LI WANG AND CHAO WANG
[2020] NZHC 309
•27 February 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2019-404-1447
[2020] NZHC 309
BETWEEN LI WANG
Plaintiff
AND
CHAO WANG
Defendant
Hearing: 19 February 2020 Appearances:
A Malone for the Plaintiff JS Clark for the Defendant
Judgment:
27 February 2020
JUDGMENT OF ASSOCIATE JUDGE SMITH
This judgment was delivered by me on 27 February 2020 at 4pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors / Counsel:
Surrey Chambers, Auckland, Amy Malone [email protected] Wilson McKay, Auckland, JS Clark, [email protected]
Case Officer:
Anthony Chang
Wang v Wang [2020] NZHC 309 [27 February 2020]
[1] In July 2019 the plaintiff (Ms Wang) filed a claim in this Court for the recovery of a loan of $500,000 plus interest, said to have been made by her to the defendant (Mr Wang). Ms Wang took the view that Mr Wang had no defence to the claim, so she applied for summary judgment.
[2] Ms Wang could not locate Mr Wang to effect service of the summary judgment documents on him. She applied for an order for substituted service.
[3] By order made on 12 August 2019, Associate Judge Bell made an order for substituted service by serving a copy of the proceeding on Mr Wang’s New Zealand lawyer by delivering them to the lawyer’s office, by email to Mr Wang’s last known email address, and by message to his Facebook page.
[4] On 27 September 2019 Mr Wang filed a document protesting the New Zealand jurisdiction and asking for an order that the proceeding be dismissed. If the proceeding was not dismissed, he asked for an order for security for his costs in the proceeding. Ms Wang filed a notice of opposition to Mr Wang’s application.
[5] The parties agreed that Mr Wang’s application to dismiss the proceeding should be heard before Ms Wang’s summary judgment application. Affidavits have been filed on both sides on the application to dismiss, and I heard oral argument from counsel on 19 February 2020.
[6] I now give judgment on Mr Wang’s applications to dismiss the proceeding, or, if the proceeding is not dismissed, for an order for security for his costs.
Ms Wang’s claim and her evidence in support of her summary judgment application
[7] Ms Wang is an investment analyst who lives in Hong Kong. She married Mr Wang on 26 March 2016, but the parties separated on 22 November 2016. An order dissolving the marriage was made on 4 June 2019.
[8] Ms Wang says that on 23 March 2014, before she and Mr Wang began living together, they entered into a deed (the Deed), under which she agreed to lend Mr Wang the sum of $500,000.
[9]Ms Wang pleads that the loan agreement contained the following terms:
7.1An acknowledgement by the defendant that in consideration of the transfer of the sum of $500,000 to him, he owes the debt to the plaintiff (clause 2.1);
7.2The defendant must repay the plaintiff a minimum of $5,000 per month including interest (clause 3.1);
7.3The defendant must repay the debt to the plaintiff immediately upon demand (clause 3.2);
7.4The defendant must pay interest on the debt at a rate of 25% calculated annually on the anniversary of the Loan Agreement (clauses 4.1 and 4.2);
7.5The defendant is only required to make payment of interest if the plaintiff demands payment of interest. Such demand must be in writing within three months of each anniversary of the date of the deed, for interest due for the year up to that anniversary (clause 4.3).
[10] Between 12 April 2014 and 20 April 2014 Ms Wang says that she advanced the total sum of $500,000 to Mr Wang pursuant to the loan agreement. The advance was made by way of transfer of funds from her ASB account to Mr Wang’s bank account.
[11] It is common ground that Mr Wang received the $500,000, and that it was indeed a loan and not a gift.
[12] Ms Wang says that nothing has been repaid on the loan. However, in a letter from Mr Wang’s solicitors dated 16 September 2019 Mr Wang contended that there was no specific date agreed as to when the repayment of the money would be made. Mr Wang contended through his solicitors that the parties were in a relationship when the $500,000 was advanced, and that, as their relationship became serious and they married, the obligations and terms of repayment altered. He contended through his solicitors that he had assisted Ms Wang’s parents in renovating two properties in New Zealand, funded family trips, purchased expensive clothing and jewellery for Ms Wang, paid for travel between Hong Kong and New Zealand, and generally funded Ms Wang’s lifestyle when she returned to New Zealand from Hong Kong.
[13] On 17 January 2017 Ms Wang’s lawyers sent a letter of demand to Mr Wang, demanding repayment of $607,545 (representing the principal plus accrued interest) by 1 February 2017. Mr Wang did not respond to the demand, and nothing has been paid to Ms Wang.
[14] Ms Wang asks for an order directing Mr Wang to pay her the $500,000 plus interest, together with the costs of the proceeding.
[15] In her supporting affidavit, Ms Wang said that she first met Mr Wang in about October 2009. They became friends.
[16] She said that in 2014 Mr Wang approached her and asked if she would be interested in investing in a night club business he was looking at starting up in Auckland. Mr Wang told her that he was in financial strife, and asked for her help on an urgent basis to rebuild an earlier business that had failed (a business partner was said to have left, taking Mr Wang’s initial investment funds for the business).
[17] Ms Wang deposed that Mr Wang said he would repay the money within two months, with “good interest”.
[18] At the time, Ms Wang and Mr Wang had been friends for five years, and she said she had no reason to doubt his sincerity. She accordingly agreed to lend the
$500,000, which she would source from her own family in China.
[19] Ms Wang produced a copy of the Deed. It named her as the lender and Mr Wang as the borrower. The Deed was dated 23 March 2014, and it purported to have been signed by both Ms Wang and Mr Wang (although neither party’s signature was witnessed).
[20] Ms Wang advanced the $500,000 to Mr Wang between 12 April 2014 and 20 April 2014 by way of direct credit of funds from her ASB Streamline account to Mr Wang’s account with BNZ. There were eight transfers of $60,000 to Mr Wang’s account number, and a further $20,000 paid on 20 April 2014.
[21] Mr Wang did not make the initial interest payment of $5,000. Initially that did not concern Ms Wang, as Mr Wang had said that the loan would be repaid in full within two months in any event. When the loan was not repaid within the two months, she said that Mr Wang told her that he had encountered more difficulties with his business and family issues. He asked if she would agree to extend the loan, and she agreed to that. She said the same request was made again by Mr Wang a few times, but she wasn’t too bothered by that because she knew his business was a start-up, and she believed him when he said that he would ensure she was repaid as soon as he had the money from China and/or when the business started to make a profit.
[22] Ms Wang’s evidence was that she and Mr Wang started dating in about October 2015 while she was still living in Hong Kong. They married in New Zealand in March 2016, but she did not move back to New Zealand until May of 2016, and in June and July 2016 she was in China visiting relatives. Problems appear to have developed quickly in her relationship with Mr Wang, and he stopped all contact with her in October 2016.
[23] Ms Wang said she made clear to Mr Wang that their relationship did not affect his responsibility to repay the loan. He told her that he would repay the loan, both before and after the marriage.
[24] In January 2019 Ms Wang commenced a proceeding in New Zealand for the dissolution of the marriage. She had difficulty attending to service of that proceeding on Mr Wang, as the former marital home had been sold in March 2017 and she had no current address for Mr Wang. She applied to the Family Court for an order for substituted service.
[25] In the event, no order for substituted service of the application for dissolution of the marriage was necessary. Mr Wang’s New Zealand lawyer agreed to accept service of the application on Mr Wang’s behalf.
[26] Ms Wang also deposed that there are other proceedings in this Court at Auckland that had been brought against Mr Wang by his former business partner.
The order for substituted service
[27] Ms Wang applied for an order for substituted service of this proceeding on the defendant’s New Zealand solicitor, on 8 August 2019. Reliance was placed on the fact that the solicitor had accepted service of the dissolution of marriage proceeding earlier in the year, had asked for copies of the Court papers in this proceeding, but had then said that he had no instruction to accept service on Mr Wang’s behalf.
[28] The application for substituted service attached a copy of an affidavit Ms Wang had sworn in the Family Court proceeding, summarising efforts made to accept service of that proceeding, all unsuccessful.
[29] In a memorandum dated 12 July 2019 relating to the proper registry for filing the proceeding, counsel for Ms Wang advised the Registrar that Mr Wang’s current address was unknown. She said that it was understood that Mr Wang no longer resided in New Zealand, although he was represented by counsel in Auckland.
[30] Associate Judge Bell recorded that Ms Wang lived in Hong Kong, but Mr Wang’s whereabouts were unknown. He referred to the evidence filed in support of the application, and noted that there was no evidence to suggest that Mr Wang had left New Zealand. His Honour dealt with the application on the basis that Mr Wang was still living in New Zealand.
Mr Wang’s application to dismiss and his evidence in support
[31]The grounds relied upon by Mr Wang for dismissal of the proceeding are:
(a)The defendant protests the jurisdiction of this Honourable Court on the grounds of ‘forum non conveniens”, namely New Zealand is not the appropriate jurisdiction for the hearing of this matter.
(b)Both the plaintiff and the defendant are Chinese nationals with neither party having been resident in New Zealand since 2016 (plaintiff) and January 2017 (defendant).
(c)That a partly oral and partly written agreement was entered into to record the borrowing of the $500,000, and such agreement was entered into:
(i)Whilst the parties were constantly moving between Hong Kong and New Zealand;
(ii)All funds were transferred from Hong Kong;
(iii)No jurisdiction in respect of the agreement was ever discussed or agreed upon;
(iv)That in any event, the deed relied upon by the plaintiff was never signed by the defendant and the signatures purporting to be his signatures are false.
[32] Mr Wang said in his affidavit that he first came to New Zealand in October 2005. He first attended an English language school and later obtained a diploma in business.
[33] Mr Wang said that he had been in a relationship with Ms Wang for a number of years prior to their marriage. He said the relationship commenced not long after they met in October 2009, and that they were in the relationship when the funds were advanced to him in 2014.
[34] In around 2012, Mr Wang set up a joint venture with a business partner to open a nightclub in Auckland. The venture did not work out, however, and Mr Wang got out of the business relationship and began to look for other opportunities. An opportunity arose in late September 2013 to set up a new nightclub. Plans were well advanced for the new club by the end of 2013, and renovations on the site were well under way by the end of the year. Ms Wang was well aware of the work being done on the nightclub.
[35] Mr Wang said that most of the funding for the nightclub was coming from family sources, but Ms Wang was also interested in investing.
[36] Mr Wang denied any knowledge of the Deed. He said that he had never seen it before it was provided as an annexure to Ms Wang’s affidavit in this proceeding.
[37] While he denied any knowledge of the Deed, Mr Wang said that there was a one-page letter drafted by Ms Wang recording the arrangements for the $500,000 advance. However, he said he no longer had a copy of the letter.
[38] Mr Wang referred to his lawyer’s letter sent on 16 September 2019, and he attached a copy of the letter.
[39] Mr Wang said that the nightclub failed after a fallout with a new shareholder in the business. The company which was the owner of the nightclub has been put in liquidation. Mr Wang was forced out of the club, and a proceeding has been issued against him in this Court by the former business partner. Mr Wang has lodged a counterclaim in that proceeding.
[40] Mr Wang said that he left New Zealand in January 2017. He could not stay, because he only had a work visa, and it required him to remain an owner of the nightclub business. Once his interest in the nightclub was removed, he no longer had the right to stay in New Zealand.
[41] Mr Wang confirmed that both Ms Wang and he are Chinese nationals, and both now live overseas. His business takes him throughout the world, but he considers his home to be China, and returns there frequently.
[42] As for the claimed debt, Mr Wang did not deny that the money was originally advanced. However, he contended that the signature on the Deed is not his, and he is not bound by the Deed. He also suggested that a reconciliation of what is now owed needs to be undertaken. He said that he did not accept that he owed Ms Wang the amount claimed by her, if he owes her anything at all. He said that there was never any agreement as to where and when the funds were to be paid, or on what basis.
[43] Mr Wang suggested that Hong Kong would be a more appropriate forum for the determination of the dispute, and he said that he would be happy to submit to the jurisdiction of the Courts of Hong Kong. Hong Kong is Ms Wang’s country of residence, and it is only approximately two hours flying time from his own residence in China. It would be convenient for both parties, and would also be convenient for witnesses, all of whom would be from China.
[44] If the case is to remain in this Court, Mr Wang expressed concern about his ability to recover costs from Ms Wang if he is ultimately successful in the proceeding.
Ms Wang’s evidence in opposition to the dismissal application
[45] Ms Wang denied that the parties were in a de facto relationship at the time the loan was made. She said they had casually dated for a year or two during her time at university in Auckland (2010-2011), but were not de facto partners during this time. She said that she left New Zealand at the end of 2011 for work in Hong Kong and remained working fulltime in Hong Kong from January 2012 to May 2016. She was not living in New Zealand when the advances were made to Mr Wang in 2014.
[46] Ms Wang said that she only agreed to lend the funds to Mr Wang because he told her that his uncle was somehow preventing his father from transferring the necessary money out of China. While Mr Wang’s father was finding another way to transfer the funds, Mr Wang needed urgent cash to continue renovating the new club.
[47] Ms Wang said she had no knowledge of the one-page letter referred to by Mr Wang in his affidavit. The only formal agreement of which she was aware was the Deed. Ms Wang said that the Deed was handed to her personally by Mr Wang at a meeting in Auckland. It was prepared at his instigation, presumably by his lawyer or by a friend with legal knowledge. She said that she holds the original of the Deed, with Mr Wang’s signature, and it can be tested forensically if necessary.
[48] Ms Wang said that Mr Wang mentioned to her that he would use the loan agreement as personal borrowings for tax purposes, and was thus happy to pay a relatively high interest rate. It was Mr Wang who offered the $5,000 a month for interest, to be deducted against his taxable earnings.
[49] Ms Wang provided copies of an email exchange between Mr Wang and herself on 11 and 12 April 2014. The emails were in Chinese, but Ms Wang provided the English translations to which I now refer.
[50] In his 11 April 2014 email, Mr Wang first gave Ms Wang his BNZ account number. He then continued:
After transferring to me, I will then transfer it to the company account, otherwise IRD would ask me about the inflow/income issues if it is from other people’s name. Because the company has not yet started its operation, apart
from myself, all other income/inflow would be counted as company income, which needs to pay tax.
From next month (May), I will transfer the money back to your account within two months by splitting into a few instalments, the monthly interest is NZD5000. I will let you know in advance if there is any taxation issues involved. Because I will transfer from the company to myself, and then transfer to you. I will try to avoid PAYE and taxes.
If you have any urgency on your side, please let me know in advance, I will immediately sort out the idea and transfer back to you asap.
Really thank you for your help this time, in such a tight timeframe.
[51] Ms Wang replied the following day, 12 April 2014, advising that the first payment had been transferred to Mr Wang. She said that the inter-bank transfer might need one to two days, but she would keep transferring her money to Mr Wang every day until the amount was sufficient.
[52] Mr Wang sent a short reply later that day, acknowledging receipt, and noting that it might take three days before the first payment arrived in his account.
[53] Ms Wang said that she quit her high-paying job in Hong Kong to join Mr Wang in New Zealand in May 2016. Her parents also bought three investment apartments in this country in 2016, with the intention that the rent would provide financial security for their daughter (who then had no employment or source of income in New Zealand).
[54] Ms Wang said that, although she does not currently reside in New Zealand, she lived in New Zealand for many years. She came to New Zealand at the age of 13, and she has been a New Zealand citizen since 2010. She still has a New Zealand bank account, and her parents still own properties in New Zealand. She said that she believed that the dispute should be determined in this Court, as the money was advanced to Mr Wang in New Zealand, from a New Zealand bank account, for use in setting up the nightclub business in New Zealand.
[55] Ms Wang produced copies of her parents’ ASB account and the relevant pages from her own (New Zealand) ASB “Streamline” account. The statements show that on 7 March 2014 the sum of $724,542 was transferred to Ms Wang’s account from her mother’s Auckland ASB Savings On Call account.
[56] The pages from Ms Wang’s ASB Streamline account that were produced show the eight payments of $60,000 and one payment of $20,000 made from the account to the same BNZ account referred to in Mr Wang’s email to Ms Wang, dated 11 April 2014. Ms Wang noted that, even if for some reason the Deed was not a valid document (which Ms Wang denied), the email correspondence from Mr Wang made it clear that the money was always intended to be a loan which he would repay within two months.
[57] Ms Wang noted that Mr Wang has not produced any evidence to support his claim that advances made by him to Ms Wang during the marriage should be set off against the loan amount. Various sums were advanced by Mr Wang when he acted as agent for Ms Wang’s mother in the purchase of three Auckland properties, but the amounts advanced were repaid to him.
[58] Ms Wang said that in view of Mr Wang’s past behaviour, she has no confidence in his expressed intention of participating in any proceeding she might issue in Hong Kong (if she were to discontinue the present proceeding).
[59] On the issue of witnesses, Ms Wang said that she and Mr Wang were the only parties to the loan agreement, and there were no other people present at their meeting when the Deed was handed to her by Mr Wang.
[60] On the issue of security for costs, Ms Wang accepted that if her opposition to Mr Wang’s jurisdiction protest was successful, it would be appropriate for her to pay security for Mr Wang’s costs.
Reply evidence
[61]Mr Wang elected not to file any evidence in reply.
Rules applicable to a defendant’s protest to the New Zealand jurisdiction
[62] Rules 5.49, 6.27, 6.28, 6.29 and 15.1 of the High Court Rules 2016 materially provide:
5.49 Appearance and objection to jurisdiction
(1) A defendant who objects to the jurisdiction of the court to hear and determine the proceeding may, within the time allowed for filing a statement of defence and instead of so doing, file and serve an appearance stating the defendant’s objection and the grounds for it.
(2) The filing and serving of an appearance does not operate as a submission to the jurisdiction of the court.
(3) A defendant who has filed an appearance may apply to the court to dismiss the proceeding on the ground that the court has no jurisdiction to hear and determine it.
…
(5) At any time after an appearance has been filed, the plaintiff may apply to the court by interlocutory application to set aside the appearance.
(6) The court hearing an application under subclause (3) or (5) must,—
(a) if it is satisfied that it has no jurisdiction to hear and determine the proceeding, dismiss the proceeding; and
(b) if it does not dismiss the proceeding under paragraph (a), set aside the appearance.
(7) To the extent that an application under this rule relates to service of process effected outside New Zealand under rule 6.27 or 6.28, it must be determined under rule 6.29.
…
(8) The court, in exercising its powers under this rule, may do so on any terms and conditions the court thinks just and, in particular, on setting aside the appearance it may extend the time within which the defendant may file and serve a statement of defence and may give any directions that appear necessary regarding any further steps in the proceeding.
(9) If the appearance set aside has been filed in relation to a proceeding in which the plaintiff has applied for judgment under rule 12.2 or 12.3, the court—
(a) must fix the time within which the defendant may file and serve—
(i) a notice of opposition; and
(ii) an affidavit by or on behalf of the defendant in answer to the affidavit by or on behalf of the plaintiff; and
(b) may, under subclause (8), give any other directions that appear necessary regarding any further steps in the proceeding.
6.27 When allowed without leave
(1) This rule applies to a document that initiates a civil proceeding, or is a notice issued under subpart 4 of Part 4 (third, fourth and subsequent parties), which under these rules is required to be served but cannot be served in New Zealand under these rules (an originating document).
(2) An originating document may be served out of New Zealand without leave in the following cases:
…
(b) when a contract sought to be enforced or rescinded, dissolved, annulled, cancelled, otherwise affected or interpreted in any proceeding, or for the breach of which damages or other relief is demanded in the proceeding—
(i) was made or entered into in New Zealand; or
(ii) was made by or through an agent trading or residing within New Zealand; or
(iii) was to be wholly or in part performed in New Zealand; or
(iv) was by its terms or by implication to be governed by New Zealand law:
(c) when there has been a breach in New Zealand of any contract, wherever made:
…
6.28 When allowed with leave
(1) In any proceeding when service is not allowed under rule 6.27, an originating document may be served out of New Zealand with the leave of the court.
…
(5) The court may grant an application for leave if the applicant establishes that—
(a) the claim has a real and substantial connection with New Zealand; and
(b) there is a serious issue to be tried on the merits; and
(c) New Zealand is the appropriate forum for the trial; and
(d) any other relevant circumstances support an assumption of jurisdiction.
6.29 Court’s discretion whether to assume jurisdiction
(1) If service of process has been effected out of New Zealand without leave, and the court’s jurisdiction is protested under rule 5.49, the court must dismiss the proceeding unless the party effecting service establishes—
(a) that there is—
(i) a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and
(ii) the court should assume jurisdiction by reason of the matters set out in rule 6.28(5)(b) to (d); or
(b) that, had the party applied for leave under rule 6.28,—
(i) leave would have been granted; and
(ii) it is in the interests of justice that the failure to apply for leave should be excused.
…
(3) When service of process has been validly effected within New Zealand, but New Zealand is not the appropriate forum for trial of the action, the defendant may apply for a stay, or for a dismissal of the proceeding under rule 15.1.
…
15.1 Dismissing or staying all or part of proceeding
(1) The court may strike out all or part of a pleading if it—
(a) discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b) is likely to cause prejudice or delay; or
(c) is frivolous or vexatious; or
(d) is otherwise an abuse of the process of the court.
(2) If the court strikes out a statement of claim or a counterclaim under subclause (1), it may by the same or a subsequent order dismiss the proceeding or the counterclaim.
(3) Instead of striking out all or part of a pleading under subclause (1), the court may stay all or part of the proceeding on such conditions as are considered just.
(4) This rule does not affect the court’s inherent jurisdiction.
What Rules are to be applied?
[63] It was common ground that the starting point is that Mr Wang’s application to dismiss the proceeding is to be dealt with under r 5.49(3) and (6)(a). The issue arises under r 5.49(7), which provides that, where the defendant’s application to dismiss relates to service of process effected outside New Zealand, it must be determined under r 6.29.
[64] Associate Judge Bell dealt with the substituted service application on the basis that Mr Wang was in New Zealand (although the evidence now available shows that was not the position). If service of process has been validly effected within New Zealand, but New Zealand is not the appropriate forum for the trial of the proceeding, the defendant’s proper recourse is to apply for dismissal of the proceeding under r 15.1.1
[65] The principal difference between proceeding under r 6.29(1), in accordance with r 5.49(7), and proceeding under r 15.1, is who bears the onus of proof. Under r 6.29(1), it is the plaintiff who carries the onus of proof.2 If the case is one where service has been validly effected in New Zealand and rr 6.29(3) and 15.1 apply, the burden of proof rests on the defendant, not just to show that (in this case, New Zealand) is not the natural or appropriate forum for the trial, but that there is another available forum which is clearly or distinctly more appropriate.3
[66] In this case, I think the better view is probably that r 6.29(3) and r 15.1 apply, on the basis that the service was validly effected within New Zealand. I do not think the substituted service order made by the Associate Judge on 12 August 2019 was a nullity; the fact that Mr Wang was in fact resident out of New Zealand may have been an irregularity, but the order has not been set aside, and the effect of r 1.5(1) of the High Court Rules in those circumstances would appear to be that the order has remained effective and binding on the parties.4
1 High Court Rules 2016, r 6.29(3).
2 Rule 6.29(1).
3 Spiliada Maritime Corp v Cansulex Ltd [1987] 1 AC 460 (HL) at [476], applied in New Zealand in Exportrade Corporation v Irie Blue New Zealand Ltd [2013] NZCA 675, [2014] NZAR 495 at [42].
4 Exportrade Corporation v Irie Blue New Zealand Ltd, above n 3, at [29].
[67] In the end, it is not necessary for me to decide which procedure was the correct one. That is because I have come to the view that the dismissal application must fail regardless of whether the application is to be dealt with under r 6.29(1) or under rr 6.29(3) and 15.1. In the judgment that follows, I proceed on the basis that r 6.29(1) may apply, and Ms Wang may carry the onus of proof. If Ms Wang succeeds on that basis, the same result would necessarily follow if rr 6.29(3) and 15.1 applied and Mr Wang carried the onus of proof.
The application of r 6.29(1)
Rule 6.29(1)(a)(i) – a good arguable case within one of the r 6.27 categories
[68] The question under r 6.29(1)(a)(i) is whether Ms Wang has shown “a good arguable case that the claim falls wholly within one or more of the paragraphs of rule 6.27”. I am satisfied that Ms Wang has shown such a good arguable case.
[69] I am satisfied that she has shown that the contract she wishes to enforce was to be wholly or in part performed in New Zealand,5 as the parties agreed that Ms Wang was to pay the loan money to Mr Wang in New Zealand.
[70] The first point is that it is clear from the April 2014 emails that there was some urgency over Mr Wang receiving the loan money. Secondly, it was his New Zealand BNZ account he nominated (in his 11 April 2014 email) for the receipt of the funds. The money was required for the nightclub venture in Auckland, and Mr Wang had a bank account here. It would have made no sense for the parties to have contracted for the loan money to be paid to Mr Wang in some other country.
[71] It is also clear that the loan money was in fact paid wholly within New Zealand. Although Mr Wang contended that the money came from China, Ms Wang sufficiently established in her affidavit in opposition, that the money, although sourced from her mother in China, was lodged first into Ms Wang’s own account with ASB Bank in Auckland. The copies of bank statements produced by Ms Wang then show the
5 High Court Rules 2016, r 6.27(2)(b)(iii).
movement of the payments making up the $500,000 advance from Ms Wang’s Auckland ASB Bank account to Mr Wang’s New Zealand BNZ account.
Rule 6.29(1)(a)(ii) – should the Court assume jurisdiction by reason of the matters set out in r 6.28(5)(b)-(d)?
[72] Rule 6.28(5)(b) requires that there be a serious issue to be tried on the merits. In my view that ground has been made out. It is not disputed that the $500,000 was advanced, and it is not disputed that Mr Wang has not repaid the capital or any interest on the loan. Whether the Deed is or is not a genuine document cannot change those facts. The only dispute raised by Mr Wang relates to gifts or other payments allegedly made by him either during the marriage or while he was still on good terms with Ms Wang, and he did not quantify these claimed set-offs; there is no evidence to suggest that, to the extent they may be valid, they could or would exceed the amount of Ms Wang’s claim.
[73] I conclude, without difficulty, that Ms Wang has shown that there is a serious issue to be tried on the merits.
[74] The next factor to consider is whether New Zealand is the appropriate forum for the trial (r 6.28(5)(c)).
[75] As the Court of Appeal said in Wing Hung Printing v Saito Offshore, the Court will be guided on this issue by existing authority, including the matters canvassed by the House of Lords in Spiliada.6
[76]In Spiliada, Lord Goff said:7
The basic principle is that a stay will only be granted on the ground of forum non conveniens where the court is satisfied there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, i.e. in which the case may be tried more suitably for the interests of all the parties and the ends of justice.
6 Wing Hung Printing v Saito Offshore [2010] NZCA 502, [2011] 1 NZLR 754, at 765. Referring to Spiliada Maritime Corp v Cansulex Ltd, above n 3.
7 Spiliada Maritime Corp v Cansulex, above n 3 at [476].
[77] The New Zealand Court of Appeal followed Lord Goff’s approach (as articulated in that passage) in Exportrade Corporation v Irie Blue New Zealand Ltd, noting that the “natural forum” will be the one with which the cause of action has the most real and substantial connection.8 Relevant considerations may include factors affecting convenience or expense (such as availability of witnesses), the law governing the relevant transaction, and the places where the parties respectively reside or carry on business. Special circumstances, by reason of which justice may require a stay not be granted, may include consideration of factors such as the ability of the plaintiff to obtain justice in the foreign jurisdiction, advantages which the plaintiff may derive from invoking the New Zealand jurisdiction, and the application of any relevant limitation periods.9
[78] In this case, I think it is clear that the country with which Ms Wang’s cause of action has the most real and substantial connection, is New Zealand. The loan was made for the purpose of a business venture in New Zealand, at a time when Mr Wang no doubt expected to be living in this country for some years to come. Ms Wang is a citizen of this country, and she has maintained a bank account here. The Deed, if it is a valid document, was written in English, and on Ms Wang’s account, it was executed in Auckland. If the Deed was a valid document, it seems more likely than not in those circumstances that the parties expected the loan arrangements to be governed by the law of New Zealand.
[79] The country with the most real and substantial connection to the loan transaction being New Zealand, I think it more likely than not that the court hearing the case will conclude that the relevant law to be applied is the law of New Zealand.
That is a factor favouring the proceeding remaining in this Court.10
[80] Further factors favouring the proceeding remaining in this country include the inevitability of further costs and delays if Ms Wang has to start her proceeding again in Hong Kong. Both parties have New Zealand lawyers who are now fully engaged with the dispute, and Ms Wang is prepared to litigate in this country. Furthermore,
8 Exportrade Corporation v Irie Blue New Zealand Ltd, above n 3, at [39].
9 At [39].
10 Wing Hung Printing v Saito Offshore, above n 6, at [45].
Mr Wang remains connected with New Zealand – he is involved in (unrelated) litigation in this country, and has elected to file a counterclaim in it.
[81] There is no evidence before the Court of the likely costs of running this case in Hong Kong, or of any delays that might be encountered in that jurisdiction in getting the case to trial. But I think it can at least be assumed that counsel’s costs would be unlikely to be any less than those charged by New Zealand counsel.
[82] In the end, costs and possible delays are probably a neutral factor in the balancing exercise I have to undertake – all that can be said on the evidence is that it is clear that some costs will be wasted if the parties have to start again in Hong Kong.
[83] A further consideration on the appropriate forum issue, is where witnesses are likely to be located. Mrs Malone submitted that the only witnesses will be Ms Wang and Mr Wang. Mrs Clark, on the other hand, submitted that there would likely be witnesses from China, who would give evidence relating to the gifts and other value allegedly provided by Mr Wang that he wishes to set off against Ms Wang’s claim. It is not at all clear how many such witnesses there might be, or the exact nature of the evidence they might give. On the face of it, one would expect that the likely proof would be evidence given by Mr Wang relating to relevant payments and purchases, supported by appropriate bank statements and other documents. There is nothing at this stage to suggest that there would be a need for additional witnesses. Again, I consider the “Chinese witnesses” factor to be neutral.
[84] Mrs Clark submitted that Hong Kong would be a preferable jurisdiction having regard to the fact that the Chinese language is widely used in Hong Kong, but is spoken by relatively few people in this country. Again, there is insufficient evidence for this to be anything other than a neutral factor, particularly as it is not clear that additional witnesses (beyond the parties) will be required, and it appears (from the documents filed in this Court) that Ms Wang and Mr Wang are both proficient in English.
[85] The one factor that clearly does favour Hong Kong as the proper forum, is the fact that Ms Wang lives there. But Mr Wang does not live there, and his evidence is that he travels regularly to other parts of the world. The best that can be said for him
on this point is that Hong Kong would be a two hour flight for him from the place in China he regards as his home.
[86] I accept that the fact that neither party resides in New Zealand makes this case somewhat unusual, but apart from the fact that Ms Wang lives in Hong Kong and Hong Kong is closer to Mr Wang’s place of residence than New Zealand is, Mrs Clark could point to no other cogent factor favouring Hong Kong as the proper forum.
[87] There is one further factor that I think favours New Zealand as the appropriate forum. Mrs Clark made it clear in her submissions that Mr Wang does not suggest that Ms Wang’s claim is affected by the Property (Relationships) Act 1976 (the PRA). Nevertheless, Mrs Malone did address that possible issue in her submissions, submitting that the PRA only applies to moveable property (situated in New Zealand or elsewhere) if one of the spouses or partners is domiciled in New Zealand at the date of an application under the PRA.11 She submitted that, as neither party is now domiciled in New Zealand, the PRA can have no effect.
[88] On the face of it, s 7(2) of the PRA appears to provide an answer to any possible issue that might be raised in the future relating to this Court’s jurisdiction. I note, however, that s 4(4) of the PRA does provide:
4 Act a code
…
(4) Where, in proceedings that are not proceedings under this Act, any question relating to relationship property arises between spouses or partners, or between either or both of them and any other person, the question must be decided as if it had been raised in proceedings under this Act.
…
[89] I think all that it is necessary to say about that section for present purposes, is that if any question under the PRA were to emerge at some future point in this proceeding, I think this Court would be better equipped to deal with it than a Court in Hong Kong.
11 Property (Relationships) Act 1976, s 7(2).
[90] On balance, I am satisfied that Ms Wang has sufficiently shown that New Zealand is the appropriate forum for the trial.
[91] The remaining consideration is that identified in r 6.28(5)(d) – any other relevant circumstances supporting an assumption of jurisdiction.
[92] The obvious matter under this heading is the absence of any fully articulated and quantified defence to Ms Wang’s claim. Mr Wang contends that his signature has been forged on the Deed, but he acknowledges that the money was lent to him and that he has not repaid it. In his evidence he spoke vaguely about the need for a reconciliation of what may be owed. However, Mr Wang did not file any affidavit in reply to Ms Wang’s opposition affidavit, answering her evidence that at least some of the payments made by Mr Wang on behalf of Ms Wang’s family members have been repaid. Further, Ms Wang and Mr Wang appear to have only lived together for a few short months – on the evidence so far produced, it seems improbable that anything Mr Wang spent on maintaining Ms Wang’s lifestyle would have been sufficient to extinguish the $500,000 loan (assuming, without deciding, that he is entitled to set off any such expenditure against the loan).
[93] In summary, the evidence so far put forward by Mr Wang in opposition to the claim does not appear to be particularly strong, and I consider that is a relevant circumstance which supports this Court assuming jurisdiction. There would be little point in requiring Ms Wang to start again in Hong Kong if there may not be a substantial defence.
[94] Weighing all those factors, I am satisfied that Ms Wang has made out her case under r 6.29(1)(a), and that Mr Wang’s application to dismiss her claim should be dismissed. I make an order accordingly.
Mr Wang’s application for an order for security for costs
[95]Rule 5.45 of the High Court Rules materially provides:
5.45 Order for security of costs
(1) Subclause (2) applies if a Judge is satisfied, on the application of a defendant,—
(a) that a plaintiff—
(i) is resident out of New Zealand; or
…
(2) A Judge may, if the Judge thinks it is just in all the circumstances, order the giving of security for costs.
(3) An order under subclause (2)—
(a) requires the plaintiff or plaintiffs against whom the order is made to give security for costs as directed for a sum that the Judge considers sufficient—
(i) by paying that sum into court; or
(ii) by giving, to the satisfaction of the Judge or the Registrar, security for that sum; and
(b) may stay the proceeding until the sum is paid or the security given.
…
[96] Ms Wang accepts that an order for security for Mr Wang’s costs should be made if his application to dismiss the proceeding is refused. However, neither party put forward any details of what they would regard as appropriate as security, and I think the best thing is to adjourn this part of the application to allow them to confer on an appropriate amount for security and how that security is to be provided.
[97] I adjourn Mr Wang’s application for security for costs to 12.30pm on 25 March 2020. Counsel are to file a joint memorandum no later than 5 working days before that hearing, advising whether security for Mr Wang’s costs has been agreed, and if so, the terms of the agreed security. If no agreement has been reached, time will then be allocated to hear from counsel on the appropriate amount to be ordered by way of security.
Further directions
[98] I direct under r 5.49(9) that Mr Wang is to file and serve his notice of opposition to Ms Wang’s summary judgment application, and any affidavit in opposition, by no later than 10 working days after Ms Wang has provided any security for Mr Wang’s costs that may be agreed or fixed by the Court.
Result
(1)Mr Wang’s application to dismiss the proceeding is declined.
(2)Mr Wang’s application for security for costs is adjourned for mention at 12.30pm on 25 March 2020. No later than 5 working days before that call, counsel are to file a joint memorandum advising whether security for Mr Wang’s costs has been agreed, and if so the terms of the agreed security. If no agreement has been reached, time will then be allocated to hear from counsel on the appropriate amount to be ordered by way of security.
(3)Ms Wang is entitled to costs on Mr Wang’s dismissal application. Those costs are fixed on a 2B basis, plus disbursements as fixed by the Registrar.
Associate Judge Smith
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