Huang v Jiang
[2018] NZCA 209
•21 June 2018 at 2.30 pm
| IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA |
| CA598/2017 [2018] NZCA 209 |
| BETWEEN | HUIFEN HUANG |
| AND | RUI JIANG |
| Hearing: | 15 May 2018 |
Court: | Miller, Ellis and Woolford JJ |
Counsel: | A R Gilchrist and C M Fry for Appellant |
Judgment: | 21 June 2018 at 2.30 pm |
JUDGMENT OF THE COURT
AThe appeal is dismissed.
BThe appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.
____________________________________________________________________
REASONS OF THE COURT
(Given by Woolford J)
Huifen Huang and Rui Jiang are property investors. They have been involved in at least two joint ventures. The arrangements between them were often oral or not well recorded. In 2006, they bought the property at 74 Swayne Road, Cambridge (the property) together. Although each contributed more or less equally to the purchase price, the property was registered in Ms Huang’s sole name.
In 2015, following a breakdown of trust and communication between them, Mr Jiang issued proceedings in the High Court against Ms Huang seeking various orders recognising his interest in the property. Ms Huang counterclaimed seeking the repayment of two loans, one of $200,000 and a second of ¥3.1 million.[1]
[1]Throughout this judgment we use $ for NZD and ¥ for RMB.
In a judgment dated 26 September 2017, Fitzgerald J declared that Ms Huang held a share of the value of the property on trust for Mr Jiang.[2] She found that Mr Jiang had repaid $100,000 of the $200,000 loan, but that Ms Huang was out of time to recover the remainder of the $200,000 loan.[3] She also found that Ms Huang had not proven that she had advanced a second loan of ¥3.1 million to Mr Jiang.[4]
[2]Jiang v Huang [2017] NZHC 2340 at [30] and [67].
[3]At [86] and [93].
[4]At [109].
Ms Huang now appeals. Essentially, she considers the Judge got it wrong. She says she owns the property outright, that Mr Jiang still owes her half the $200,000 loan and the entire second loan of ¥3.1 million.
Factual background
The parties first met in around 2006. They agreed to undertake a property venture together. Mr Jiang looked for an investment property. He found the property at 74 Swayne Road, Cambridge. With Ms Huang’s agreement, Mr Jiang entered into a sale and purchase agreement for $2.5 million.
Prior to settlement of the purchase of the property, the parties orally agreed that each of them would have a 50 per cent interest in the property on the basis they would share income and expenses equally. The purchase of the property was funded by a contribution from Mr Jiang of approximately $419,000 and a contribution from Ms Huang of $410,000. The balance of the purchase price was funded by a loan on an interest only basis from the ASB Bank to Ms Huang.
On settlement, the property was registered in Ms Huang’s name only. It is accepted that Ms Huang held a 50 per cent interest in the property on trust for Mr Jiang at that time.
Ms Huang did not take an active role in the property’s management. She resided overseas (in China and London) for most of the relevant period. The property’s management was left to Mr Jiang, who resides in New Zealand.
The property was initially rented out at $400 per week. Mr Jiang’s ex-wife attended to most of the day-to-day matters arising in respect of the property, including liaising with the rental agent, receiving (via the rental agent) the rent and paying the rates and other outgoings. The rental income was insufficient to cover the mortgage interest payments and other expenses. The venture, therefore, was running at a loss.
While Mr Jiang initially paid his share of the mortgage interest payments, he ceased to make such contributions by about mid-2008 due to his financial position. By that time, Mr Jiang had contributed an additional $74,000. In addition to making contributions to the mortgage interest payments, in late 2008 and early 2009 Ms Huang made three separate payments reducing the principal of the ASB loan by $800,000, $210,000 and a further $210,000 in November 2008, March 2009 and April 2009 respectively.
By mid-2010 Ms Huang was frustrated at the imbalance in the parties’ respective contributions to the property. They met to discuss matters and documented their discussions in a written agreement dated 29 July 2010 (the 2010 agreement).
The nature, terms and effects of the agreement will be addressed in more detail, but in short, Ms Huang says that the 2010 agreement recorded the parties’ agreement that if the property was not able to be sold quickly to a third party for $1.3 million, it would be sold to either herself or Mr Jiang for $1.2 million. Ms Huang further states as a result of the 2010 agreement she purchased the property or, perhaps more accurately, bought out Mr Jiang’s share in the property. According to her, this is reflected, in particular, by the fact that from September 2010 all rental income was redirected to her.
Both parties instructed expert accountants to analyse their respective financial contributions to the purchase of the property. A joint statement of the experts dated 31 May 2017 was produced. It set out the parties’ respective contributions as at 31 March each year. Relevantly, it showed the parties’ contributions as follows:
| 31 March 2010 | 31 March 2011 | 31 March 2012 | |
| Ms Huang | $1,744,081 | $1,780,094 | $1,809,277 |
| Mr Jiang | $617,927 | $618,234 | $621,997 |
| ASB Bank mortgage | $448,809 | $427,525 | $404,519 |
The joint statement showed that the financial position of each party did not significantly change following the 2010 agreement, which was dated 29 July 2010. Although the rental payments were transferred to Ms Huang from 10 September 2010, two and a half months later, the rates continued to be paid by Mr Jiang’s ex-wife for at least a year. In particular the bank loan was not repaid, although the 2010 agreement provided that it would be prioritised for repayment on the sale of the property.
More significantly, there was no accounting as to who owed what if Ms Huang had in fact bought the property for $1.2 million in terms of the 2010 agreement. It is unclear from the terms of the 2010 agreement exactly how that accounting would be done, but it would appear from the fact that the difference in contributions between the parties was less than the purchase price of $1.2 million, Ms Huang would have owed some money to Mr Jiang.
In addition to paying Mr Jiang’s share of the mortgage interest payments from mid-2008, Ms Huang also claimed that she had advanced two loans to Mr Jiang. One of $200,000 by bank transfer on 2 August 2007 and a second of ¥3.1 million on or about 11 January 2012. As regards the latter, she says she handed the money over to Mr Jiang in cash at a meeting in a car park near a petrol station in Shenzhen, China.
Mr Jiang acknowledges receiving the first loan and made two lump sum repayments to Ms Huang of $50,000 each on 14 February 2008 and 22 September 2009. He says, however, recovery of the remainder of the loan is time barred. As to the second loan, Mr Jiang disputed that he received ¥3.1 million cash from Ms Huang in a car park in China.
There were various IOUs or receipts issued in subsequent years, which were relied upon by each party to support their claim or discredit the other’s. Mr Jiang, in particular, contended that some of the amounts referred to in these IOUs or receipts related to dealings between the parties in relation to a separate investment in a company called LJ Holdings Ltd, which was involved in a development of a property in Whangaparaoa. Disputes arose between the parties in relation to that venture also and High Court proceedings were issued. However, those proceedings were settled in December 2015, shortly before the substantive trial was to commence.
Events which precipitated the commencement of these proceedings were steps said to have been taken by Ms Huang in late 2015 to sell the property. On 18 December 2015, Mr Jiang applied for, and was granted, an interim injunction preventing the sale of the property. This order was ultimately made by consent as Ms Huang said she had no intention to sell the property at that time in any event.
Approach on appeal
The approach on appeal is well settled. In Austin, Nichols & Co Inc v Stichting Lodestar (Austin, Nichols), the Supreme Court held that those exercising general rights of appeal are entitled to judgment in accordance with the opinion of the appellate court, even where that opinion is an assessment of fact and degree and entails a value judgment.[5] If the appellate court’s opinion is different from the conclusion of the court below, the appeal must be allowed even if it was a conclusion on which reasonable minds might differ.[6] Austin, Nichols reaffirms the appellate court’s obligation to form its own independent judgment on the merits of an appeal by way of re-hearing. But as noted by this Court in Green v Green, two fundamentals remain constant:[7]
[30] First, it is still axiomatic that the appellant bears the onus of persuading the appellate court to reach a different conclusion. Of necessity, in discharging that onus the appellant must identify the respects in which the judgment under appeal is said to be in error.
[31] Second, it is also axiomatic that in determining whether the judgment was wrong the appellate court will take into account any particular advantages enjoyed by the trial court. The advantages possessed by a trial judge in determining questions of fact are obvious, especially where assessments of credibility and reliability are involved. The trial judge gets to see and hear the witnesses, and is able to evaluate the strength of the evidence as it progressively unfolds within the context of the trial as a whole…
Credibility of the parties
[5]Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
[6]At [16].
[7]Green v Green [2016] NZCA 486, [2017] 2 NZLR 321.
In the present case, the Judge had doubts about the credibility of both parties. She stated:[8]
[23] Unfortunately, I did not find either the plaintiff or the defendant to be particularly reliable or credible witnesses. At times, their evidence was confused, internally inconsistent and in parts, simply not credible. Findings in relation to credibility were hampered by the fact that the evidence was being given through a translator. Nevertheless, I formed the clear impression at the time each of the plaintiff and defendant gave evidence that some aspects of their oral evidence was formulated in order to respond to particular questions being put to them in cross-examination.
[24] Because of this, I have placed more reliance on the contemporaneous documentary evidence. Unfortunately, this was limited, and also in parts confusing and inconsistent. Nevertheless, evidence that I consider reliable and credible, together with the documentary evidence, has enabled me to reach clear conclusions in relation to the plaintiff’s claim and the defendant’s counterclaims.
Issues on appeal
[8]Jiang v Huang, above n 2.
Counsel for Ms Huang identifies three questions for determination on appeal:
(a)Did Fitzgerald J err in fact and law in finding that the 2010 Agreement was not implemented by the parties?
(b)Did Fitzgerald J err in finding that Ms Huang demanded repayment of $200,000 loan from Mr Jiang in 2007 or 2008?
(c)Did Fitzgerald J err in finding that Ms Huang did not advance a loan of ¥3.1 million to Mr Jiang in January 2012?
First ground of appeal: the 2010 agreement
The original agreement was handwritten in Chinese, signed by both parties and dated 29 July 2010. It contained eight clauses. The English translation is as follows:
Shareholder Agreement
1. Each of the two parties Huifen Huang and Rui Jiang made the contributions of four hundred thousand New Zealand dollars respectively in 2006, forming a total amount of eight hundred thousand New Zealand dollars. A further loan of one million and seven hundred thousand New Zealand dollars was borrowed from the ASB Bank, that came to a total amount of two million and five hundred thousand New Zealand dollars, and purchased [Translator’s Notes: Blank Space]
2. Each of the two parties Huifen Huang and Rui Jiang is responsible to bear 50% of the loan interest (i.e. eight hundred and fifty thousand New Zealand dollars) of the loan amount of one million and seven hundred thousand New Zealand dollars borrowed from the ASB Bank, and each of the two parties holds 50% shares.
3. Through the consultations between the two parties, Huifen Huang and Rui Jiang agree to have [Translator’s Notes: Blank Space] sold for a price of over one million and three hundred thousand New Zealand dollars. In the event that it is unable to be sold in about two weeks, both parties agree that it shall be sold at a price of one million and two hundred thousand New Zealand dollars to either Huifen Huang or Rui Jiang, and the proceeds of the sale of the section shall be prioritized for the repayment of the bank loan. The deal shall be concluded in one week.
4. Prior to/Up to the point of time the section is sold, the amount of payments to the loan principal and the interest advanced by Huifen Huang shall be borne by both parties. Rui Jiang shall be responsible for half of the amount of payments to the bank loan principal and the interest.
5. In the event that Rui Jiang does not have the capability to make the payment, half of the payments to the loan principal and the interest advanced by Huifen Huang shall be turned into the investment for the development of the retirement apartment project at 40a Scott Road, Stanmore Bay by LJ Holdings Ltd. The shares that Huifen Huang holds shall be adjusted accordingly pursuant to the amount of investment she makes for the retirement apartment project.
6. The two parties agree that the principal plus the interest of the funds that Huifen Huang contributed to LJ Holding Ltd for the development of the retirement apartment project shall be transferred to Huifen Huang within two months.
7. The payments made for the loan principal and interest of the loan borrowed from the bank shall be based on the bank slips/statements/documents.
8. This agreement is entered into between the two parties through consultations and acceptance and it is hereby referred to as proof.
Fitzgerald J was not satisfied that the 2010 agreement was implemented. She gave six reasons.
First, the Judge did not accept Ms Huang’s argument that nothing needed to take place to implement her purchase of the property pursuant to the 2010 agreement. Some form of communication between the parties was required to notify the other party of their intention to buy the other’s interest. Steps then needed to be taken to implement the sale and resolve the resulting financial position of the parties in accordance with cl 3–7.[9]
[9]At [51]–[52].
Ms Huang said she telephoned Mr Jiang shortly after entering into the 2010 agreement to notify him of her intention to purchase his share in the property. The Judge, however, did not find this aspect of Ms Huang’s evidence credible. She formed the clear impression that Ms Huang made up this evidence.[10]
[10]At [53]–[54].
Second, the Judge did not consider credible Ms Huang’s evidence that shortly after entering into the 2010 agreement she asked two real estate agents to look for potential buyers for the property.[11] Two real estate agents, Ms Francis Li and Ms Amy Xiong, gave evidence at trial. The Judge recorded that Ms Xiong was very clear in her recollection that she had met Ms Huang together with Ms Li in her new house, which she had moved into in 2012. Ms Xiong was clear that the meeting could not have taken place in 2010 because at that time she was living in her old house and her clear recollection was that she had met with Ms Huang and Ms Li in her new house. The Judge accordingly did not accept that Ms Huang engaged with Ms Li and Ms Xiong in 2010 as part of steps taken by her to implement the 2010 agreement.[12]
[11]At [56].
[12]At [57]–[59].
Third, there was no evidence that there was any engagement between the parties subsequent to the 2010 agreement in relation to the amounts of principal and interest that Ms Huang had paid in the intervening years as contemplated by clause 7. There was also not any evidence advanced before the Judge of any steps taken as contemplated by clauses 5 and 6 in terms of adjustments being made to the parties’ respective investments in the Whangaparaoa property through LJ Holdings Ltd.[13]
[13]At [60].
Fourth, the fact that nothing actually happened or changed after the 2010 agreement was consistent with Ms Huang’s “hands off” approach and intermittent engagement with the property. She gave evidence that she had no knowledge or understanding that the property was in fact being rented from 2008. It was not clear to the Judge how Ms Huang thought that the various expenses relating to the property were being paid.[14]
[14]At [61].
Fifth, the limited documentary evidence subsequent to the 2010 agreement was, in the Judge’s view, inconsistent with Ms Huang having purchased the property as a result of the 2010 agreement. In this regard, the Judge referred to a text message between the parties in December 2011, a receipt from 2012 and text message in May 2012. The Judge was of the view that these communications were inconsistent with the property already having been sold to Ms Huang some two years earlier.[15]
[15]At [62].
Sixth, the evidence demonstrated that Mr Jiang’s ex-wife continued to manage the property after 2010 and, indeed, until at least 2015. The rates were, until July 2011, paid by Mr Jiang’s ex-wife. After that point, they were significantly in arrears. Ms Huang also took no steps to rent the property or engage with the property manager, Ms Nicole Antsiss. Ms Antsiss gave evidence at trial and confirmed that until 2015 she continued to deal with Mr Jiang’s ex-wife, just as before the 2010 agreement.[16]
[16]At [63].
The Judge acknowledged that from September 2010 rental payments from the property were redirected to Ms Huang. While consistent with Ms Huang being the sole owner, the Judge considered that the redirection of the rental payments was also consistent with Mr Jiang retaining an interest in the property. It could have been to redress the continuing imbalance in contributions.[17]
[17]At [64]–[66].
On appeal, Ms Huang argues that the Judge erred in:
(a)accepting the evidence of Ms Xiong when her recollection of when she met Ms Huang was not clear and did not support a finding that Ms Huang had not taken any steps to implement the 2010 agreement;
(b)not taking into account commercial considerations in assessing whether the parties’ conduct (or absence of specific actions) tended to prove or disprove that the 2010 agreement was implemented;
(c)the way she interpreted two text messages between the parties;
(d)finding that Ms Huang formulated the aspect of her evidence where she said she telephoned Mr Jiang shortly after the 2010 agreement to communicate her intention to purchase his share of the property; and
(e)dismissing the significance of the redirection of the rent payments to Ms Huang from September 2010.
Evidence of Ms Xiong
Ms Xiong’s original brief of evidence stated she first met Ms Huang in 2014 or 2015. She said that in any given year she talked to about 100 people about prospective sales and admitted that there were some discussions over the years which would be difficult to recall. She also admitted that it was difficult to recall the year in which she may have had discussions with those people. Based on this, Ms Huang submits that Ms Xiong’s recollection of when she first met Ms Huang was not clear and did not support a finding that Ms Huang did not take steps to implement the 2010 agreement.
The Judge, however, found Ms Xiong’s evidence on when she met Ms Huang credible and reliable. There is no reason to question that finding. The fact that Ms Xiong meets 100 people a year and may not recall all the conversations with those people or the particular year she met them does not necessarily detract from her recall of meeting Ms Huang in 2012 at her new house.
Commercial considerations
As regards commercial considerations, Ms Huang submitted the Judge did not sufficiently consider whether the parties’ conduct (or absence of specific actions) tended to prove or disprove that the 2010 agreement was not implemented. Specifically, Ms Huang says the Judge did not sufficiently consider:
(a)that the parties entered into an agreement, which they intended to be bound by; and
(b)as a matter of business sense, no experienced business person such as Ms Huang would continue to make contributions to a loan on behalf of another party, in circumstances where there was no prospect of recovering those funds (given Mr Jiang’s financial difficulties) and in the absence of an agreement to address those imbalances.
In the High Court, counsel for Mr Jiang argued that the 2010 agreement was not a valid and enforceable contract. The Judge rejected that argument. She stated:[18]
I am satisfied that the 2010 Agreement is a valid and binding agreement between the parties, on its terms. I consider that the parties clearly intended to enter into legal relations as a result of their discussions, and that the terms of the 2010 Agreement are sufficiently certain to be enforceable.
[18] Jiang v Huang, above at n 2, at [40].
The Judge, therefore, considered the first matter complained of and accepted that the parties entered into an agreement which they intended to be bound by.
As to the second consideration which the Judge allegedly failed to consider, the submission proceeds on a false premise — that there was no prospect of recovering funds contributed by Ms Huang on behalf of Mr Jiang. On the contrary, Ms Huang had more than adequate security because she was registered as sole proprietor on the property’s title. It was Mr Jiang who had to initiate proceedings in the High Court to secure recognition for the contributions he had made to the property. Ms Huang continued making contributions to protect her interest as registered proprietor of the property.
Text messages
The first text message which the Judge thought was inconsistent with the 2010 agreement having been implemented was sent by Ms Huang to Mr Jiang on 2 December 2011, a year and a half after the 2010 agreement. It included the statement:
I was the one that was serving [sic] the loan for the section in Cambridge, and it has been two years, did I say anything about it? Do hope you understand! It won’t matter anymore if it is left to the bank for auction!
On appeal, Ms Huang submits that because neither party gave evidence about how this text message applied to the property and the 2010 agreement, the Judge should not have relied upon it to infer that Ms Huang did not implement the 2010 agreement.
However, the Judge did not find either Ms Huang or Mr Jiang to be particularly reliable or credible witnesses and gave more weight to contemporaneous documentary evidence. The Judge was entitled to give some weight to the text message, even though neither party gave evidence as to how the text message related to the property. The question could reasonably be asked why the parties were even talking about the property if Mr Jiang had had no interest or share in the property for more than a year.
The second text message which the Judge thought was inconsistent with the 2010 agreement having been implemented was sent by Mr Jiang to Ms Huang on 29 May 2012, almost two years after the 2010 agreement. It included the statement:
…taking the time after the purchase of the section in Cambridge as an example, I also made lots of contributions of human and financial resources, it was originally agreed that interest wouldn’t be charged, as it would be offset between each other, but it was again added now. It was originally agreed that the section in North Shore would be held by you as the security at the price of 3 million, and 200,000 would be compensated to me plus 10% shares, this was changed just over the time of one meal. I thought about it for the whole night, we’d better have a clear cut between you and I. You get hold of both sections, and get cash compensation to me, this is the best solution! If you do not agree with this, we then return to what was agreed before, for the section(s) to be transferred to you, but with the added conditions that I would impose, any price of sale must be subject to my acceptance, both sides get the respective principal back, and the interests shall be divided in accordance with the shares held.
Ms Huang responded:
Isn’t it better for the profit to be paid to you by the time the two sections are sold. And we can still be friends!
Again, we consider that the Judge was entitled to give some weight to the text message. The fact that Mr Jiang did not give evidence about it and that Ms Huang only addressed the message in cross‑examination does not change that. Ms Huang clearly referred to the future sale of two properties being the property in Cambridge and another section on the North Shore. The text message is inconsistent with Mr Jiang having no interest or share in the property.
Telephone call to Mr Jiang
The Judge found that Ms Huang had made up her evidence about telephoning Mr Jiang shortly after entering into the 2010 agreement to communicate her intention to purchase his share in the property because she was unclear as to the details of the call, including whether she was in England or China at the time, but more importantly, this evidence did not form part of her original brief of evidence or her oral evidence in chief.
Ms Huang submits that the Judge erred because it was never Mr Jiang’s case that the 2010 agreement was not implemented and, moreover, Mr Jiang had the onus of establishing that the 2010 agreement was of no effect. Ms Huang did not have to prove that the 2010 agreement was implemented. However, that the Judge was best placed to assess Ms Huang’s credibility. Where the onus lay on a particular issue is not sufficient reason for an appeal court to overturn a credibility finding.
Rental payments
The Judge correctly noted that from September 2010 rental payments from the property were redirected to Ms Huang. She also recorded the evidence of Mr Jiang and his ex-wife that the redirection of the rent had nothing to do with the 2010 agreement, but rather was in recognition of the continuing imbalances in the parties’ contributions.
On proper analysis of her judgment, the Judge saw the redirection of the rental payments as a neutral factor, which could lead to opposing inferences of equal weight. She therefore put this factor to one side. The Judge did not err in doing so. What the Judge saw as significant was that Mr Jiang’s ex-wife continued to manage the property after 2010 and indeed until at least 2015.
Apart from submitting that the Judge erred in fact in finding that the 2010 agreement was not implemented by the parties, Ms Huang submits that the Judge also erred in law in concluding that the 2010 agreement was discharged by mere non‑implementation. She argues that mere non‑implementation does not bring a contract to an end. Rather, it is said, contracts may be discharged in one of five broad ways: by performance, agreement, breach, impossibility of performance and law. To the extent that a contract may be discharged by evidence of non‑implementation, it would be on the basis of discharge by implied agreement, specifically by abandonment.[19]
[19]See Paal Wilson & Co A/S v Partenreederei Hannah Blumenthal [1983] 1 AC 854 (HL); and Matthew Barber “Discharge by Agreement” in Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) at 759–761.
On Ms Huang’s case, the 2010 agreement was not discharged by abandonment because she did not have to do anything after signing the 2010 agreement to put it into effect because:
(a)the title to the property was already in her sole name so she did not need to arrange for a transfer of title;
(b)the ASB Bank loan was also in her sole name so again she did not need to arrange for a transfer of Mr Jiang’s responsibility for the loan to her; and
(c)she was already making the entire mortgage payments so she did not need to change the amount she was paying.
Clauses 3–7 of the 2010 agreement, however, imposed various requirements on the parties. Doing nothing was not an option. Ms Huang’s conduct, as evinced towards Mr Jiang and acted upon by him, leads necessarily to the inference of an implied agreement between them to abandon the 2010 agreement. The Judge’s finding of non‑implementation can properly be characterised as a finding of abandonment through implied agreement. The Judge was not in error in finding the 2010 agreement was at an end.
Conclusion on the first ground
Ms Huang has not persuaded us to reach a different conclusion than Fitzgerald J on this ground. We consider that the Judge was correct in finding that the 2010 Agreement was not implemented. In particular, we note this conclusion depended in large part on assessments of credibility and reliability, an area in which Fitzgerald J enjoyed obvious advantages.
Second ground of appeal: the $200,000 loan
Fitzgerald J noted that it was not in dispute that on 2 August 2007 Ms Huang transferred $200,000 to Mr Jiang. The purpose of the loan was unclear, but that was immaterial as the real dispute between the parties was how much, if any, of it had been repaid and whether Ms Huang was now time barred from recovering any balance.[20]
[20]Jiang v Huang, above n 2, at [80].
The Judge found that two payments of $50,000 each made by Mr Jiang to Ms Huang on 14 February 2008 and 22 September 2009 were partial repayments of the loan and not catch-up payments in respect of Mr Jiang’s unpaid share of the mortgage interest payment as Ms Huang originally asserted.[21] Ms Huang does not challenge that finding on appeal.
[21]At [82]–[86].
Mr Jiang has also not cross-appealed the Judge’s finding that the loan was not an on-demand loan as he originally asserted, but one that was repayable once demand was made.[22] If it was an on-demand loan the six-year limitation period set out in the Limitation Act 2010 would apply from the date of the loan advance, whereas if it was a loan that was repayable once demand was made, the six-year limitation period would only begin to run once demand was made.
[22]At [87]–[88].
Mr Jiang said that Ms Huang made repeated verbal requests at the end of 2007 and the beginning of 2008 that he repay the loan. On the other hand, Ms Huang said that she made demand for repayment of the loan in March and August 2011. The Judge preferred Mr Jiang’s evidence as to the timing of the demands for repayment. She said this was consistent with her finding that the $50,000 lump sum payments were partial repayments of the loan. The Judge noted that Ms Huang did not produce any contemporaneous evidence of the demands she said she made in 2011.[23]
[23]At [92].
As to a text message from Ms Huang to Mr Jiang on 2 December 2011 in which she said “no formal process was made when you borrowed 200,000 from me”, the Judge noted that there was no reference in the text message to the demand said to have been made earlier that year, nor did it contain a further demand that the loan be repaid. The Judge therefore found that Ms Huang was unable to recover the remainder of the $200,000 loan as she was now out of time to do so.[24]
[24]At [93].
Ms Huang submits that the Judge’s preference for Mr Jiang’s evidence when demand was made does not sufficiently take into account that his evidence in respect of the $200,000 loan was muddled.
Although Mr Jiang’s evidence may have been muddled, the fact remains that repayments were made in 2007 and 2008. The Judge was entitled to consider that the repayments must have been made at the request of Ms Huang. It was obvious by the time of the 2010 agreement Ms Huang was well aware of Mr Jiang’s financial difficulties. She had made substantial payments of the principal from November 2008 onwards, which were not matched by Mr Jiang. It does not make sense that Ms Huang would wait for a number of years to demand repayment if she was aware of Mr Jiang’s financial difficulties. We are not persuaded that the Judge was in error.
Third ground of appeal: the ¥3.1 million loan
Fitzgerald J was not satisfied that Ms Huang made a loan of ¥3.1 million to Mr Jiang for the purpose of exploring business opportunities in China by handing two carry bags of cash to Mr Jiang in a car park in Shenzhen, China.
No documentary record was made of the alleged loan at the time it was advanced. Two subsequent documents relied upon by Ms Huang — an IOU dated 28 March 2012 and a receipt dated 23 April 2015 — appear to relate to either the property or another property that was the subject of a joint venture between the parties. The Judge considered it inherently unlikely that Ms Huang would have loaned such a significant sum to Mr Jiang in January 2012 with no documentary record or security, when she was aware that Mr Jiang was experiencing significant financial difficulties.[25]
[25]At [105]–[108].
Ultimately, the only evidence supporting the loan of ¥3.1 million was from Ms Huang. The Judge did not find Ms Huang to be a particularly reliable or credible witness. Further, her evidence of the loan was at times confused and contradictory.[26] On a matter of this significance, and absent any other contemporaneous corroborating evidence, the Judge was not satisfied that loan was actually made.
[26]At [109].
Ms Huang argues on appeal that the Judge erred in:
(a)not ascribing any real weight to a written statement made by Mr Yifeng Li of what he saw when the parties met in Shenzhen, China in January 2012 given the circumstances in which he withdrew his willingness to give evidence at trial; and
(b)not fully considering the circumstantial corroborating documents in the context of the parties’ usual approach of entering into significant transactions on an undocumented and oral basis.
Mr Li is a friend of Mr Jiang. He was introduced by Mr Jiang to Ms Huang in January 2012 at the dinner prior to which Ms Huang says that the cash was handed over to Mr Jiang.
In February 2016, four years after the alleged loan, Mr Li wrote a statement of what he saw during the January 2012 meeting. In that statement Mr Li says he saw Ms Huang give Mr Jiang two bags, although he candidly acknowledged that at the time he did not know what was in the bags. Mr Li was initially willing to provide a brief of evidence when he was in New Zealand in April 2017, but subsequently refused to sign one. Despite counsel’s attempts to have Mr Li give evidence, in May 2017 Mr Li advised counsel that he had no intention of coming to New Zealand for the trial.
The Judge ruled Mr Li’s hearsay statement as prima facie admissible, but was not prepared to ascribe any significant weight to it. The statement was made four years after the event and there was no evidence concerning the circumstances in which Mr Li came to provide the statement. The Judge said that it was self-evident that these matters were intensely factual and there is no doubt that counsel for Mr Jiang would have wished to cross-examine Mr Li closely on his recollection of what he saw some four years earlier.[27]
[27]At [98]–[103].
But given the nature of Mr Li’s evidence and the timing of his unwillingness to give evidence, Ms Huang submits more weight should have been given to Mr Li’s statement. The entire statement is as follows:
As far as I know and recall in respect of what happened on the day (I can’t remember the exact date) when I was together with Huifen Huang and Rui Jiang, I saw that Huifen Huang opened the boot of the car, took out two bags and gave them to Rui Jiang. I did not know what was in the bags! Later, I was told it was Ah Fen [Ms Huang] who repaid the money to Rui Jiang. But I did not know the relationship of their cooperation!
Given the sparse information in the statement, the fact that it was made four years later and the unavailability of Mr Li for cross-examination, we are of the view that the Judge was not wrong to ascribe only little weight to his statement.
Ms Huang further says that the advancement of a loan of ¥3.1 million without documentation is not inconsistent with the parties’ typical approach to transactions of that size. Ms Huang subsequently searched for and found a bank statement showing the withdrawal of ¥3 million on 6 January 2012, six days before the parties met in Shenzhen, China. Ms Huang gave evidence that the ¥3.1 million in cash was obtained as follows:
(a)she already had ¥100,000 in cash before the ¥3 million withdrawal;
(b)she had also set aside some cash which she left in her safe to give to Mr Jiang. Ms Huang’s sister (who was managing Ms Huang’s accounts) did not know at the time that the transfer to Mr Jiang was going to be undertaken so she removed ¥2 million from the safe and deposited it into her own account; and
(c)she then advised her sister that she needed ¥3 million, which she withdrew for Ms Huang.
The Judge noted, however, that Ms Huang’s evidence in respect of the loan was at times confusing and contradictory, including as to the alleged source of the cash. In her brief of evidence, she said the cash was sourced from the sale of two of her investment properties in China. She says it was not unusual for deposits from such sales to be paid in cash. However, in cross-examination she said ¥2 million was from the sale of investment properties and ¥1 million was rental income from other properties.
Having considered the matter carefully, we are of the view that there is no good reason to challenge the Judge’s finding that Ms Huang was not a particularly reliable or credible witness and that her evidence was, at times, confused and contradictory.
On appeal, counsel for Ms Huang also referred to the IOU dated 28 March 2012, just over two months after the January 2012 meeting. This document was prepared by Mr Jiang and Ms Huang had no part in the drafting of the document and did not sign it. Ms Huang says that she did not check the document carefully, but was relieved it noted that she loaned Mr Jiang $650,000, which she says is the equivalent of ¥3.1 million.
The IOU provides:
Receipt for a Loan (IOU)
1.Rui Jiang and Huifen Huang purchased 74 Swayne Road, Cambridge (Cambridge) jointly in 2007. Rui Jiang and Huifen Huang hold 50% of the shares each, of which Huifen Huang advanced a loan of six hundred and fifty thousand New Zealand dollars to Rui Jiang.
2.Rui Jiang purchased 40A Scott Road and Huifen Huang advanced Rui Jiang a loan of one hundred and twenty five New Zealand dollars.
3.With regard to the above, the two parties agree that Rui Jiang will pay to Huifen Huang the interest at 10% per annum. The tax on the interest shall be paid by Huifen Huang or shall be advanced by Rui Jiang as the disbursement.
4.The time of the loan shall start to be calculated on the day when Huifen Huang transfers the funds to the lawyer’s account or to (designated) bank account.
5.The time of the loan repayment shall be precisely the time the two sections of the aforementioned is sold. Rui Jiang shall make the repayment of the loan principal plus the interest to Huifen Huang after the settlement.
Given the timing of the IOU and in the context of the parties conducting transactions of that size on an undocumented basis, circumstantial documents, including Mr Li’s statement, it is submitted the IOU tends to support Ms Huang’s assertion that she advanced ¥3.1 million to Mr Jiang in January 2012.
In our view, Judge was not wrong in finding that Ms Huang had not proven that she advanced a loan of ¥3.1 million to Mr Jiang by handing over two carry bags of cash to Mr Jiang in a car park near a petrol station in Shenzhen, China. While the IOU does refer to a loan in its heading and refers to Mr Jiang as the borrower, its meaning is unclear and it appears to largely relate to the property. In the end, we do not consider it is possible to discern the IOU’s legal effect. Ms Huang had the onus of proof. Her evidence and the documents she called in aid were insufficient to meet the standard of proof on the balance of probabilities. The Judge was not in error.
Result
The appeal is dismissed.
The appellant must pay the respondent costs for a standard appeal on a band A basis and usual disbursements.
Solicitors:
Friedlander & Co Ltd, Auckland for Appellant