Shanghai Neuhof Trade Co Ltd v Zespri International Ltd
[2019] NZHC 1176
•27 May 2019
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2014-404-001316
[2019] NZHC 1176
BETWEEN SHANGHAI NEUHOF TRADE COMPANY LIMITED
First Plaintiff/First RespondentSHANGHAI HUI ZHAN LOGISTIC LIMITED
Second Plaintiff/Second RespondentAND
ZESPRI INTERNATIONAL LIMITED
Defendant/Applicant
Hearing: 17 May 2019 Appearances:
B Gray QC and K Muller for Plaintiffs/Respondents M Corlett QC and S Barker for Defendant/Applicant
Judgment:
27 May 2019
JUDGMENT OF WYLIE J
This judgment was delivered by Justice Wylie On 27 May 2019 at 4.00 pm
Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar
Solicitors/counsel:
Winston Wang & Associates/B D Gray/K Muller, Auckland Buddle Findlay, Wellington/M Corlett QC, Auckland
SHANGHAI NEUHOF TRADE CO LTD v ZESPRI INTERNATIONAL LTD [2019] NZHC 1176 [27 May 2019]
Introduction
[1] These proceedings are scheduled for a six week hearing commencing on 1 July 2019.
[2] The plaintiffs and counterclaim defendants – Shanghai Neuhof Trade Company and Limited and Shanghai Hui Zhan Logistic Limited (jointly the plaintiffs)
– seek an adjournment. The application is resisted by the defendant/counterclaim plaintiff – Zespri International Limited (“Zespri”).
Background
[3] The application is made, because a significant witness for the plaintiffs – Xiong Jie Liu (“Mr Liu”) – is in prison in China. He is serving a sentence of imprisonment
– initially of 13 years – that was imposed on him in 2012 by the Shanghai Number One Intermediate Peoples’ Court for smuggling general cargo. The offending involved the underpayment of duty to Chinese Customs authorities on kiwifruit exported into China by Zespri. The sentence was upheld on appeal – first, by the Shanghai High People’s Court and then by China’s Supreme Court. It has since been commuted on three occasions – on 4 March 2015 for a period of two years, on 22 March 2016 for a period of one year, and on or about January 2018 for a period of nine months. I was told that the sentence being served by Mr Liu is currently nine years and three months’ imprisonment.
[4] An application for parole was made by Mr Liu in or about January 2019. Based on advice from officials, it seems likely that the application for parole will be granted, but the process is not automatic. Affidavits filed advise that once an application for parole has been submitted to the Parole Board of the relevant prison, the Board holds a meeting to consider the application. If the application is approved by the Board, the decision is then publicly noted. If there are no objections, the application is then referred to a Court, which determines whether to accept or reject it. This process can take from two to four months. If the application is approved by the Court, the order will then be served and the prisoner will typically be released within a further seven to 10 days. If the application is denied, the prisoner must wait a further six to 12 months before he or she can apply afresh.
[5] Whether or not Mr Liu will be released on parole is entirely at the discretion of the Courts in China. The plaintiffs hoped that he might be released on parole earlier this year. The hope was not realised. A decision on whether or not Mr Liu will be released on parole is still awaited.
[6] The affidavits filed suggest that it would be difficult for Mr Liu to give evidence from prison. While giving evidence in a civil proceeding in a foreign jurisdiction by video link is not prohibited, the matter is ultimately at the discretion of the prison authorities. Prison authorities are generally reluctant to grant permission for a prisoner to give evidence in this way. It might be possible for Mr Liu to prepare a written witness statement from prison, but that could also be problematic. It would depend on the internal rules and procedures of the prison where Mr Liu is being held, and any documents which needed to be referred to him would first have to be inspected and vetted by the prison authorities. It is unlikely that Mr Liu would be allowed access to a computer, let alone a computer with an internet connection.
Submissions
[7] Mr Gray QC, for the plaintiffs, noted that the plaintiffs gave notice of the possible need for an adjournment as soon as they realistically could do so, and that an adjournment is now necessary because there is no longer time available to prepare fully for the trial. He advised that all other witness briefs have been prepared and exchanged, but submitted that the trial cannot properly proceed in Mr Liu’s absence, given that he is the plaintiffs’ key witness. He argued that the unavailability of a key witness is an established ground for granting an adjournment, and that there would be significant prejudice to the plaintiffs if an adjournment were not to be granted. He accepted that the proceedings cannot be adjourned indefinitely and that sooner or later the plaintiffs will have to “bite the bullet”, and decide whether they can properly proceed if Mr Liu is not released from prison and cannot give evidence. He also argued that Zespri has not shown any significant prejudice to it. He sought an adjournment until the second half of 2020 but was not opposed to an earlier date.
[8] Zespri opposed the application, or in the alternative, sought that the proceeding should be set down for an alternative six week fixture on the first available date after
1 July 2019. It also sought a direction that an alternative fixture should proceed whether or not Mr Liu is released from prison. Mr Corlett QC, for Zespri, argued that the interests of justice are best served by adhering to the current trial date, that the prejudice likely to be caused to it outweighs the prejudice likely to be caused to the plaintiffs if the adjournment is refused, that the plaintiffs were aware of the risk that Mr Liu might be unable to give evidence at trial from an early date, that the plaintiffs have failed to take any practicable steps to avoid the need for an adjournment, and that there is no justification for granting an adjournment where the unavailability of a witness is neither sudden nor unexpected. Zespri argued that the public interest weighs against granting an adjournment, and said that it is ready to proceed to trial.
Analysis
[9] There is a degree of irony in both parties’ positions. The plaintiffs have from an early date sought a fixture. Their requests for the same were resisted by Zespri. Discovery issues long bedevilled these proceedings, but when discovery was finally taken as far as it could be, the plaintiffs were given a fixture. They now seek to adjourn it and Zespri now seeks to retain it.
[10]Rule 10.2 of the High Court Rules governs the situation. It provides as follows:
10.2 Adjournment of trial
The court may, before or at the trial, if it is in the interests of justice, postpone or adjourn the trial for any time, to any place, and upon any terms it thinks just.
[11] The rule confers a wide discretion on the Court.1 The essential question which the Court must ask itself is whether or not an adjournment is necessary in order to do justice between the parties. It is necessary to consider the interests not only of the party seeking the adjournment, but also the interests of the party who wishes to retain the benefit of the fixture. A balancing exercise is called for.2
1 Cygnet Farms Ltd v ANZ Bank New Zealand Ltd [2016] NZHC 1945.
2 O’Malley v Southern Lakes Helicopters Ltd HC Christchurch CP513/89, 4 December 1990 at 1- 2.
[12] Relevant considerations to the exercise of the discretion can include the following:
(a)when the unavailability of a witness forms the basis of the application, the reasons for the unavailability and the impact of the unavailability in proceeding to trial;
(b)whether the applicant has acted reasonably and done everything practicable to avoid the need for an adjournment;3
(c)the right of the parties to a fair trial and the need for resolution of the proceedings, including the likely impact of further delay on the quality of the evidence, the difficulties of reorganising witnesses for a later trial date, and the like;4
(d)the prejudice likely to be caused to each party as a result of the exercise of the discretion the one way or the other;5 and
(e)the public interest in the efficient administration of justice.6
[13] I have endeavoured to bear these various matters in mind in considering the plaintiffs’ application.
[14] I accept that Mr Liu is a critical witness from the plaintiffs’ perspective. The plaintiffs’ claims are founded in part on an alleged oral contract entered into in 2006 between Mr Liu on behalf of Shanghai Neuhof and Hu Jan Chen on behalf of Zespri. As I understand it, there is no written record, contemporaneous or otherwise, of this alleged oral contract. As explained above, Mr Liu is currently incarcerated in China. It is argued that it is likely to be difficult to obtain a brief of evidence from him, or for him to give evidence from within the prison by video link. It is said that it would be very much easier to obtain a brief from him if he is released on parole and the plaintiffs’
3 High Court Rules 2016, r 10.2.02(2).
4 Chilcott v McLachlan HC Auckland CIV-2007-404-2796, 5 June 2009.
5 A C Beck and others McGechan on Procedure (online ed, Thomson Reuters) at 10.2.02(2).
6 EBR Holdings (in liq) v Van Duyn [2016] NZHC 1169.
legal advisers can meet with him. I comment on these assertions below, but I do accept that it would be difficult for the plaintiffs to proceed to trial without Mr Liu’s evidence.
[15] Zespri suggested that any evidence Mr Liu might be able to give will be inherently unreliable, and that any value the Court could attribute to it would be low, given Mr Liu’s criminal history, and his personal interest in the matters in issue in these proceedings.
[16] I do not consider that I can properly attribute any weight to these assertions in the context of the present application. Whether Mr Liu will or will not prove to be a credible witness is a matter which will have to be determined at trial, in the event that Mr Liu is able to give evidence.
[17] More weight must however be given to Zespri’s argument that it is not obvious from the plaintiffs’ affidavits that the plaintiffs have done everything practicable to avoid the need for adjournment. Mr Liu’s potential unavailability was raised by Zespri as early as August 2014. The plaintiffs knew that Mr Liu was serving a prison sentence in China when the proceedings were filed. There is nothing to suggest that the plaintiffs have made any attempt to obtain a written brief from Mr Liu, or to explore the possibility that he might be able to give evidence by way of video link from the prison he is currently being held in in China. The plaintiffs have not responded to requests from Zespri for copies of relevant papers, such as the application for parole. There is considerable force in the submission that the plaintiffs have had over five years to try and resolve the issue of Mr Liu’s potential unavailability, but that they have failed to take adequate steps to try and address the matter.
[18] I also agree with Zespri that these proceedings need to be resolved. The statement of claim was filed as long ago as May 2014. There is a strong public interest in the expeditious resolution of disputes, and this matter has already suffered from considerable delay because of allegations the one way or the other about the adequacy of discovery. There is force in Zespri’s submission that it cannot be expected to wait indefinitely and that sooner rather than later the plaintiffs are going to have to address whether they can proceed to trial in the event that Mr Liu is unable to give evidence.
[19] There is also the risk, identified by Zespri, that the matter is becoming stale. Witnesses will be required to recall events that are said to have occurred many years ago. There is a risk that their memories will have faded. As against this, the evidence of all relevant witnesses has already been taken – with the exception of the evidence of Mr Liu. There is nothing to suggest that a further modest delay will exacerbate the situation unduly, or that there are likely to be difficulties in reorganising witnesses for a later trial date.
[20] I turn to the issue of prejudice. For the reasons noted above at [14], there would be significant prejudice to the plaintiffs if they are required to proceed to trial without having Mr Liu available as a witness. That may well be an issue they ultimately have to address, because they cannot expect that the proceedings will be held over for resolution until Mr Liu is ultimately released from prison at the end of his term of imprisonment. I also take into account that, in Mr Liu’s view, his sentence is in relation to acts for which, he says, Zespri was responsible. If there is anything in this argument, there would be an inherent unfairness in requiring the plaintiffs to go to trial when Mr Liu is unavailable because he is in prison.
[21] As against these matters, Zespri asserts that it has incurred significant costs to date, and that it is ready to go to trial. I accept that Zespri has incurred significant costs to date. Those costs will not however be wasted in the event that an adjournment is granted. Any costs which have been incurred directly as a result of the 1 July 2019 fixture, and which are likely to be wasted or unable to be recovered when the matter proceeds to a hearing, can be dealt with in the context of a costs order on this adjournment application.
[22] On balance, I have concluded – albeit by a fine margin – that the plaintiffs should be granted an adjournment – not to the second half of 2020 as sought, but rather to the weeks of 27 April, 4 May, 11 May, 25 May, 1 June and 8 June 2020. With the agreement of counsel, those dates had already been “pencilled in” by the Registrar, to accommodate the possibility that it might ultimately be decided that the trial did need to be adjourned. Counsel have already confirmed that they are available on those dates, and they have not signalled any issues with the availability of other witnesses.
[23] I decline to deal with Zespri’s request that I should now order that the trial proceed on these alternative dates whether or not Mr Liu is then available. I am not at this stage prepared to fetter the discretion under r 10.2 by such a ruling. I do however record that the plaintiffs are being granted an indulgence. They should not expect a further indulgence if Mr Liu is still unavailable on the alternative dates, unless a very good reason for a further adjournment can be made out.
[24] Accordingly, I vacate the six week fixture due to commence on 1 July 2019, and direct that the matter will proceed in the weeks noted above, commencing at 10 am on 27 April 2020.
[25] The plaintiffs are to file and serve memoranda at not more than three monthly intervals as from the date of this judgment, updating the Court and Zespri as to the availability of Mr Liu.
[26] There is to be a further telephone conference in the first week of March 2020, to ensure that the matter is ready to proceed to hearing, and to make any further directions which may be required.
[27] It transpired in the course of the hearing that the plaintiffs have failed to pay part of the security for costs ordered by me. I reserve to Zespri the right to make further application in this regard if it wishes to do so.
Costs
[28] In my view and in the circumstances of this case, it is appropriate to order costs against the plaintiffs, notwithstanding that they have been successful in their adjournment application.
[29]I direct as follows:
(a)any memorandum in respect of costs sought by Zespri is to be filed within 10 working days of the date of this judgment;
(b)any memorandum in reply from the plaintiffs is to be filed within a further 10 working days;
(c)memoranda are not to exceed five pages.
I will then deal with the issue of costs on the papers, unless I require the assistance of counsel.
Wylie J
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