Shuo v Yueyang Limited - [2024] NZHC 2401

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1691

[2024] NZHC 2401

BETWEEN
YAN SHUO

Plaintiff

AND

YUEYANG LIMITED

Defendant

Hearing: On the papers

Counsel:

AAH Low for plaintiff

Date of judgment:

26 August 2024

JUDGMENT OF JAGOSE J

[Freezing orders]

This judgment was delivered by me on 26 August 2024 at 4.00pm.
Pursuant to Rule 11.5 of the High Court Rules.

………………………… Registrar/Deputy Registrar

Counsel/Solicitors:
AAH Low, Barrister, Auckland Turner Hopkins, Auckland

SHUO v YUEYANG LTD [2024] NZHC 2401 [26 August 2024]

[1] As duty judge, I have today had referred to me for determination Yan Shuo’s 6 August 2023 without notice interlocutory application for freezing orders in support of as-yet unserved debt recovery proceedings. I regret the delay in the registry’s reference of the application to me.

Background

[2] In this proceeding, Ms Shuo alleges she progressively lent $1.5 million to Yueyang Limited (the company) on terms of a 21 June 2021 agreement for repayment with interest on 29 June 2024, and the company has not repaid on her demand the then-due approximately $1.8 million.1 She says her husband also lent the company
$650,000, presumably on similarly unmet terms, in respect of which another proceeding is issued against the company.2 Her husband’s father, Kun Jiang, is a director of the company.3

[3] On the present application, Ms Shuo seeks to freeze the company’s assets in New Zealand, predominantly being a property in Auckland’s Pakuranga acquired for development into five separate units, but extending to derivative titles and money. Although separate title has yet to issue, on 26 July 2024, all five lots in the property were offered for sale by 8 August 2024. At least four of the lots appear still to be listed for sale, and still for “Deadline Sale 8th August 2024 3.00pm (unless sold prior)”.4

Law on freezing orders

[4] Freezing orders may be ordered if I am satisfied, having regard to all the circumstances, there is a danger a prospective judgment in Ms Shuo’s favour will be wholly or partly unsatisfied because the value of the company’s assets are alienated from it in some manner.5

1      The agreement in evidence only is signed by Ms Shuo. She proposes to file further affidavit evidence to establish its acceptance, but that has yet to be done.
2      Jiang v Yueyang Ltd HC Auckland, CIV-2024-404-1706.
3      Bo Li, resident at the same address as Kun Jiang, is the other director and sole shareholder.
4      < Court Rules 2016, r 32.5(4).

[5] Freezing orders are “a valuable protective measure for those commencing civil proceedings”,6 for which Ms Shuo must show “a good arguable case on an accrued or prospective cause of action”.7 By ‘good arguable case’ is meant establishment of “a sufficiently plausible foundation” such that “the cause of action is at least tenable”.8

A good arguable case against the respondent is therefore established if the allegations in the proposed claim are capable of tenable argument and are…

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 Shuo v Yueyang Limited

Details

AGLC: Shuo v Yueyang Limited [2024] NZHC 2401
Case: [2024] NZHC 2401
Decision Date: 26 August 2024

CaseChat Overview and Summary

In the case of Shuo v Yueyang Limited, the High Court of New Zealand was asked to determine an interlocutory application for freezing orders made by Ms. Yan Shuo against Yueyang Limited. Ms. Shuo alleged that the company owed her approximately $1.8 million, which was due for repayment but had not been met. She sought to freeze the company's assets in New Zealand, primarily a property in Pakuranga, Auckland, which was being prepared for sale. The legal issues before the court included whether Ms. Shuo had established a good arguable case for her claims, the potential danger of asset alienation, and the balance of convenience in favour of issuing the freezing order. The court found that Ms. Shuo's allegations were capable of a tenable argument and that there was a potential danger of asset alienation, leading to the conclusion that the balance of convenience favoured Ms. Shuo.

The court detailed the legal framework for granting freezing orders, emphasizing that such orders are intended to protect prospective judgment creditors and require the establishment of a good arguable case. The court also noted the need to consider the balance of convenience, weighing the hardship to the applicant if the order was not granted against the hardship to the respondent if the order was granted. Given the imminence of the property sale and the alleged denial by Kun Jiang, a director of the company, of any debt owed by the company, the court found that the requisite danger of asset alienation "may" exist, albeit by a slim margin. Consequently, the court ordered the freezing of Yueyang Limited's assets, subject to certain conditions, including that the order would lapse after being called in the duty judge’s list on 2 September 2024, and that any application to discharge or vary the order would require two working days' notice to Ms. Shuo. The court also required Ms. Shuo to file compliant affidavits or provide an undertaking to do so promptly.

The final orders issued by the court were as follows: the freezing order would cease to have effect after its call in the duty judge’s list on 2 September 2024; any application to discharge or vary the order must be made on two working days' notice to Ms. Shuo; and the order would remain in court until Ms. Shuo filed compliant affidavits or provided an undertaking to do so. This decision underscores the importance of establishing a good arguable case and the potential consequences of asset alienation in the context of freezing orders.

Orders