissibility of further evidence in the form of bank statements. The case was heard in the New Zealand Court of Appeal. The central issue was whether Mr Chen was owed a debt by Mr He, as well as the admissibility of additional bank statements that Mr He sought to introduce in the appeal.

The court had to determine the proper allocation of the onus of proof in light of the acknowledgement of debt, which both parties had accepted as authentic. The appeal also considered whether the bank statements were admissible under Rule 45 of the Court of Appeal (Civil) Rules 2005. The court assessed whether the proposed evidence was fresh, credible, and cogent, and whether it could have been produced at the trial with reasonable diligence. The court also needed to decide whether the acknowledgement of debt was a comprehensive record of the parties' agreement and, if so, whether the onus of proof shifted to Mr He to rebut this presumption.

The Court of Appeal concluded that the bank statements were neither fresh nor cogent, and thus declined Mr He’s application to adduce further evidence. The court held that the acknowledgement of debt did not appear to be a comprehensive record of the agreement, and therefore the onus remained with Mr Chen to prove that Mr He owed him a debt. The court further reasoned that the amount advanced by Mr Chen to NZPIL was irrelevant to the issue of whether the $300,000 advanced to Mr He constituted a personal loan. Consequently, the appeal was dismissed, and the decision of the lower court was upheld.

The final orders of the court were that Mr He’s application to adduce further evidence was declined, and the appeal was dismissed with costs.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

Mr He relies on r 45 of the Court of Appeal (Civil) Rules 2005:45 Application for leave to adduce further evidence(1)The Court may, on the application of a party, grant leave for the admission of further evidence on questions of fact by—(a) oral examination in Court; or(b) affidavit; or(c)depositions taken before an examiner or examiners in accordance with rules 369 to 376 of the High Court Rules.(2)The parties and their counsel are entitled to be present at, and take part in, the examination of a witness. Rule 45 is drafted in different terms than its predecessor rule.[11] The Supreme Court has held, however, that the new version of the rule does not alter the well understood and firmly established principles which had developed under the previous rules.[12] Accordingly, this Court will only grant leave for the admission of further evidence on questions of fact if the evidence is fresh, credible and cogent. Evidence is not regarded as fresh if it could with reasonable diligence have been produced at the trial.[13][11]Court of Appeal (Civil) Rules 1997, r 24. [12]Aotearoa International Ltd v Paper Reclaim Ltd [2006] NZSC 59, [2007] 2 NZLR 1 at [6].[13]Rae v International Insurance Brokers (Nelson Marlborough) Ltd [1998] 3 NZLR 190 (CA) at 192. We agree with Mr Campbell that Mr He could easily have produced these bank statements at trial. As a director of NZPIL, Mr He had access to these documents and indeed produced many of NZPIL’s bank statements for its other accounts with the same bank at trial. Moreover, as a matter of cogency, the amount that Mr Chen advanced to NZPIL is not relevant to whether the $300,000 advanced by Mr Chen to Mr He was or was not a personal loan. Accordingly, we decline Mr He’s application to adduce further evidence. It is neither fresh nor cogent. A key issue on appeal was where the onus of proof lay once both parties had accepted the authenticity of the acknowledgement of debt. Both parties referred us to the case of Newmans Tours Ltd v Ranier Investments Ltd where Fisher J said:[14]If the written document appears on its face to be a comprehensive record of an agreement, that in itself will be strong evidence that it was intended to be exhaustive. The more the suggested oral term is in disharmony with the wording of the written document, the more difficult it will be to persuade the Court that it was intended to survive the written document. But if, from whatever source, the Court is satisfied as to the parties’ real agreement, it will give effect to that agreement regardless of the form in which it may have been expressed. In the end, the search is therefore for the objectively expressed intentions of the contracting parties.[14]Newmans Tours Ltd v Ranier Investments Ltd [1992] 2 NZLR 68 (HC) at 81. Thus the issue, as far as the onus of proof is concerned, is whether the acknowledgement of debt appears on its face to be a comprehensive record of an agreement between the parties. If it does then the onus fell on Mr He to rebut the presumption that the document accurately records the parties’ entire agreement. If, on the other hand, the acknowledgement of debt does not appear on its face to be a comprehensive record of an agreement then the onus remained with Mr Chen as the plaintiff to persuade the Court that Mr He owes him a debt on similar terms to those recorded in the document.

Decision

Reasons for decision

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Ratio Decidendi

Legal Principle Established

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