Tan v Tan
[2024] NZHC 3370
•14 November 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-873
[2024] NZHC 3370
BETWEEN BAOSHAN TAN
Plaintiff
AND
WILLIAM (YUANHUI) TAN
Defendant
Hearing: 23 August 2024 Appearances:
K Morrison and KL Chiu for the Plaintiff T Ashley for the Defendant
Judgment:
14 November 2024
JUDGMENT OF ASSOCIATE JUDGE SUSSOCK
This judgment was delivered by me on 14 November 2024 at 3 pm pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors:
Meredith Connell, Auckland Forrest Harrison, Auckland
TAN v TAN [2024] NZHC 3370 [14 November 2024]
Introduction
[1] The plaintiff, Baoshan Tan (Baoshan), seeks summary judgment of his claim for recognition and enforcement of a judgment of the Intermediate People’s Court of Haikou City (IPC) of the People’s Republic of China (PRC) issued on 3 June 2020.1
[2] Before a foreign judgment can be enforced in New Zealand it must be recognised by a New Zealand Court. Once an order for recognition is made all of the usual consequences of having a New Zealand judgment flow including being able to enforce payment of the remaining judgment sum.
[3] The judgment sum ordered the defendant, William (Yuanhui) Tan (William), to pay the principal amount of RMB 2,780,000 plus interest of 24 per cent to the date of payment from the following dates:
(i)on RMB 2,700,000 from 30 November 2016 (less RMB 20,000 that has already been paid by the defendant);
(ii)on RMB 50,000 from 8 February 2018; and
(iii)on RMB 30,000 from 3 July 2018.
[4] In addition, the judgment ordered that delayed performance interest is payable on the principal of RMB 2,780,000 until payment if William failed to pay the judgment sum within 10 days (calculated by Baoshan’s counsel as 0.0175 per cent per day from 20 June 2020).
[5] Following the judgment, Baoshan obtained an order in PRC to sell a property owned by William, receiving RMB 859,444 in sale proceeds. The proceeds have been applied to the accrued interest, with the principal amount of RMB 2,780,000 plus remaining interest of RMB 2,220,968.05 still outstanding as at 31 August 2021. Interest continues to accrue.
1 I refer to the plaintiff and defendant by their first names given they share a surname. I intend no disrespect in doing so and confirm they are not related.
[6] There is no treaty for recognition of judgments between PRC and New Zealand so recognition is considered at common law. William accepts the three prerequisites for recognition at common law are satisfied in this case but opposes summary judgment on the basis of two of the three settled exceptions:2
(a)that the judgment was obtained by fraud; or
(b)that the proceedings in which the judgment was obtained were contrary to natural justice.
[7] Baoshan says William has not clearly pleaded the fraud exception and is instead seeking to re-examine the merits of the Chinese Court’s decision, submitting that this is not appropriate in an application for recognition. Furthermore, Baoshan says there was no breach of natural justice because William participated in the lower court decision and had a lawyer represent him in the appeal to the IPC. In addition Baoshan says the fact that William says he was unable to attend the hearing before the IPC because of the COVID-19 pandemic does not amount to a breach of natural justice where his lawyer attended and represented him. Finally Baoshan points to the fact that William unsuccessfully applied for a retrial to the Hainan High People’s Court (HPC) in which his inability to attend was not raised.
[8] Baoshan is proceeding by way of summary judgment so the issues for determination are whether Baoshan has established that William does not have a reasonably arguable defence based on:
(a)the fraud exception; or
(b)the natural justice exception.
2 Eilenberg v Gutierrez [2017] NZCA 270 at [30].
Summary judgment principles
[9] Under r 12.2(1) of the High Court Rules 2016, the court may give summary judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim.
[10] The principles applying to a plaintiff’s application for summary judgment are well settled and were set out by the Court of Appeal in Krukziener v Hanover Finance Ltd:3
(a)The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried.4
(b)The court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated.5
(c)The court will not normally resolve material conflicts of evidence or assess the credibility of deponents. However, it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable.6
(d)In the end the court’s assessment of the evidence is a matter of judgment. The court may take a robust and realistic approach where the facts warrant it.7
3 Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26] to [27].
4 Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3.
5 MacLean v Stewart (1997) 11 PRNZ 66 (CA).
6 Eng Mee Yong v Letchumanan [1980] AC 331 (PC) at 341.
7 Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[11] A defendant is under an obligation to lay a proper foundation for their defence in the affidavits filed in support of the notice of opposition.8
[12] Finally, I record that the fact that the Court may be required to determine questions of law does not preclude summary judgment.9
Is there a reasonably arguable defence based on the fraud exception?
[13] The fraud exception is based on the fundamental ex turpi causa rule that a person may not profit from their own wrong.10
[14] In order to invoke the exception, the party alleging fraud must demonstrate fraud in the strict sense of intentional deception.11 As Clark J held in Yingling v Gifford:12
In order for the defendant to displace the estoppel arising out of a final decision by a court of competent jurisdiction, the defendant must show a conscious and deliberate dishonesty on the part of the plaintiff. It is not enough to argue that the plaintiff was reckless as to the truth or falsity of the evidence he put before the Superior Court. The stricter legal standard has been applied in New Zealand since the Court of Appeal decision in Svirskis v Gibson:13
What must be shown was that there was fraud practised on the [overseas] court, by misleading the court by evidence known to be false.
[15] In William’s amended notice of opposition he pleads in respect of the fraud exception as follows:
(a)It is reasonably arguable that the foreign judgment is impugned because it was obtained dishonestly by the plaintiff:
(i)The plaintiff claimed that the defendant had failed to repay a loan of RMB 600,000, whereas in fact the defendant repaid that loan, and interest pertaining to it (totalling RMB 690,000), on 8 April 2009.
8 Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
9 Zurich Australian Insurance Ltd v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR
383 at [37].
10 Abouloff v Oppenheimer (1882) 10 QBD 295 (CA) at 300.
11 At 301.
12 Yingling v Gifford [2021] NZHC 314 at [33].
13 Svirskis v Gibson [1977] 2 NZLR 4 at 9.
(ii)The defendant obtained documentary evidence of that repayment after the first instance judgment was issued and was given leave to file that evidence in support of his appeal in the Haikou Intermediate People’s Court of Hainan Province; the plaintiff accepted that he had received a payment of 690,000 on 8 April 2009 but dishonestly claimed that the payment related to a different transaction.
(iii)The Court accepted the plaintiff’s account of events and gave judgment against the defendant.
[16] The notice of opposition records that William relies on the further grounds set out in William’s affidavit, the affidavit of his ex-wife, Yingxin Fan, filed in support.
[17]William includes the following paragraph in his affidavit:
27.Before the appeal hearing my lawyers filed into the appeal Court the original proof of payment of the RMB 690,000 paid by Dehan Li. This was clear evidence that Baoshan had gotten his judgment dishonestly because in the first instance case he had told the Court I never paid him back for the loan he gave me on 8 November 2008.1 understand that Baoshan accepted that he was paid 690,000 RMB by Dehan in April 2009. But Baoshan denied that the payment was a repayment of his loan to me and said this was actually a loan that Dehan gave him in April 2009. This was impossible because he had never met her at this point - I introduced Baoshan and Dehan Li in the beginning of 2010. Baoshan’s story was that he took the loan from her in 2009 and then wrote a loan note to her in February 2010. He claimed he only received 84,000 RMB in February 2010, making the total loan advance 774,000 RMB, plus interest, which brought the principal sum to 900,000 RMB. However, this statement does not make sense as Dehan did not meet Baoshan in 2009 and therefore could not have lent him money that year. The financial details are inconsistent. If Baoshan received a total of 690,000RMB with an interest rate of 3.5% per month from April 2009 over 10 months until February 2010, the total owed would be 931,500RMB. It would not be commercially reasonable for Dehan to issue a loan note for merely 900,000 RMB. It is also not making sense for Dehan to withdraw additional 84,000 RMB advance to Baoshan in February 2010. Thus, Baoshan's statement of the loan does not hold up under scrutiny.
[18]Ms Fan deposes:
3.… The purpose of my affidavit is to confirm that my late mother, Dehan Li, paid RMB 690,000 on William’s behalf to Baoshan Tan in 2009.
…
6.I remember that in early-2009, I spoke with my mother about William’s loans. At that time, I was in NZ and she was in Hainan and
we used to speak on the phone. I don’t remember the date but I remember the conversation very clearly because my mother scolded me for allowing William to do something so silly. I only told her the existence of the loan amount to $600,000.00. She had cash available to repay one of the loans and she agreed to repay it as a favour to me, even though she and William did not get along. I got Baoshan Tan’s bank account number from William and passed it on to my mother to organise the repayment. My mother did not know Baoshan at that time.
7.I recall, although I do not exactly recall exactly when, that my mother confirmed to me in a telephone conversation that she had repaid the smaller loan, including the interest. I think I told William that this debt had been paid but I am not absolutely sure. I do not recall a particular conversation about it with William and I didn’t think about it again after that.
[19] Counsel for Baoshan placed some emphasis on the failure by William to use the word “fraud” in its pleading as William only pleads that the judgment had been obtained “dishonestly”.
[20] William’s counsel submits in response that there is no material difference between an allegation of dishonesty and an allegation of fraud and that counsel is not aware of any authority where the failure to use the word fraud has prevented reliance on this exception where the dishonesty is appropriately particularised.
[21] Furthermore, William says there is clearly no prejudice to Baoshan by the use of only the word “dishonestly” as Baoshan has prepared his submissions on the basis that William is relying on the fraud exception.
[22] In my view, where the notice of opposition uses the word “dishonestly”, the fact that it does not also use the word “fraud” does not, for solely that reason, prevent reliance on the fraud exception. The formulation of the test for fraud in the cases discussed above refers to “misleading the Court” or “conscious and deliberate dishonesty” so the use of the word “dishonestly” is sufficiently consistent with that test.
[23] Support for this can be found in Emajor v Emajor where Gilbert J commented that the pleading in that case fell short of alleging that the misrepresentation was fraudulent as it left open the prospect that any misrepresentation may have been
innocent.14 His Honour commented that counsel presented the case on the basis that the alleged misrepresentation was fraudulent and put the fraud allegation to the forefront of submissions. Gilbert J recorded that opposing counsel took no issue with this so his Honour considered the claim on that basis.
[24] Although the word “fraud” may not be required, the pleading of dishonesty must be sufficiently particularised so that the opposing party has a fair opportunity to answer the allegation. In my view, the amended notice of opposition and the affidavits filed in support in this case sufficiently do so. The fraud alleged is clearly that Baoshan dishonestly told the Court that the RMB 690,000 paid by Ms Li was not repayment of William’s 2008 loan but instead part of a 900,000 loan for which a loan note was issued in February 2010.
[25] In his affidavit in reply, Baoshan records that “William alleges that he had repaid an additional RMB 690,000 to me through Ms Li which was not accounted for.” Baoshan then says that he understands from William’s affidavit that he says further:
(a)I gave evidence in the Intermediate Court that the RMB 690,000 that Ms Li paid to me was a separate loan to me and not William's repayment.
(b)I could not have only received RMB 84,000 in February 2010.
(c)It would not make sense for Ms Li to pay RMB 84,000 to me in February 2010.
(d)It would not have been commercially sensible for Ms Li to have issued a loan receipt for only RMB 900,000 when the total sum owing including interest at 3.5% monthly on RMB 690,000 would be RMB 931,500 as at February 2010.
[26] Baoshan says these allegations are all matters that have already been raised and argued before the IPC and annexes a transcript of the IPC hearing. I note that Baoshan’s summary of William’s position fails to refer to the fact that both William and Ms Fan say that Ms Li did not know Baoshan in 2009.
[27] Baoshan begins the next paragraph by saying “William’s statement that I gave evidence in the Intermediate Court that the RMB 690,000 that Ms Li gave me was a
14 Emajor v Emajor [2016] NZHC 2022 at [6].
separate loan in incorrect”. Exactly what Baoshan is denying by this statement is unclear. Is he denying that he said it was a separate loan or that he said it was part of the RMB 900,000 loan that both William and Baoshan agreed Ms Li entered into with him?
[28] Baoshan then continues by saying “[t]he evidence I gave during the appellate hearing was: …” rather than addressing the allegations made directly. One of the matters Baoshan then lists is that:
(c)In April 2009, Ms Li told me that she did not have RMB 1 million on hand, but that she could give me the balance the following year…
[29] The transcript of the IPC hearing annexed to Baoshan’s affidavit in reply does not however record that Baoshan told the Court that Ms Li told him in April 2009 that she did not have RMB 1,000,000 and so forth. Instead, the transcript is less clear, attributing the following evidence to the “Appellee” (which may be Mr Baoshan or his lawyer):
A receipt was issued in April 2009, but because of what was said at the beginning that a loan of 1 million yuan would be made and there would be a second loan, but in February 2010 Li Dehan said that a total of 900,000 yuan could only be borrowed, and 4 months interest would be deducted so there was an IOU on February 4, 2010, and then the receipt for 690,000 yuan was taken back. …
[30] In addition, Baoshan refers to a “loan acknowledgment slip” between himself and Ms Li that was submitted as evidence before the IPC. Again rather than discussing the loan acknowledgement slip directly, Baoshan explains that his lawyer, Ms Yao, pointed out to the IPC that at the bottom of the loan acknowledgment slip there was a line of numbers reading 4, 5, 6, 7, 8, 9, 10, 11, 12, 1 which related to the months of interest that accrued from the month the sum of RMB 690,000 was first advanced to him. Baoshan’s evidence is consistent with the annexed hearing transcript but a copy of the loan acknowledgement slip has not been provided to the Court.
[31] William explained in his affidavit (filed before Baoshan’s in reply) that he had been unable to obtain copies of the documents from the Chinese proceedings, either from his lawyers or from the Court. As the loan acknowledgement slip appears to be
a key document relied on by Baoshan, I would have expected a copy of the slip to be included in the evidence.
[32] Considering the IPC transcript annexed further, the transcript records William as being absent from Court because William “was out of the country before the year before and could not come back because of the epidemic. During this period, he also contacted the appellee himself, so he could not attend the court today.”
[33] The transcript further records that the Court asked William’s lawyer whether William had “any opinion on the facts found in the judgment of the court of first instance?”. William’s lawyer responded:
Appellant: Yes. First, 600,000 yuan is not included in 900,000. Second, the 30,000 yuan borrowed on July 3, 2018, did not have agreed interest, and the first instance was calculated according to the monthly interest rate of 3 cents, which was wrong. Third with respect to RMB 1 million, the annual interest rate was 18% from August 26, 2009 to November 8, 2008 and the annual interest rate agreed upon by both parties after November 9, 2008 was 36%, that is to say, the interest standard was changed, but the court of first instance calculated it all according to 36%, which we think is wrong.
[34] The Court then asked Baoshan and his lawyer the same question and they replied “no”. Next the Court asked William’s lawyer whether they had submitted any new evidence in the second trial to which they responded: “Yes”. When the Court asked why the new evidence had been submitted in the second trial but not the first, William’s lawyer responded that it was “because the party did not have it, the party did not know or forgot it that time.” William’s lawyer then submitted the proof of payment of RMB 690,000 on 8 April 2009 found in Ms Li’s records after her death as new evidence before the IPC. Baoshan and his lawyer did not challenge the authenticity of the proof of payment or deny that Baoshan received this payment. Baoshan instead disagreed with William’s characterisation of the payment.
[35] Baoshan submits therefore that this issue about the correct characterisation of the RMB 690,000 payment has been raised and argued before the IPC with Baoshan saying in his evidence in reply that William’s lawyer “could have cross-examined me”.
[36] William submits however that when his lawyer was able to cross‑examine Baoshan, the hearing before the IPC was brought to a close with only one question having been asked by William’s lawyer.
[37]It is useful to set out this part of the transcript in full:15
Trial: The appellant’s mother-in-law Li Dehan transferred 690,000 yuan to you, right?
Appellee: Yes. This is the first payment made by his mother-in-law from the 900,000 yuan loaned to the appellee.
Trial: Why was it in 2009? You issued the IOU in 2010?
Appellee: A receipt was issued in April 2009, but because it was said at the beginning that a loan of 1 million yuan would be made and there would be a second loan, but in February 2010, Li Dehan said that a total of 900,000 yuan could only be borrowed, and 4 months of interest would be deducted, so there was an IOU on February 4, 2010, and then the receipt for 690,000 yuan was taken back. Let us explain what that receipt means: there are 4, 5, 6, 7, 8, 9, 10, 11, 12, 1 below the receipt, which means that the interest calculated when the IOU was issued on February 4, 2010 was the interest from April 2009 to January 2010, a total of 10 months. Then on February 4, 2010, 4 months of interest, or 126,000 yuan, was deducted in advance. Then on September 12, 2010, the appellant paid the remaining six months’ interest, which was RMB 189,000.
Trial: The appellee will submit the original receipt to the Court for verification.
Appellee: OK.
Trial: How much money did Li Dehan give you in total?
Appellee: The first transfer of 690,000 yuan, the second is to give 84,000 yuan in cash, a total of 774,000 yuan. On February 2, 2010, the appellant returned 250,000 yuan, and on February 10, 2010, the appellant returned 356,000 yuan. These two sums of money were paid by the appellant to me to pay the interest of his mother-in-law.
Trial: Appellant, first of all, confirm the facts. Did the appellee borrow money from your client's mother-in-law according to your request?
Appellant: It was introduced by the appellant, and we acknowledge that. Then we pay the principal and interest.
Trial: Did you also return the money to your mother-in-law? Appellant: Yes.
Trial: Do you mean to say that the 3.5% of the monthly interest is the money you paid back to your mother-in-law and is also regarded as the money you paid back to the appellee?
Appellant: Yes.
15 “Trial” refers to the Court Undertaker who is described in the transcript as Chen Lifu, one of the three judges, “Appellee” to Baoshan’s lawyer, “Appellant” to William’s lawyer and Baoshan to Baoshan.
Trial: Appellee, have you got the 450,000 yuan for these two IOUS? Appellee: Got it.
Trial: What about the interest on these two ious?
Appellee: The interest and principal are repaid by the appellant, but the appellant asked me to borrow these two sums of money, and the appellant said that the principal and interest would be repaid by him.
Trial: Appellant, do you accept the fact that you asked the appellee to borrow the two funds from your mother-in-law, with the principal and interest paid by you?
Appellant: Yes.
Appellee: So the appellant's mother-in-law has written me a note saying that the money has been paid off, but I don't know whether the appellant has paid back the principal and interest.
Appellant: Appellee, you borrowed money from Li Dehan for the first time on February 4, 2010, right?
Tan Baoshan: February 4, 2010 was written when I took the second installment [sic]of money. The first installment [sic] was in 2009.
Appellee: This question is also clearly written in our defence statement.
Trial: Due to time constraints, today's questioning activities end here. If necessary, the court will organize another questioning.
[emphasis added].
[38] The IPC issued its decision approximately two months later holding that the transfer of RMB 690,000 from Ms Li to Baoshan on 8 April 2009 was part of the RMB 900,000 loan from Ms Li to Baoshan for which a loan receipt was issued in February 2010.
[39] No evidence is given of a further hearing so it appears there is a basis for William’s submission that only one question was allowed in cross-examination of Baoshan on this issue (see italics above). William submits that the opportunity to cross-examine was particularly important in this case as the parties’ relationship was complex and largely undocumented. The transcripts of the hearings and the PRC judgments confirm this characterisation.
[40] Baoshan’s evidence as recorded in the IPC transcript above appears to be inconsistent with his evidence in the lower court as the District People’s Court (DPC) judgment and the transcripts of the three DPC hearings record that the Court asked Baoshan several times about repayments and Baoshan replied that William repaid
RMB 900,000 on 4 February 2010 through the loan by Ms Li, with no mention of RMB 690,000 having been paid in April 2009.
[41] In Baoshan’s opposition to William’s appeal to the IPC, a copy of which is annexed to the affidavit in reply, Baoshan says several times that the two payments amounting to RMB 606,000, were interest on the “RMB 900,000 loan from 8 April 2009.” But this does not make sense as even on his version only RMB 690,000 was paid in April 2009, not RMB 900,000.
[42] In further support of his position, William annexes a WeChat message on 14 October 2020 when Baoshan messaged William to say William’s apartment needed to be sold as the Court was asking for it to be sold by auction. William replied attaching a copy of the proof of payment for RMB 690,000 by Ms Li in April 2009 with the accompanying message translated as follows:
Baoshan, God is watching what people do. How can you have the nerve?? No need to say that you let down my trust to you. Didn’t you let down Ms Li who passed away?
[43] If the IPC was misled by Baoshan in relation to the RMB 690,000 payment, other findings of the IPC may be affected as the IPC held that the two payments made on behalf of William of RMB 250,000 on 2 February 2010 and RMB 356,000 on 10 February 2010, totalling RMB 606,000, were interest on the RMB 900,000 loan extended by Ms Li. This finding appears to depend on the IPC finding that part of the RMB 900,000 loan was first extended in April 2009. If instead the RMB 900,000 loan was first extended on 4 February 2010, as William says is the correct position, then the two payments of RMB 250,000 on 2 February 2010 and RMB 356,000 on 10 February 2010 appear unlikely to be interest given the loan was only extended on 4 February 2010.
[44] It is useful at this point to consider the Court of Appeal’s decision in Svirskis v Gibson as it discusses the type of evidence relevant to the fraud exception.16 That decision was in relation to an application to set aside the registration of a judgment of the Queensland Court and involved consideration of whether a direction
16 Svirskis v Gibson, above n 13.
ought to be given under r 23 of the Reciprocal Enforcement of Judgments Rules 1935 directing an issue to be tried as to whether the Queensland judgment had been obtained by fraud. Although the question of whether there is an arguable defence based on the fraud exception arises at common law in this case, similar considerations apply.
[45]The Court of Appeal held:17
The power under r 23 to direct an issue is discretionary. In deciding whether a case strong enough to justify such a direction has been made out, the court would be entitled, we think, to have regard to all the circumstances of the case: including whether the defendant is merely seeking to try again on substantially the same evidence issues already adjudicated on in the overseas court; and whether the defendant deliberately refrained from appearing in that court. If he did so refrain, another relevant consideration must be what he should have foreseen as the probable consequences. If a defendant had adequate notice of the nature of the evidence likely to be given by the plaintiff yet did not avail himself of the opportunity of contradicting it, he may have difficulty in persuading the New Zealand court to exercise the discretion in his favour.
[46] The Court of Appeal referred to an earlier case, Syal v Heyward,18 in which the Court held that it was not bound to direct an issue unless satisfied a prima facie case of fraud on the foreign court is established. The Court said that they did not regard that statement as proposing any mechanical or rigid test or as excluding the considerations mentioned above.
[47]The Court of Appeal then discussed the evidence in Svirskis and said:19
Obviously there could be explanations for this omission other than fraud on the part of the plaintiff, but no explanation has yet been given. The reply on behalf of the plaintiff to the defendant's allegations of fraud consists in essence of nothing more than a documented account by his solicitor of the Queensland proceedings. There has been no explanation by the plaintiff of how he arrived at the opinion about value which he put forward at the Queensland hearing.
…
Perhaps an affidavit by the plaintiff in reply to the defendant's charges could have dispelled uneasiness; but there has been none and in these circumstances the plaintiff should not be permitted to avoid an issue merely by pointing to what happened and what was deposed to in the Queensland action.
[48]Very similar comments can be made here.
17 Svirskis v Gibson, above n 13, at 10.
18 Syal v Heyward [1948] 2 KB 443.
19 Svirskis v Gibson, above n 13, at 11.
[49] Although Baoshan has filed evidence in reply, he does not give a direct account, rather he offers a recounting of what was told to the IPC. Furthermore, he does not answer key parts of William’s evidence such as when he met Ms Li. Both William and his ex-wife, Ms Fan, depose that Baoshan did not know Ms Li in April 2009, when Baoshan says that he told the IPC he first had discussions with Ms Li resulting in the RMB 900,000 loan. As discussed above, Baoshan’s evidence before the IPC does not appear to be so clear as the transcript does not say Baoshan talked to Ms Li then.
[50] If there was a genuine credibility contest between the parties in the foreign court, then it may be more difficult to rely on the fraud exception. But where inconsistencies in the statements made by one of the parties raises questions as to whether that party has been dishonest in their evidence to the Court, then the fraud exception may apply.
[51] Furthermore, Baoshan has not provided copies of the documents admitted in the appeal as evidence, especially the loan acknowledgement slip, in circumstances where William deposed he was unable to obtain copies of these documents.
[52] Following the IPC decision, William appealed to the HPC for a retrial, but the application was declined. A copy of the HPC decision is annexed to Baoshan’s first affidavit. However, a copy of William’s application for retrial is not included in the documents annexed nor any other surrounding documents.
[53] Baoshan relies on a decision of the New South Wales Supreme Court, Bao v Qu; Tian (No 2), to submit that William is now estopped from attempting to raise the same defence that had been dismissed by the DPC and the IPC.20 Counsel for Baoshan submits that it was held in Bao v Qu; Tian (No 2) that a plaintiff seeking to enforce a foreign court’s judgment can rely on the judgment as creating an estoppel precluding the defendant from raising any defence which was, or could have been, raised in the foreign proceeding.21
20 Bao v Qu; Tian (No 2) [2020] NSWSC 588.
21 At [30].
[54] However, the opening words of the paragraph relied on by Baoshan say “[s]ubject to certain exceptions (including fraud, as explained below), it is not open to a defendant to challenge the merits of a judgment.”22
[55] Where William is relying on the fraud exception, the fact that the issues have been raised before the PRC courts or that there has been an appeal does not mean William is estopped from raising the same defence as may have been dismissed by the PRC courts.23
[56] Whether the necessary standard for relying on the fraud exception is a prima facie case or general uneasiness, as discussed in Svirskis above, I consider that there is sufficient evidence from William that has not been answered directly by Baoshan, as well as apparent inconsistencies in the statements made by Baoshan to the DPC and then the IPC, for an explanation to be required.
[57] As the Court of Appeal held in Svirski v Gibson, there could be explanations for these omissions other than fraud on the part of the Baoshan but where no explanation has yet been given, summary judgment must be declined.24
Is there a reasonably arguable defence based on the breach of natural justice exception?
[58] Given the view I have come to in respect of the fraud exception, I do not need to consider the natural justice exception. However, I do so briefly for completeness.
[59] There is no dispute between the parties as to the applicable principles. It is well-established that a foreign judgment given in proceedings which were contrary to New Zealand conceptions of natural justice will not be recognised in New Zealand, for example where the defendant receives insufficient notice or is denied a fair opportunity to represent a defence.25
22 Bao v Qu; Tian (No 2), above n 20, at [30].
23 And see Svirskis v Gibson, above n 13, at 9-10.
24 Svirskis v Gibson, above n 13, at 11.
25 David Goddard Laws of New Zealand Conflict of Laws: Jurisdiction and Foreign Judgments (online ed) at [75].
[60] Counsel for Baoshan refers to the fact that the appeal was commenced by William on 3 December 2019 and that William would have known that a hearing would be scheduled to hear the case. However, Baoshan submits William chose to leave China to return to New Zealand in February 2020 to renew his passport when the COVID-19 epidemic had already broken out and William had the ability to renew his passport online from China. A 2013 press release from New Zealand’s Minister of Internal Affairs is annexed to Baoshan’s affidavit in reply in support of this submission.
[61] In addition, Baoshan submits that William was represented by his lawyer before the IPC, who presented evidence and argued the case on his behalf. Baoshan says any complaint about how his lawyer conducted the IPC hearing is therefore a matter for him to pursue with his lawyer and that there is no evidence William’s lawyer requested an adjournment of the IPC hearing or for William to appear at the IPC hearing via videoconference.
[62] Baoshan relies on affidavits filed in support of his summary judgment application by the lawyers acting for Baoshan in the DPC and the IPC and an expert witness, Professor Mao Lin Tang. These witnesses depose that the proceedings in the DPC and IPC followed the usual procedures and that there was nothing out of the ordinary that would give rise to an exception upon which judgment should be denied.
[63] William’s evidence is that he was unable to attend the IPC hearing because of the Covid-19 epidemic following the return to New Zealand to renew his passport. The evidence filed on behalf of Baoshan apparently showing that passports could be renewed online is not very specific and was only filed in reply so William’s response is not before the Court.
[64] Perhaps more significantly, Baoshan deposes in his affidavit in reply that William’s lawyer “could have cross-examined me” but the transcript of the IPC hearing appears to show that this may not have been the case.
[65] The expert witness for Baoshan, Professor Mao Lin Tang, filed her affidavit prior to Baoshan’s affidavit in reply and only refers to having reviewed the first
affidavits filed and the DPC, IPC and HPC decisions annexed. Professor Tang does not therefore appear to have considered the IPC transcript and so has not commented on the early end to the cross-examination that the transcript appears to show.
[66] As set out above, the natural justice exception extends to a defendant having a fair opportunity to present a defence.
[67] Given the extent of the cross-examination apparently allowed, I consider that it is reasonably arguable that William did not have a fair opportunity to present his defence on the appeal. As a consequence, the plaintiff’s application for summary judgment also fails on the basis of the natural justice exception.
[68] Finally, I record that because of the issue with cross-examination, I do not need to determine whether William’s alleged inability to attend the IPC hearing in circumstances where he was represented by a lawyer would be sufficient to rely on the natural justice exception and so refrain from doing so.
Result
[69]Baoshan’s application for summary judgment is declined.
Costs
[70] The usual position where summary judgment is declined is to reserve costs until determination of the substantive proceeding.26
[71] In this case it appears that once the amended notice of opposition and affidavits in support were filed, Baoshan perhaps ought to have reconsidered his position in respect of the summary judgment application. My preliminary view is that costs therefore may be payable from that date on, including for the preparation of submissions and the hearing itself.
26 NZI Bank Ltd v Philpott [1990] 2 NZLR 403.
[72] I ask the parties to confer and only if costs cannot be agreed for memoranda of no more than three pages (excluding schedules) to be filed, on behalf of the defendant by 6 December 2024 and the plaintiff by 13 December 2024.
Associate Judge Sussock
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