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Li v Yeung

Li v Yeung

Case [2023] NZHC 1374 1 June 2023

Appeal

Jurisdiction

Misleading or Deceptive Conduct

Consumer Protection

Restitution

Equitable Estoppel

Civil Litigation & Procedure

Consumer Law

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2473

[2023] NZHC 1374

BETWEEN
KAREN KAYAN LI

First Plaintiff/Applicant

HUI LING (CATHERINE) KWOK
Second Plaintiff/Applicant

AND

LAM YEUNG

First Defendant/Respondent

YUHONG (CATHERINE) GAO

Second Defendant/Respondent

Hearing:
8 February 2023; further submissions 3, 10, 16 March and

6 April 2023

Appearances:

NR Williams and AME Parlane for the Plaintiffs

NJ Scampion and JAR Barrow for the First Defendant OV Collette-Moxon for the Second Defendant

Judgment:

1 June 2023

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 1 June 2023 at 4.00pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Shine Lawyers, Auckland
Tompkins Wake, Auckland BSA Law, Auckland

To:N Williams, Auckland N Scampion, Auckland J Barrow, Auckland
O Collette-Moxon, Auckland

LI v YEUNG [2023] NZHC 1374 [1 June 2023]

Introduction [1]

The pleaded claims and defences – issues arising or likely to arise [11]

The pleadings [12]

The issues likely to arise for determination [41]

Applicable legal principles [42]

Discussion [53]

Application for asset preservation orders [92]

Introduction [92]
The applicable legal principles [96]

Submissions [98]

Discussion [104]

Wasted costs of earlier hearing [118]

Background [118]

Legal principles [136]

The parties’ submissions [140]

Discussion [144]

Result [152]

Introduction

[1] The applicants, Ms Li and Ms Kwok, the first two of approximately 60 named plaintiffs, apply for leave to continue this proceeding as a representative proceeding pursuant to r 4.24 of the High Court Rules 2016. They also apply for asset preservation orders against the defendants/respondents, Ms Yeung and Ms Gao, under the Financial Markets Conduct Act 2013 (FMCA).

[2] The proceedings concern a Malaysian-based loyalty scheme, MBI International, which traded in New Zealand as the “MFC Club”. The applicants describe the MFC Club as effectively a “ponzi scheme”. Halley J, in a recent decision of the Federal Court of Australia, describes it as:1
… a sham investment scheme that preyed on vulnerable and unsophisticated investors seduced by the promise of extraordinary returns and beguiled by the complex explanations of the alleged risk free returns and benefits it could provide, and the methods by which it was promoted and marketed to invited guests.

[3] The plaintiffs sue Ms Yeung and Ms Gao under the FMCA and the Fair Trading Act 1986 (FTA) for what is alleged to be their misleading and deceptive conduct in promoting the MFC Club in New Zealand. The plaintiffs say that Ms Yeung and Ms Gao introduced the MFC Club into New Zealand and were the driving force behind it in this jurisdiction; enticed New Zealand based investors to invest in the scheme; promoted the scheme through large scale presentations and seminars in New Zealand; and in doing so, made false and misleading representations as to the nature of the investment and the likely returns. The plaintiffs say the defendants’ conduct induced them to participate in the MFC Club and caused them to suffer financial losses as a result. Those losses…

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 Li v Yeung

Details

AGLC: Li v Yeung [2023] NZHC 1374
Case: [2023] NZHC 1374
Decision Date: 1 June 2023

CaseChat Overview and Summary

The applicants, Ms Li and Ms Kwok, sought leave to continue the proceeding as a representative proceeding and asset preservation orders against Ms Yeung and Ms Gao in relation to an alleged loyalty scheme. The High Court granted the application for leave to continue the proceeding as a representative proceeding, but dismissed the application for asset preservation orders. The Court also awarded wasted costs against the applicants in favour of the defendants. Ms Li and Ms Kwok applied for leave to continue this proceeding as a representative proceeding and for asset preservation orders against Ms Yeung and Ms Gao. Ms Yeung and Ms Gao opposed the application for leave to continue the proceeding as a representative proceeding, and the application for asset preservation orders. The Court found that there were sufficient common issues between the applicants and the proposed represented plaintiffs to satisfy r 4.24’s requirement that the proposed representative and represented plaintiffs have the same interest in the subject matter of the proceeding. The Court also found that it was not appropriate to make asset preservation orders, as there was no real risk of dissipation and the considerable delay in seeking the orders. Finally, the Court awarded wasted costs against the applicants in favour of the defendants.

Orders