So v Shi
[2023] NZHC 2030
•1 August 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-000926
[2023] NZHC 2030
BETWEEN BIU TAO SO
Plaintiff
AND
YAN SHI
First Defendant
HIN SING SO
Second Defendant
Hearing: On the papers Appearances:
C P Browne and C J L Martin for Plaintiff
K G Davenport QC and A E Isaacs for First Defendant No appearance by or no behalf of the Second Deft
Judgment:
1 August 2023
JUDGMENT OF PAUL DAVISON J
This judgment was delivered by me on 1 August 2023 at 4.00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar
Solicitors:
Wilson Harle, Auckland Corban Revell, Auckland
SO v SHI [2023] NZHC 2030 [1 August 2023]
Introduction
[1] This judgment relates to an application by the plaintiff for the entry of judgment for an amount for which the first and second defendants were previously found liable, and which has since been quantified by an accounting analysis of relevant company and financial records.
Background
[2] By my judgment delivered on 18 February 2022 and reissued on 11 May 2022,1 I granted the plaintiff’s application for summary judgment against the first and second defendants and made orders granting the relief he sought by way of a declaration that the first and second defendants held 200 of the 300 shares in Tim Tim Company Ltd (the company) as bare trustees for the plaintiff, together with an order directing the first and second defendants to transfer the shares to the plaintiff.2
[3] I also granted the plaintiff relief by making orders directing the first and second defendants: to procure the company to pay the plaintiff his share of the company’s rental income as provided for in the deed of bare trust; to take all necessary steps to obtain a release of liability of the company to the ANZ Bank or to repay all debts guaranteed by the company without recourse to the assets of the company; and to produce and deliver to the plaintiff all records of the company relating to the receipt of rental income relating to the period commencing January 2016.3
[4] However, I declined to grant the plaintiff the relief he sought in relation to the sum diverted by the first and second defendants from the company’s income for their own benefit, as that amount had not been determined by an accounting examination of the relevant company and financial records at the time of the hearing. I said:
[119] For these reasons, I find that the plaintiff has established his claim against the first and second defendants and that Maggie has no arguable defence to his claim against her and Esmond, and that he is accordingly entitled to summary judgment against them both, and for orders for the relief sought in the statement of claim. However, as the quantum of misapplied rental income that ought to have been paid to the plaintiff cannot be
1 So v Shi [2022] NZHC 214.
2 At [121(a)–(b)].
3 At [121(c)–(d)].
ascertained until after the relevant company records have been obtained, I decline to make and order in the full terms sought by the plaintiff in paragraph
(e) of the statement of claim, as recovery of the misapplied sum will necessarily await the outcome of the plaintiff’s examination of the relevant company records and may require a further and separate demand for payment of such sum as is determined to have been misapplied by the defendants either together or separately.
[5] By memorandum dated 18 July 2023, counsel for the plaintiff applies for entry of judgment against the first and second defendants for the sum of $121,555.49 being the amount determined as having been misapplied by the defendants from the rental income received by the company. Attached to the memorandum by the plaintiff’s counsel is a letter of demand dated 10 July 2023 which was sent to the lawyers for the first and second defendants, in which the plaintiff made demand for immediate payment of the sum of $121,555.49. Counsel notes that despite the demand having been made no payment has been received by the plaintiff from the first and second defendant.
[6] In support of the application for judgment for that sum, the plaintiff has filed an affidavit by Mr Dasheng (“David”) Xu, who is a Chartered Accountant and director of the accounting firm, Business and Investment Taxation Ltd, which specialises in providing accounting and business advice to business owners.
[7] In his affidavit Mr Xu states that he and his firm have been involved with the company since its incorporation in 2012, and since then have been involved in preparing each of the company’s year-end financial statements. He says that he was asked by the plaintiff’s lawyers to review the records of the company and to identify the amount, if any, that was directed to the first and second defendants. He was asked to assume that the first and second defendants were the beneficial owners of 100 of the 300 shares in the company, and that the plaintiff and his late wife Chui Wa, were together the beneficial owners of the other 200 shares in the company. He was also asked to assume that liability for repayments associated with the mortgage-secured debt owed by the company to ANZ bank were required to be borne as to two-thirds by the first and second defendants, and as to one-third by the plaintiff and Chui Wa.
[8] Mr Xu says that having reviewed the company’s financial statements for the financial years 2013 to 2023, and bank statements relating to the company’s cheque and loan accounts with the ANZ covering the same period, he found that:
In the period from inception to 31 March 2023, the company made total mortgage repayments (principal and interest) of $364,666.48. One third of that sum being the amount required to be paid by [the first defendant] and [the second defendant] to [the plaintiff] to give effect to the terms set out at paragraph 6 above, is $121,555.49.
Decision
[9] I am satisfied by Mr Xu’s evidence that the amount misapplied by the first and second defendants from the rental income received by the company in the period since incorporation of the company in 2012 to 31 March 2023 is the sum determined by Mr Xu, namely, $121,555.49.
[10] I am also satisfied that the plaintiff has made demand to the first and second defendants for payment of the sum determined by Mr Xu as having been misapplied and that no payment has been made.
[11] I accordingly find that the plaintiff is entitled to summary judgment for the sum of $121,555.49 against the first and second defendants jointly and severally.
Result
[12] I make an order entering judgment for the plaintiff against the first defendant and against the second defendant, jointly and severally, for the sum of $121,555.49.
I reserve the plaintiff leave to apply for costs.
0