Huang v Huang

[2021] NZHC 7

IN THE HIGH COURT OF NEW ZEALAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2519

[2021] NZHC 7

BETWEEN

PEIXIAN HUANG

First Applicant

HUAIJIAN HUANG
Second Applicant

POY TONG WONG
Third Applicant

AND

JIEHAO HUANG

Respondent

Hearing:	13 January 2021
Appearances:	R J Katz QC and S F Gazley for Applicants R E Harrison QC and D Liu for Respondent
Judgment:	13 January 2021

JUDGMENT OF LANG J

[on application for interim relief]

This judgment was delivered by me on 13 January 2021 at 3 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

Solicitors:
Lane Neave, Auckland

HUANG v HUANG [2021] NZHC 7 [13 January 2021]

[1]    In this proceeding the applicants seek to recover a share of the proceeds of sale of two properties in which they say they have a beneficial interest. The properties were sold on 15 August 2019. The applicants contend the respondent holds their share of the sale proceeds on their behalf in a fiduciary capacity. They believe the sum involved amounts to more than $9 million.

[2]    The applicants have applied under Part 32 of the High Court Rules 2016 for freezing orders over the respondent’s assets to protect them for any judgment they might ultimately obtain against him. The assets in question are bank accounts in the respondent’s name that the applicants have identified as containing credit balances.

[3]    The applicants initially applied for freezing orders on a without notice basis under r 7.23. In a minute issued on 23 December 2020 Jagose J directed the applicants to serve the proceeding on the respondent and two other persons who also appear to hold beneficial interests in the sale proceeds. The applicants arranged for those parties to be served with copies of the proceeding on 23 and 24 December 2020.

[4]    When the hearing commenced today Mr Katz QC asked me to make freezing orders on the basis of the material filed by the applicants in support of the application. I declined to take that step because I am satisfied the respondent and the other two parties who have been served ought to have a proper opportunity to file documents in response. The time that has elapsed since the documents were served is plainly insufficient for that to occur. Furthermore, the respondent is currently in China and this poses obvious difficulties so far as the filing and service of documents in opposition to the application is concerned.

[5]    Matters are further complicated by the fact that the respondent has now filed and served an appearance under protest to the jurisdiction of this Court to hear and determine the proceeding. He contends the proceedings were not validly served on him and that this Court has no jurisdiction to hear and determine the applicants’ claims. Alternatively, he contends the dispute could be more conveniently heard by the courts in China.

[6]    Mr Harrison QC appeared on the respondent’s behalf when the matter was called today. He acknowledges the respondent will now need to apply for the proceeding to be dismissed or the applicants will need to apply for the protest to be set aside. Whether or not any such application should be heard at the same time as the application for freezing orders is a matter that is yet to be determined. Mr Harrison says the respondent considers both applications involve interrelated issues and should therefore be heard at the same time.

[7]    When I indicated I was not prepared to make final freezing orders on the papers Mr Katz asked me to make interim orders to protect the applicants’ position until the substantive application for freezing orders can be heard. Mr Harrison urged me not to take that step. He points out that the respondent has, through counsel, offered to undertake to the Court not to dispose of any of the sale proceeds pending further order of the Court. Mr Harrison contends this is sufficient to provide the applicants with protection during the period leading up to the hearing of the substantive application for freezing orders.

[8]    There is no dispute that the Court has the power to grant interim relief notwithstanding the fact that a protest to jurisdiction remains undetermined. It may do so to ensure that, if the Court does decide to hear and determine a claim on its merits, it is able to do effective justice between the parties.1

[9]    I acknowledge the delay that has occurred since the properties were sold but do not consider this should count against a grant of interim relief. The issue of delay may, however, be relevant when the substantive application is heard.

[10]   I am also satisfied that on the material filed by the applicants they have established a good arguable case that the respondent holds monies in which they have a beneficial interest. Whether that remains the case after the respondent files evidence in response is obviously a different matter. I am also satisfied it is necessary to protect the applicants’ position pending determination of the substantive application.

1      Commerce Commission v Viagogo AG [2019] NZCA 472 at [80].

[11]   I do not consider it appropriate to rely solely on the undertaking offered by the respondent. The principal reason for this is that he is currently resident in China and it would be very difficult for any enforcement action to be taken against him if he or his agents breached the undertaking by moving funds out of his bank accounts. I acknowledge that interim freezing orders would be addressed to the respondent rather than the banks with which he holds accounts. I consider it far more likely, however, that freezing orders would provide a practical means of ensuring the funds remain in the accounts until the substantive application can be heard.

[12]   I therefore make interim freezing orders against the respondent in relation to the bank accounts set out  in  Schedule  2  to  the  memorandum  of  counsel  dated 22 December 2020. Those orders will restrain the respondent from dealing with or disposing of the funds in those accounts until the substantive application for freezing orders can be heard. The respondent shall be entitled to have access to funds from the accounts to meet his ordinary living expenses, to pay his legal costs in relation to the present proceeding and to make payments in the ordinary course of his business including business expenses incurred in good faith. The respondent has leave to apply to vary or discharge the orders on three working days notice. I make no further orders at this stage.

[13]   Mr Harrison indicates the respondent should be able to file documents in opposition to the application for a freezing order and in support of any application to dismiss the proceeding within one month from today’s date. I consider that to be ambitious but rely on his advice.

[14]   The proceeding will now be listed for mention in the Duty Judge List on Wednesday 17 February 2020 at 10 am. The purpose of that listing is to ensure the respondent has filed and served his documents and to determine whether the two applications should be heard separately or together. Further directions in relation to the filing and service of submissions and the allocation of a fixture can be given at that time.

Lang J