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He v Chen

He v Chen

Case [2023] NZHC 119 17 February 2023

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Breach of Contract

Breach of Fiduciary Duty

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-003369

[2023] NZHC 119

BETWEEN
YAO WEI HE

Plaintiff

AND

ZHIXIONG CHEN

Defendant

Hearing: 14 November 2022

Appearances:

Plaintiff in Person

C Jiang for the Defendant

Judgment:

17 February 2023

JUDGMENT OF ASSOCIATE JUDGE GARDINER

This judgment was delivered by me on 17 February 2023 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Tompkins Wake, Auckland

HE v CHEN [2023] NZHC 119 [17 February 2023]

Introduction

[1] Mr He and Mr Chen have been entangled in a dispute since 2012 arising out of the collapse of an export business that sold goods from New Zealand to China.

[2] This proceeding was brought by Mr He on 23 December 2014. It has been through a series of procedural twists and turns and was due to be heard on 9 May 2022 until the trial was vacated on Mr He’s application. It is now set down for trial in February 2024.

[3] Mr Chen seeks to strike out Mr He’s claims for want of prosecution under r 15.2 of the High Court Rules 2016. Alternatively, under r 15.1, because there are no arguable causes of action and/or the proceeding is an abuse of process.

[4] The central issue is whether justice can be done after the considerable time that has elapsed since the events in question and with incomplete documentary evidence.

Background and prior litigation

[5] In approximately 2010 Mr He and Mr Chen established an export business venture. To implement the venture, they incorporated a company called New Zealand Products International Ltd (NZPIL). Mr Chen and Mr Chen’s son (Mr Chen Jnr) were directors. The company ceased trading in 2012 and was placed into liquidation by the Court on 22 May 2014. The Official Assignee was appointed as liquidator.

[6] Not long before the company was put into liquidation, the Court of Appeal dealt with an application by Mr He to bring a derivative action in the company's name under s 165 of the Companies Act 1993 (Act) against the Chens. It is helpful to set out the Court’s description of the background:1
Background

[2] NZPIL was incorporated on 18 June 2010. Mr He and Mr Chen Jnr are its de jure directors. Mr He and his wife hold 50 per cent of the shares in NZPIL. The balance 50 per cent of the shares are held by the Chen interests through a trustee company and Mr Chen Jnr and his wife.

1 He v Chen [2014] NZCA 153 [2014 Court of Appeal judgment].

[3] Prior to the incorporation of NZPIL Mr He carried on a business which involved the purchase of New Zealand made dairy and health supplements in retail stores in New Zealand and the export of them for sale into Hong Kong and China through Mr He's contacts in those markets.

[4] Mr He and 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 [2023] NZHC 119
Case: [2023] NZHC 119
Decision Date: 17 February 2023

CaseChat Overview and Summary

This case involves a legal dispute between Yao Wei He and Zhixiong Chen, stemming from their involvement in an export business venture that ultimately collapsed. The central issue revolves around whether justice can be served in this case, given the considerable time elapsed since the events in question and the incomplete documentary evidence. Mr. Chen has applied to strike out Mr. He's claims for want of prosecution, alleging that there is no arguable cause of action and/or that the proceeding is an abuse of process. The court examined whether justice could be done at trial despite the delay, and concluded that it would be premature to strike out Mr. He's claim before he had filed his briefs of evidence. The court declined to strike out Mr. He's statement of claim or any of the causes of action under r 15.1, for the same reasons given under r 15.2. The court found that it would be premature to do so before Mr. He had filed his briefs of evidence. Chen’s interlocutory application to strike out He’s claims is dismissed. As Chen is the unsuccessful party, he will pay He’s reasonable disbursements in relation to this application, to be fixed by the Registrar.

Orders