Suo v Yang

[2021] NZHC 940

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV 2020-404-000613

[2021] NZHC 940

BETWEEN

FEI (SOPHIE) SUO

Plaintiff

AND

QIAO YANG

Defendant

Hearing:	14 April 2021
Appearances:	C J Pendleton for the Plaintiff No appearance for the Defendant
Judgment:	29 April 2021

JUDGMENT OF VAN BOHEMEN J

This judgment was delivered by me on 29 April 2021 at 12 noon Pursuant to Rule 11.5 of the High Court Rules

…………………………

Registrar/Deputy Registrar

Solicitors/Counsel:

Turner Hopkins, Auckland Copy to:

Defendant (Self-Represented)

FEI (SOPHIE) SUO v QIAO YANG [2021] NZHC 940 [29 April 2021]

[1]    By statement of claim dated 22 April 2020, the plaintiff, Fei (Sophie) Suo, seeks repayment of a loan of $500,000, plus contractual interest, that she says she made to the defendant, Qiao Yang, and which Mr Yang has refused to pay.

[2]    In a statement of defence dated 29 May 2020, Mr Yang admitted that Ms Suo had advanced him $500,000 but he said that the sums advanced to him by Ms Suo were in payment of Ms Suo obtaining a 25 per cent shareholding in his company, Royale Biotech Group Ltd, formerly known as R&B International Group Ltd.

[3]    On 19 February 2021, Associate Judge Andrew struck out Mr Yang’s statement of defence pursuant to r 7.48(2) of the High Court Rules 2016 after Mr Yang had failed to comply with Court orders for discovery. Mr Yang had not engaged with the Court since 26 August 2020 when he advised that he was acting in person in place of his former solicitors.

[4]    Associate Judge Andrew set down Ms Suo’s claim for formal proof and directed Ms Suo to file any affidavit evidence and submissions in advance of the hearing.

[5]    Ms Suo’s claim was heard before me on 14 April 2021. Ms Pendleton appears on behalf of Ms Suo.

Evidence in support of Ms Suo’s claim

[6]    In an affidavit sworn on 7 April 2021, Ms Suo says that on or around January 2007, Mr Yang asked for a personal loan and she agreed. She says she initially advanced $200,000 to Mr Yang  and subsequently advanced a further $300,000 to  Mr Yang.

The payments

[7]    Ms Suo says she made a total of six payments to Mr Yang over a period of eight months. She has produced copies of bank statements showing the following payments from the ANZ Bank account of MRS R SUO & Mr Y CHEN to the account of QIAO YANG FEI. SUO:

(a)       11 January 2017:        $100,000

(b)       26 January 2017:        $100,000

(c)       8 August 2017:             $50,000

(d)      18 August 2017:           $60,000

(e)       18 August 2017:         $100,000

(f)       30 August 2017:           $90,000.

Emails regarding receipt of first two payments

[8]    Ms Suo has also produced  copies  of  emails  dated  12  January  2017  and 31 January 2017 in which she says Mr Yang confirmed receipt of the first two payments.

[9]    The emails were from email account “[email protected]” and bore the electronic signature of “Lawrence Young, Managing Director, R&B International Group”. The emails stated:

(a)Email of 12 January 2017:

Hi Sophie

I’m writing this email to confirm that I have received first $100,000, as part of $200,000 deposit of share purchase of R&B International

Group Ltd, Company Number: 5502493. Thank you very much.

I will get our company lawyer to start preparing the papper [sic] works as we agreed.

Hope you have a great holiday, see you when you get back NZ.

(b)Email of 31 January 2017:

Hi Sophie

I have received the second $100,000 deposit of share purchase of

R&B International Group Ltd, Company Number: 5502493. In total $200,000 deposit received.

Looking forward to see you when you back to NZ.

[10]   Companies Office records provided by Ms Pendleton confirm that the company number of Royale Biotech Group (formerly R&B International Group) is 5502493.

The Loan Agreement

[11]   Ms Suo has produced a copy of a loan agreement dated 15 June 2018 between herself as Creditor and Mr Yang as Debtor (Loan Agreement). The copy of the Loan Agreement annexed to Ms Suo’s affidavit appears to have been signed by both Ms Suo and Mr Yang. Both signatures were witnessed by persons resident in Auckland.

[12]The Loan Agreement provided that:

(a)The Loan Amount was the sum of NZD500,000.

(b)The loan was to be drawn down in two instalments. The first instalment of $300,000 had already been drawn by the Debtor on 30 August 2017. The second instalment of $200,000 was to be drawn down on 7 October 2019 “or the date agreed by both parties.”

(c)The loan term was one year with two per cent fixed annual interest calculated on a capitalised basis.

(d)The Debtor was to repay the principal loan amount and interest upon the expiry of the term.

(e)The debtor was to render 2,500,000 of his shares, being 25 per cent of R&B International Group, to the Creditor “as security in consideration of the total Loan Amount.”

(f)If the Debtor was unable to repay the loan on the expiry date, the Creditor could choose to accept the shares “as an alternative in satisfaction of the total Loan Amount.” In such an event, the Debtor agreed to forfeit his shares, being 25 per cent of R&B International

Group, as security to the Creditor and to facilitate the transfer of the shares to the Debtor without unreasonable delay.

(g)If the Creditor did not wish to implement “the share transfer / security option” at any time after 7 October 2019, the Creditor’s contribution to the loan agreement was to remain as a personal loan to the Debtor, unless the Debtor exercised her share transfer option.

(h)The parties acknowledged that if the Creditor did not wish to implement the share transfer option, the total Loan Amount was to be repaid on the 10th working day after the Creditor provided written notice to the Debtor demanding repayment of the loan.

Ms Suo demands repayment of loan

[13]   Ms Suo says she never accepted shares in R&B International Group because Mr Yang did not provide her with sufficient financial information about the company and she was not convinced to make the investment. She says that on 30 July 2019, she sent Mr Yang an email asking for repayment of the loan. Ms Suo has produced a copy of the email. It is in Chinese and no translation has been provided. Ms Suo says Mr Yang did not repay the money he owed her.

[14]   Ms Suo has produced a letter dated 23 September 2019 from Turner Hopkins, solicitors who were acting on her instructions, addressed to Mr Yang, which gives formal written notice of Ms Suo’s demand for repayment of the full loan amount (principal and interest) within 10 working days of receipt of that letter. The letter advised that the debt due to Ms Suo was $523,063.01, being $500,000 plus interest at 2 per cent per annum.

[15]   Ms Suo has produced a letter dated 31 October 2019 from Wilson Harle, solicitors then acting for Mr Yang, in response to the letter from Turner Hopkins. The letter from Wilson Harle stated that they had been instructed that no loan agreement had been entered into but that Ms Suo had paid Mr Yang $500,000 for the purchase of 25 per cent of the shares in of R&B International Group. The letter referred to the emails of 12 January 2017 and 31 January 2017 referred to above, and to a further

email dated 2 May 2017 which confirmed receipt of payments for the purchase of the shares. The letter also stated that Ms Suo had forwarded a draft loan agreement to  Mr Yang on June 2018 but that Mr Yang instructed that he had declined to execute the agreement.

[16]Wilson Harle subsequently ceased acting for Mr Yang.

Mr Yang transfers shares to Ms Suo

[17]   Ms Suo, through her counsel, has produced Companies Office records that show that on 25 September 2019, two days after receipt of the letter from Turner Hopkins, Mr Yang presented a Particulars of Shareholding in Royal Biotech Group Ltd in which Fei Suo was shown as a new shareholder, holding 250,000 of the shares in the company, and that Mr Yang’s previous shareholding had reduced from 800,000 to 550,000 shares.

[18]   Ms Suo says she did not request or authorise this change of shareholding and has not received any share certificates.

Discussion

[19]   On the basis of the above evidence, I am satisfied, on the balance of probabilities, that Ms Suo advanced Mr Yang $500,000 and that the advance was intended to be a loan repayable by Mr Yang, unless Ms Suo elected to take an allocation of 25 per cent of the shares in R&B International Group, later Royal Biotech Group, in satisfaction of the amount of the loan amount.

[20]   There is an inconsistency between the terms of the loan agreement, which stated that $300,000 had been paid by 30 August 2017, and the bank statements produced by Ms Suo, which show that the full amount of $500,000 had been advanced by 30 August 2017. However, that inconsistency does not negate the facts that

$500,000 was advanced by Ms Suo to Mr Yang and that the parties agreed to document, in the loan agreement dated 15 June 2018, the advances that had been previously made.

[21]   While Mr Yang’s emails of 12 and 31 January 2017 stated that the initial two payments of $100,000 made in January 2017 were for the purchase of shares in R&B International Group, it is relevant that the emails, between two native Chinese speakers, were in English. It is also relevant that no transfers of shares were made to Ms Suo until September 2019, over two and a half years later, and only after demand had been made for the repayment of the loan. Whether or not Ms Suo understood the references in the emails to the purchase of shares, Mr Yang did not act as if the advances were for the purchase of shares. He then later executed the loan agreement.

[22]For these reasons, I am satisfied that:

(a)The advances were made as part of a loan that totalled $500,000 from Ms Suo to Mr Yang;

(b)Mr Yang has not repaid those advances, despite demand for repayment being made by Ms Suo through her solicitors, Turner Hopkins;

(c)Ms Suo has not elected to receive shares in Royal Biotech Group in satisfaction of the loan amount;

(d)As a consequence, under the Loan Agreement Mr Yang owes Ms Suo

$500,000 plus interest at two per cent per annum.

Result

[23]I enter judgment against Mr Yang. I order Mr Yang to pay Ms Suo:

(a)$500,000 plus interest at two per cent per annum from 23 September 2019, the date of demand, to 28 April 2021, the date of this judgment;

(b)Interest pursuant to s 24 of the Interest on Money Claims Act 2016 from 28 April 2021, the date of this judgment, to the date of repayment; and

(c)Costs.

Costs

[24]   Ms Suo is entitled to costs on a category 2B basis. If Ms Suo and Mr Yang are unable to agree costs or otherwise wish to make submissions, they may submit memoranda of no more than four pages.

[25]   Any memorandum from Ms Suo should be filed and served by 20 May 2021. Any memorandum from Mr Yang should be filed and served by 3 June 2021.

G J van Bohemen J