He v Chen - [2024] NZHC 1565

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-3369

[2024] NZHC 1565

BETWEEN
YAO WE HE

Plaintiff

AND

ZHIXIONG CHEN

Defendant

Hearing: 12-16 February; 19-23 February; 26 and 27 February 2024

Appearances:

Yijun Liu, McKenzie Friend for Plaintiff C Jiang and B Hayes for Defendant

Judgment:

14 June 2024

JUDGMENT OF BECROFT J

This judgment was delivered by me on 14 June 2024 at 4pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar

……………………………………

Solicitors:
Tompkins Wake, Auckland Copy to: Y He, Auckland

HE v CHEN [2024] NZHC 1565 [14 June 2024]

What is this case about?

[1] This is a wide-ranging and long running civil action that was commenced in 2014. It arises from the breakdown in the commercial relationship between two businessmen. The plaintiff is Mr Yao Wei He (Mr He). The defendant is Mr Zhixiong Chen (Mr Chen).

[2] The primary issue is the scope and effect of their business relationship for the export of infant milk formula from New Zealand to Hong Kong and China.

[3] The starting point is whether there was a joint venture agreement between them, allegedly commenced in June 2010. If so, did Mr Chen breach it, and if he did, did Mr He suffer any loss? Other questions include whether fiduciary duties were owed (and allegedly breached by Mr Chen); whether Mr Chen is liable to account to Mr He for money had and received, or whether a claim against Mr Chen of unjust enrichment could succeed; and, whether s 174 of the Companies Act 1993 (the Act) is engaged?

[4] Finally, there is an entirely separate question (but first in time) of whether the HKD 800,000 advanced to Mr Chen by Mr He on 28 September 2007, on trust for investment purposes, has been repaid?

An overview of the dispute between Mr He and Mr Chen

[5] Mr He and his family emigrated to New Zealand from China in 1991. They have lived here ever since. Mr He operated a “noodle house” in East Auckland, assisted by his family. In 2002, he also incorporated Prestige Products (East Auckland) Ltd (Prestige), which supplied gifts and labels for use by companies and organisations within New Zealand. He was apparently earning an “average” income through that company. He owned a home and was repaying a mortgage loan.

[6] Mr Chen came to New Zealand in 2004 under the investor migrant scheme but continued to reside principally in China. Mr Chen met Mr He in 2004 or 2006 (the evidence is unclear) through a mutual friend from their shared hometown in China. Mr Chen was (and apparently still is) a wealthy and successful Chinese property

developer. He said that by about 2010 he owned at least nine or 10 companies with over 1,000 employees. Mr Chen was based in China but regularly commuted to and from New Zealand, where he owned a house in Auckland.

[7] From about 2007, Mr…

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.

Continue reading He v Chen

Details

AGLC: He v Chen [2024] NZHC 1565
Case: [2024] NZHC 1565
Decision Date: 14 June 2024

CaseChat Overview and Summary

In the High Court of New Zealand, the case of He v Chen was heard over a 12-day period and involved complex and long-standing commercial disputes between Yao Wei He (Mr He) and Zhixiong Chen (Mr Chen). Mr He brought five causes of action against Mr Chen, alleging breach of a joint venture agreement, breach of fiduciary duty, money had and received or unjust enrichment, relief under s 174 of the Companies Act 1993, and breach of trust regarding an HKD 800,000 investment. The court found that Mr He had not discharged the burden of proof on the balance of probabilities for any of his claims. The court concluded that there was no joint venture agreement between Mr He and Mr Chen, and that Mr He had not established any loss caused by any alleged breaches. The court dismissed all five causes of action, noting the lack of clear documentation and the inherent implausibility of some of Mr He's claims. The court also highlighted the cultural differences and the impact of the passage of time on the ability to accurately recall events. The final orders were that all five claims were dismissed, and the parties were directed to attempt to agree on costs.

Orders