Li v Yeung - [2021] NZHC 2

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-2473

[2021] NZHC 2

UNDER the Fair Trading Act 1986, the Financial Markets Conduct Act 2013

IN THE MATTER

of breach of the Fair Trading Act 1986, negligence, knowing receipt, unjust enrichment, and breach of the Financial Markets Conduct Act 2013

BETWEEN

KAREN KAYAN LI AND OTHERS

Applicants

AND

LAM YEUNG AND OTHERS

Respondents

Hearing: 6 January 2021

Appearances:

C McLean for Applicants

D Dufty for Second Respondent
P Shanahan-Pinker for Eighth and Fourteenth Respondents

Judgment:

6 January 2021

JUDGMENT OF CAMPBELL J

This judgment was delivered by me on 6 January 2021 at 4.45 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

LI AND OTHERS v YEUNG AND OTHERS [2021] NZHC 2 [6 January 2021]

Introduction

[1] The plaintiffs, of which there are 69, filed this proceeding on 16 December 2020. They make claims against 15 defendants. Their statement of claim runs to 22 pages (not including a lengthy schedule).

[2] On 21 December 2020 the plaintiffs applied without notice for freezing orders over 12 properties located in Auckland. The 12 properties are owned by various (but not all) of the 15 defendants. On the same day the plaintiffs applied on notice for leave to bring the proceeding as a representative action. The plaintiffs filed 11 affidavits in support of the two applications.

[3] The plaintiffs’ application for freezing orders was referred to Gault J as Duty Judge. On 21 December 2020 Gault J issued a minute noting that the application was not accompanied by a memorandum of counsel, as required by r 7.23(3). His Honour said that without such a memorandum there was no prospect of the orders being made on the papers before the impending vacation.

[4] On 22 December 2020 Mr McLean, counsel for the plaintiffs, filed a memorandum.

[5] In a minute dated 23 December 2020 Gault J said that he was satisfied that the plaintiffs had a good arguable case, and satisfied that there was a real risk of dissipation. Gault J noted that only eight of the 69 applicants had signed an undertaking as to damages, as required by r 32.2(5). He considered that the absence of the other undertakings did not, “for present purposes” preclude the grant of the freezing orders, though he said that the other plaintiffs should sign an undertaking. His Honour referred to r 32.6(2), which provides that if the maximum amount of the claim is known, the value of assets covered by the freezing order must not exceed that amount together with interest and costs. The total value of the 12 properties appeared to exceed the amount claimed. However, given the number of plaintiffs, the different position of some respondents and the potential for joint and several liability, his Honour accepted that it may not yet be possible to limit the assets covered by the freezing orders.

[6] His Honour made the freezing orders, but said that “in…

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 [2021] NZHC 2
Case: [2021] NZHC 2
Decision Date: 6 January 2021

CaseChat Overview and Summary

The case of Li v Yeung involved 69 plaintiffs bringing claims against 15 defendants for alleged breaches of the Fair Trading Act 1986, negligence, knowing receipt, unjust enrichment, and breaches of the Financial Markets Conduct Act 2013. The plaintiffs sought freezing orders over properties owned by the defendants, arguing that they had been involved in a pyramid or Ponzi scheme, encouraging investment with promises of guaranteed high returns. The plaintiffs alleged significant losses and sought to prevent dissipation of assets. On 21 December 2020, the plaintiffs applied for freezing orders over 12 properties and leave to bring the proceeding as a representative action. The application for freezing orders was initially declined by Gault J due to the absence of a required memorandum, but later granted on 23 December 2020, with a limited duration until 6 January 2021. The matter came before Campbell J to determine whether the freezing orders should be continued or renewed.

The primary legal issue before the court was whether the plaintiffs had satisfied the requirements for a freezing order to be continued or renewed. The court needed to determine if the plaintiffs had demonstrated a good arguable case, the existence of assets subject to the order, and a real risk of dissipation of those assets. The plaintiffs argued that the nature of the claims and the defendants' overseas ties indicated a real risk of dissipation. The defendants, however, contended that the plaintiffs had not demonstrated such a risk, given the prolonged nature of the investigation and the plaintiffs' previous actions to recover their investments.

Campbell J found that while the nature of the claims and the defendants' overseas ties did suggest a real risk of dissipation, other factors indicated otherwise. The court noted that a separate proceeding had been ongoing against two of the defendants since 2019, and that the plaintiffs had been seeking repayment since 2018. Additionally, the lead plaintiff had reported the scheme to the Police in 2019 and had traveled to Malaysia in an attempt to recover her investment. There was no evidence that the defendants had taken steps to dissipate their assets despite this prolonged scrutiny. The court also noted that none of the plaintiffs, except for eight, had signed the required undertaking as to damages, and that some claims were significantly less than the value of the frozen properties. Based on these findings, the court concluded that the plaintiffs had not shown a real risk of dissipation.

In light of the above, Campbell J declined to continue or renew the freezing orders. The defendants who appeared were granted costs, with an invitation for the parties to submit memoranda if they could not agree on the costs.

Orders