Liu v Delamere
[2024] NZHC 3320
•8 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-002164
[2024] NZHC 3320
UNDER the Contempt of Court Act 2019 IN THE MATTER
of an application for orders pursuant to s 16 of the Contempt of Court Act 2019
BETWEEN
YINGHENG LIU (also known as GAVIN LIU)
Applicant
AND
TUARIKI JOHN EDWARD DELAMERE
Respondent
Hearing: 7 November 2024 Appearances:
D B Hickson for Applicant Respondent in person
Judgment:
8 November 2024
JUDGMENT OF VAN BOHEMEN J
[on application for orders for contempt of court]
This judgment was delivered by me on 8 November 2024 at 12 pm pursuant to r 11.5 of the High Court Rules 2016.
Registrar/Deputy Registrar
……………………………..
Solicitors:
PCW Law Ltd, Auckland Copy to: T Delamere
LIU v DELAMERE [2024] NZHC 3320 [8 November 2024]
[1] Yingheng Liu applies, pursuant to s 16 of the Contempt of Court Act 2019, for orders that John Tuariki Delamere, within seven days of the orders:
(a)comply with orders said to have been made by this Court requiring Mr Delamere to arrange for the payment of funds held in an ANZ Bank term deposit account in the name of TDA Botany Ltd (the TDA Botany Account) to Mr Liu, by transferring the funds to the trust account of Mr Liu’s solicitors, PCW Law Ltd; and
(b)deliver up to PCW Law Ltd the most recent bank statement for the TDA Botany Account recording the moneys held in the account prior to the above transfer.1
[2]Mr Liu also seeks orders that, failing compliance with the above orders:
(a)a warrant be issued committing Mr Delamere to a term of imprisonment not exceeding six months for contempt of court; or
(b)a fine not exceeding $25,000 be imposed against Mr Delamere for contempt of court; or
(c)Mr Delamere be ordered to do community work not exceeding 200 hours for contempt of court.
[3] The orders at [2] above are the maximum penalties that may be imposed under s 16(4)(a) of the Contempt of Court Act.
[4]Mr Delamere opposes the above orders. In particular, he says:2
(a)he is unable to transfer the funds because the TDA Botany Account has been frozen at the direction of Mr Liu;
1 Mr Liu also seeks an order regarding the conditions on which PCW Law Ltd is to hold any funds transferred.
2 Mr Delamere states other grounds in his notice of opposition but those grounds relate to other orders made by the Court and are not relevant to the current application.
(b) because Mr Liu has commenced bankruptcy proceedings against him, it is inappropriate for Mr Liu to attempt to have him found to be in contempt of Court;
(c)he has a reasonable excuse for not having complied with this Court’s orders;
(d)he does not have possession or control of the TDA Botany Account and the Court could not make orders against TDA Botany;
(e)the affidavits filed in support of Mr Liu’s application are legally invalid because they do not comply with the requirements of the law in China, where they were sworn.
[5] Mr Delamere also filed a memorandum in which he advises that he has made a complaint to the New Zealand Law Society against Mr Hickson, counsel for Mr Liu, about the filing of this proceeding.
[6] There is little merit in the grounds advanced by Mr Delamere or, it would appear, in Mr Delamere’s complaint to the New Zealand Law Society. However, for the reasons that follow, and as explained at the hearing on 7 November 2024, I am satisfied that I cannot make the orders sought.
Relevant background
[7] The following summary is taken from the judgment of the Court of Appeal in Delamere v Liu, in which the Court of Appeal dismissed Mr Delamere’s appeal of the judgment of Lang J in Liu v Delamere, which was issued on 20 September 2021 and in which the directions Mr Liu seeks to enforce were made.3
[8] In August 2012, Mr Delamere and TDA Immigration and Student Services Ltd (TDA Immigration), a company owned and operated by Mr Delamere, agreed to assist
3 Delamere v Liu [2023] NZCA 427 [Court of Appeal Judgment]; and Liu v Delamere
[2021] NZHC 2445 [First HC Judgment].
Mr Liu, a Chinese national resident in China but who had attended secondary school and university in New Zealand, to obtain permanent residency on New Zealand.
[9]As stated in the Court of Appeal Judgment:
[5] … It was proposed that be achieved using a fast-track immigration procedure known as “Business (Entrepreneur Plus)”. This required Mr Liu to invest at least $500,000 in a business to be operated in New Zealand. The business had to employ at least three New Zealand citizens or permanent residents on a full-time basis for at least two years.
[6] The plan was for Mr Liu to satisfy these requirements by acquiring 30 per cent of the shares in a company that would be formed to operate a branch of Mr Delamere’s business and situated in Botany. Mr Delamere would hold the balance of the shares. The company would have three directors: Mr Liu, Mr Delamere, and his son, Jean-Paul Delamere. It was also agreed that Mr Liu would use his contacts in China to find potential clients who the company could assist to obtain New Zealand residency. Mr Liu would be paid a commission if the company was engaged to act for persons who he sourced.
[7] Three written agreements prepared by Mr Delamere were signed recording these arrangements on 24 August 2012. At that time TDA Botany had not been incorporated. Mr Liu paid the sum of $500,000 into the bank account of another company owned by Mr Delamere, TDA Immigration Mount Albert Ltd (TDA Mt Albert). That company had been operating for about a year and had several employees. TDA Mt Albert subsequently changed its name to TDA Botany and opened another office in Botany. The Judge found that TDA Botany thereafter assumed responsibility for paying the wages of two of the existing employees of TDA Immigration.
[8] It was intended that of the $500,000 deposited into TDA Botany’s bank account, $150,000 would be used as working capital. The balance of
$350,000 was placed on term deposit to meet the future needs of the company as agreed by the directors. Mr Liu had the right to veto any proposed use of the money with which he disagreed. Under the agreed arrangements he was to be the sole signatory on the term deposit account and funds could not be removed from the account without his specific agreement.
[9] Once Mr Liu obtained permanent residency he had the right to transfer his shares in TDA Botany back to Mr Delamere in return for repayment of the funds held on term deposit. But the agreement did not prescribe what was to happen if his application for permanent residency was declined, as in fact occurred. Immigration New Zealand was not convinced that Mr Liu had committed the funds held on term deposit for use in TDA Botany’s business. Further, it considered that TDA Botany had effectively retained the services of two existing employees, and had not created the three new employment positions required in accordance with the Entrepreneur Plus scheme. With Mr Delamere’s assistance, Mr Liu appealed unsuccessfully to the Immigration and Protection Tribunal. He was subsequently denied leave to appeal by the High Court.
[10] Mr Liu then asked Mr Delamere to repay the funds held on term deposit, but discovered that most of the money had been transferred to a current account used to meet TDA Botany’s operating expenses. Mr Delamere had instructed the bank to transfer the funds because, contrary to the agreement, Mr Liu was not in fact the sole signatory on the term deposit account. Both Mr Delamere and his son had the ability to give the bank instructions about the use of the money on term deposit.
[11] This litigation followed. (footnotes omitted)
First HC Judgment
[10] In the First HC Judgment, Lang J held that Mr Delamere had breached the terms of one of the agreements referred to by the Court of Appeal, the Term Deposit Agreement, when he arranged for funds to be transferred from the TDA Botany Account to TDA Botany’s current account.4
[11] Because the Term Deposit Agreement was concluded between Mr Liu, Mr Delamere and TDA Immigration, Lang J recorded the following:
[48] The fact that Mr Delamere arranged for funds to be transferred out of the account without Mr Liu’s consent resulted in a breach of his obligations under the Term Deposit agreement regardless of the capacity in which he committed those acts. In other words, Mr Delamere breached the obligations imposed on him personally by the Term Deposit agreement even though he acted in his capacity as agent for TDA Botany rather than TDA Immigration as pleaded in the statement of claim. …
Should the defendants now be required to repay the funds to Mr Liu?
[49] Given that TDA Immigration played no part in the transfer of the funds it did not breach its obligations to Mr Liu under the Term Deposit agreement. Mr Delamere alone is liable for those acts. This leads to the issue of whether he should now be required to remedy his breach by repaying the full amount Mr Liu paid into TDA Botany’s term deposit account in accordance with the Term Deposit agreement.
[50] The measure of damages for breach of contract in the present context is the sum required to restore Mr Liu to the position he would have been in had the breach not occurred. This means Mr Delamere would need to pay the amount required to restore the term deposit to the position it would have been in if he had not caused the funds to be transferred to TDA Botany. …
(footnotes omitted)
4 First HC Judgment, above n 3, at [42].
[12] Lang J then found that:5
… it is appropriate to imply a term into the Term Deposit agreement that, if Mr Liu failed in his application for permanent residency, he would be entitled to be repaid the balance of the funds held in the term deposit account in return for transferring his shares in the company back to Mr Delamere. Alternatively, he could retain the shares and the balance of the funds held in the term deposit account would be paid to Mr Delamere.
[13] After considering and dismissing Mr Delamere’s counterclaims and claims for set-off, the Judge stated the result of his decision as follows:
[67] I enter judgment in favour of Mr Liu against Mr Delamere but not TDA Immigration. Mr Delamere must now restore the term deposit account to the position it would have been in if he had not caused the funds to be transferred out of it. This will require a calculation to be made of the interest that would have been earned on the funds transferred out of the term deposit account. The funds held in the term deposit account must then be paid to Mr Liu. Alternatively, the funds currently held in the term deposit account may be paid to Mr Liu immediately. In that event Mr Delamere will be required to pay damages to Mr Liu in the sum required to notionally restore the term deposit account to the position it would have been in if Mr Delamere had not caused the funds to be transferred out of the account.
[14] Mr Liu’s application is directed at enforcing this paragraph; in particular, the directions regarding the payment to Mr Liu of the remaining funds in the TDA Botany Account.
[15] Lang J also noted that Mr Delamere and TDA Immigration were entitled to make deductions from the amount Mr Delamere must pay relating to expenditure incurred in prosecuting proceedings before the Immigration Protection Tribunal and the High Court after Immigration New Zealand had declined to grant permanent residency to Mr Liu and his family.6 Lang J reserved leave to both Mr Liu and Mr Delamere to seek further directions if they could not reach agreement on issues of quantum.7
5 At [58].
6 At [68].
7 At [69].
Second HC Judgment
[16] In the event, the parties could not reach agreement and the proceeding returned before Lang J. After a hearing on 6 December 2021, Lang J issued his second judgment in the proceeding on 8 December 2021.8
[17]Lang J recorded the purpose of the Second HC Judgment as follows:
[2] I am now required to fix the damages payable by Mr Delamere to Mr Liu. I am also required to fix the interest payable by Mr Delamere to Mr Liu in relation to losses Mr Liu has suffered as a result of the breach of contract by Mr Delamere. Finally, I am required to fix the costs payable in relation to this proceeding.
[18] Lang J recorded the directions given in the First HC Judgment as follows:
[6] At the conclusion of the judgment I gave Mr Delamere two options. The first was to restore the term deposit account held by TDA Botany to the position it ought to have been in if Mr Delamere had not permitted the funds to be transferred out of the account without Mr Liu’s authority. Mr Delamere would then need to arrange for TDA Botany to pay that sum, together with interest that would have been earned on the funds transferred out of the account, to Mr Liu. Alternatively, Mr Delamere could arrange for TDA Botany to pay the remaining funds held in its term deposit account to Mr Liu forthwith. In that event damages would be payable to Mr Liu in the sum needed to restore the account to the position it would have been in if Mr Delamere had not caused the funds to be transferred out of the account.
[19] Lang J then stated:
[7] Mr Delamere has not accepted either of these alternatives. Subject to the adjustments referred to below I enter judgment against him, and in favour of Mr Liu, for the sum of $350,000. This is the amount Mr Delamere ought to have arranged for TDA Botany to repay to Mr Liu once the efforts to obtain permanent residency had failed.
[20] Lang J then decided the deductions that Mr Delamere and TDA Immigration were entitled to make for expenditure incurred in prosecuting proceedings before the Immigration Protection Tribunal and the High Court and provided a process by which those deductions were to be finalised.9 Lang J also awarded Mr Liu interest of
$66,631.70 on the sums transferred out of the Term Deposit Account and provided a process for determining the interest earned on the balance of the funds held in the Term
8 Liu v Delamere [2021] NZHC 3348 [Second HC Judgment].
9 At [8]–[12].
Deposit Account after 23 February 2017,10 made orders for costs and disbursements in favour of Mr Liu,11 declined to order costs in favour of TDA Immigration,12 and again reserved leave to file memoranda if agreement could not be reached on damages and interest.13
Contempt of Court Act 2019
Section 16 of the Contempt of Court Act relevantly provides:
Certain court orders and undertakings may be enforced
(1)This section applies to—
(a)any interim or final order, decision, decree, direction, or judgment of a court (a court order) to do or abstain from doing something, except as provided in section 17:
...
(2)A court may enforce the court order or undertaking against the party, non-party, or other person bound by the order or undertaking by taking action provided for in subsections (3) and (4) on application by—
(a)the party who sought the order or undertaking being enforced; or
…
(3)The court—
(a)must not proceed further under this section unless it is satisfied that other methods of enforcing the court order or undertaking have been considered and are inappropriate or have been tried unsuccessfully; and
(b)if so satisfied, must make a finding as to whether it is proved beyond reasonable doubt that—
(i)the court order or undertaking being enforced has been made in clear and unambiguous terms and is clearly binding on the person; and
(ii)the person had knowledge or proper notice of the terms of the court order or undertaking being enforced; and
10 At [13]–[16].
11 At [18]–[22].
12 At [23]–[28].
13 At [29].
(iii)the person has, without reasonable excuse, knowingly failed to comply with the court order or undertaking being enforced.
(4)On finding beyond reasonable doubt that the requirements of subsection (3)(b)(i) to (iii) are met, the court may—
(a)do any of the following:
(i)issue a warrant committing the person or a director or an officer of the body corporate, as the case may be, to a term of imprisonment not exceeding 6 months:
impose a fine,—
(A)in the case of an individual, not exceeding
$25,000; or
(B)in the case of a body corporate, not exceeding
$100,000:
(iii)order the individual or a director or an officer of the body corporate, as the case may be, to do community work, not exceeding 200 hours, as the court thinks fit:
(b)if the court is the High Court, make a sequestration order in accordance with the rules of court.
…
Submissions for Mr Liu
[22] Mr Hickson, counsel for Mr Liu, submits that the orders made by Lang J in the First HC Judgment are enforceable because it is beyond reasonable doubt that:
(a)Mr Liu is the person who sought the orders which he now wants enforced;
(b)other methods of enforcing the judgment have been tried unsuccessfully;
(c)the orders have been made in clear and unambiguous terms and are binding on Mr Delamere;
(d)Mr Delamere has knowledge or proper notice of the terms of the orders; and
(e)Mr Delamere has, without reasonable excuse, refused to comply with the orders.
Analysis
[23] As I explained at the hearing, I do not accept that the directions that Mr Liu seeks to enforce are binding orders enforceable under s 16 of the Contempt of Court Act.
[24] In terms of s 16(2)(a), I accept that Mr Liu sought the direction sought to be enforced. In terms of s 16(3)(b)(i), however, I do not accept that the direction was an order binding on Mr Delamere.
[25]As Mr Hickson has confirmed, the direction that Mr Liu seeks to enforce is at
[67] in the First HC Judgement which Mr Hickson says required Mr Delamere to arrange for the payment of funds held in the TDA Botany Account to be transferred Mr Liu. The only direction in that paragraph relating to the transfer of funds in the TDA Botany Account to Mr Liu is the sentence that reads, “Alternatively, the funds currently held in the term deposit account may be paid to Mr Liu immediately.”
[26] That is not an order. Nor is it binding on Mr Delamere. In the Second HC Judgment, Lang J described it as an “option” that Mr Delamere had not accepted. Given that lack of acceptance, Lang J entered judgment against Mr Delamere and in favour of Mr Liu for the sum of $350,000. The obvious effect of that order was to put an end to the option offered in the First HC Judgment. It is that order, at [7] in the Second HC Judgment, that is binding on Mr Delamere. However, that is not the order that Mr Liu has applied to enforce.
[27] As a consequence, there is no continuing order requiring Mr Delamere to arrange for the payment of the remaining funds held in the TDA Botany Account to be transferred to Mr Liu.
[28] Accordingly, there is no order, made in clear and unambiguous terms, that is binding on Mr Delamere to transfer the remaining funds in the TDA Botany Account to Mr Liu.
[29] In terms of s 16(3)(b)(i) of the Contempt of Court Act, therefore, I cannot be satisfied that it has been proved beyond reasonable doubt that the order that Mr Liu seeks to enforce is clearly binding on Mr Delamere. Accordingly, I cannot make any of the orders provided for in s 16(4)(a).
Result
[30] For the above reasons, I dismiss the application by Mr Liu for orders under the Contempt of Court Act.
Agreement
[31] At the hearing, I said to Mr Hickson and to Mr Delamere that the unresolved questions were whether Mr Delamere was willing to transfer the funds in the TDA Botany Account to Mr Liu and whether Mr Liu was willing to unfreeze the TDA Botany Account to enable that to happen. Mr Delamere said he had not taken any steps to use the money because he was aware of Mr Liu’s claim to it, and he had no other plans for the money. Mr Hickson said he was sure Mr Liu would agree to unfreeze the TDA Botany Account if he was confident the money would be paid to him.
[32] I adjourned to allow Mr Hickson and Mr Delamere to discuss the terms of a possible agreement. When the hearing resumed, I was informed that an agreement had been reached. I was also informed that Mr Delamere had agreed to withdraw his complaint to the New Zealand Law Society.
Costs
[33]As agreed at the hearing, I make no order as to costs.
G J van Bohemen J
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