Huang v Zhang - [2024] NZHC 1327

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2019-419-237

[2024] NZHC 1327

BETWEEN
WEIHONG HUANG

Plaintiff

AND

YOUFENG ZHANG

Defendant

Hearing: On the papers

Counsel:

P V Cornegé for Plaintiff

Judgment:

24 May 2024

JUDGMENT OF MOORE J

This judgment was delivered by me on Friday, 24 May 2024 at 2.30 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar / Deputy Registrar Date:

Solicitors: Nolan & Lu, Lawyers, Hamilton Counsel: Phillip V Cornegé

HUANG v ZHANG [2024] NZHC 1327 [24 May 2024]

Introduction

[1] Mr Huang seeks judgment for breach of contract. He pleads that he and Mr Zhang, the defendant, each agreed to invest in a retail liquor business for which they incorporated a company called Z&H Venture Limited (“Z&H”). In breach of that agreement, he says Mr Zhang failed to invest as required and that he instead borrowed funds in Z&H’s name. He says that this caused their retail liquor business to be sold by Z&H at a loss.

[2] Mr Huang received nothing from Z&H’s sale of the retail liquor business. He pleads that because of Mr Zhang’s breach, he lost $219,639. He therefore seeks judgment for that sum, together with interest and costs.

[3] While Mr Zhang filed a statement of defence to Mr Huang’s first statement of claim, he has not since filed a statement of defence to Mr Huang’s amended pleadings. The matter accordingly proceeds by way of formal proof.

[4] For various scheduling reasons, a fixture has regrettably eluded this matter. Registry subsequently inquired of counsel for Mr Huang if they were content for the matter to be dealt with on the papers, subject to the Court’s approval. They were. Having reviewed the matter, I consider that it is suitable for determination on the papers.

Background

[5] As with many a tale of a business fall-out, the origin of this dispute is that Mr Huang and Mr Zhang were friends. Mr Huang was a marketing manager; Mr Zhang ran a liquor store in Hamilton.

[6] In or about December 2015, the parties began discussions about the prospect of jointly investing in a retail liquor business on the corner of Peachgrove Road and Clyde Street in Hamilton. The idea appealed to Mr Huang as Mr Zhang had told him that revenues from his own liquor store were “good” and because Mr Zhang had experience in the industry.

[7] In March 2016, Mr Zhang carried out negotiations with Aushi Ventures Limited (“AVL”), the vendor of the retail liquor business Z&H would come to purchase. As this happened, Mr Huang says that he and Mr Zhang reached a verbal agreement of their own (“the Agreement”). Mr Huang says that the Agreement between him and Mr Zhang was that:

(a)they and their wives would each own 50 per cent of Z&H’s shares but that Mr Zhang would be Z&H’s sole director;

(b)they would each invest $400,000 into Z&H to pay for the purchase price of…

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 Zhang

Details

AGLC: Huang v Zhang [2024] NZHC 1327
Case: [2024] NZHC 1327
Decision Date: 24 May 2024

CaseChat Overview and Summary

The case of Huang v Zhang involved a dispute over a breach of contract related to an investment in a retail liquor business. Weihong Huang sought judgment against Youfeng Zhang for failing to invest in the business as agreed, leading to the business being sold at a loss. The High Court of New Zealand determined the matter on the papers, with the plaintiff’s counsel consenting to this approach. The court found that the parties had a verbal agreement to each invest $400,000 in the business, which was intended to be legally binding. The defendant's failure to invest as agreed constituted a breach of contract. The court accepted the expert's calculation that the plaintiff’s loss due to the breach was $219,639. Consequently, the court ordered the defendant to pay the plaintiff damages of $219,639, plus interest and costs.

Moore J concluded that the evidence supported the existence of a verbal contract between the parties to each invest $400,000 in the retail liquor business. The plaintiff’s transfer of funds to the defendant directly underscored the defendant’s obligation to contribute his share to the business. The court was satisfied that the defendant breached this agreement as there was no evidence that he contributed to the purchase of the business. The expert’s assessment that the plaintiff’s loss due to the breach was $219,639 was accepted, taking into account the burden the plaintiff had to shoulder from the loan and interest payments. The court ordered the defendant to pay the plaintiff $219,639 in damages, together with interest from the date of the sale and costs.

Orders