Huang v Luo - [2017] NZHC 680

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

CIV-2015-419-000307 [2017] NZHC 680

BETWEEN
JIANMING HUANG

Plaintiff

AND

LIN LUO
First Defendant

W & L LIMITED Second Defendant

Hearing: 6 April 2017

Appearances:

D Zhang and Y Taylor for Plaintiff
A B Foster for Defendants

Judgment:

6 April 2017

ORAL JUDGMENT OF WYLIE J

Solicitors/counsel: D Zhang, Auckland
Foster & Milroy, Hamilton

HUANG v LUO [2017] NZHC 680 [6 April 2017]

Background

[1] These proceedings were commenced in September 2015. The plaintiff, Mr Huang, alleges that he and the defendants entered into a partnership to purchase and develop a property situated at 8 Chamberlain Road, Massey, Auckland. He says that the partnership was formalised in writing in February 2014, but that the second defendant had earlier entered into an agreement to purchase the property in August
2011 for the sum of $1,950,000. He says that he contributed $785,000 towards the purchase price, and that he and the defendants agreed that the balance of the purchase price would be funded through the second defendant obtaining a loan from the BNZ. He says that the loan was obtained but that the second defendant subsequently obtained a further loan of $4 million from Pearlfisher Capital Ltd. He asserts that the second defendant had no authority from him to take out a loan from Pearlfisher, and that the first and/or second defendants obtained the loan proceeds using the property as security. He also asserts that there have been GST refunds and rebates received from Vector Ltd in respect of the property and its development. He says that the project has been run without his acquiescence or involvement and that the defendants have failed to keep him informed. He raises various causes of action based in contract, for breach of fiduciary duties, for monies had and received, for unjust enrichment and for a constructive trust.

[2] The defendants have filed a comprehensive statement of defence. They deny many of the key allegations.

[3] It is common ground that the first defendant, Ms Luo, is the sole director of and shareholder in the second defendant, W & L Limited.

Discovery ordered

[4] The proceedings have been before the Court on a number of occasions.

[5] As long ago as July 2016, Associate Judge Sargisson put in place a timetable order which, inter alia, required that standard discovery take place by 12 August
2016.

[6] The defendants complied, in that they filed and served an affidavit of documents by the specified date. The plaintiff however, delayed.

[7] In December 2016, the plaintiff filed an application seeking further and better discovery by both defendants. The plaintiff considered that the documents earlier discovered by the defendants were deficient.

[8] On 2 February 2017, the application was granted by Edwards J by consent. The consent memorandum filed referred to both defendants, but the order made was against the first defendant only and not the second defendant. The second defendant is not named in the intitulement to the judgment and there…

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 Huang v Luo

Details

AGLC: Huang v Luo [2017] NZHC 680
Case: [2017] NZHC 680
Decision Date: 6 April 2017

CaseChat Overview and Summary

In the case of Huang v Luo, the plaintiff, Jianming Huang, filed proceedings against the first defendant, Lin Luo, and the second defendant, W & L Limited, in the High Court of New Zealand. Mr Huang alleged that he, Ms Luo, and W & L Limited entered into a partnership to purchase and develop a property at 8 Chamberlain Road, Massey, Auckland. He further claimed that despite his financial contributions and agreements with the defendants, the project was being run without his involvement or consent, and that the defendants had failed to keep him informed. The defendants denied many of the allegations made by Mr Huang. The primary legal issues in this case were whether the defendants had breached their contractual obligations, fiduciary duties, and other alleged causes of action. Additionally, the court had to determine whether the defendants had failed to comply with discovery orders, warranting a finding of contempt. The court found that the defendants had indeed breached the discovery orders, as they had not disclosed all the required documents as per the consent order. The first defendant, Ms Luo, had wilfully ignored her discovery obligations, leading to the conclusion that she had breached the consent order without lawful excuse. However, the court could not ascertain whether the second defendant had also breached the order, as the order did not explicitly extend to it. The court was also not prepared to make a finding of contempt against the defendants on the limited materials before it. Nonetheless, the court deemed an award of costs in favour of the plaintiff to be appropriate, given the repeated breaches of discovery orders and the subsequent need to vacate a fixture. The court ordered the defendants to discover specific documents related to the loan proceeds, GST refunds, Vector rebates, and other relevant financial transactions. Furthermore, unless the defendants complied with these orders within 21 days, the court would strike out the statement of defence, allowing the plaintiff to proceed to judgment on a default basis.

The court further ordered the defendants to pay costs to the plaintiff. The plaintiff's counsel was directed to file a memorandum setting out the indemnity costs sought by the client, itemising the hourly rate charged and the hours claimed. The defendants' counsel was to respond to the memorandum within a specified timeframe. The court would then deal with the issue of costs on the papers, unless further assistance from counsel was required. In summary, the court found the defendants to be in breach of discovery orders and awarded costs to the plaintiff. However, the court refrained from making a finding of contempt against the defendants due to insufficient evidence. The defendants were ordered to discover specific documents related to the financial transactions of the partnership and were directed to pay costs to the plaintiff.

Orders