Tian v Xu
[2023] NZHC 3259
•17 November 2023
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2023-404-735
[2023] NZHC 3259
BETWEEN YANG TIAN
Plaintiff
AND
CHEN XU
Defendant
Hearing: 13 November 2023 Counsel:
C Huang for the Plaintiff
No appearance for the Defendant
Judgment:
17 November 2023
JUDGMENT OF ASSOCIATE JUDGE BRITTAIN
This judgment was delivered by me on 17 November 2023 at 12 midday.
Pursuant to Rule 11.5 of the High Court Rules.
…………………..
Registrar/Deputy Registrar
Solicitors:
Great Wall Lawyers, Auckland Capstone Law Limited, Auckland
TIAN v XU [2023] NZHC 3259 [17 November 2023]
Introduction
[1] The plaintiff, Yang Tian, seeks summary judgment to enforce two foreign judgments of the Lubei District People’s Court of Tangshan City, Hebei Province (LDPC) of the People’s Republic of China (PRC), against the defendant, Chen Xu, relying on this Court’s inherent jurisdiction to enforce foreign judgments.1
[2] Mr Xu has filed a notice of opposition and affidavit opposing recognition of the judgments on the grounds that: the PRC courts that issued the judgments are not courts of judicature; the judgments are not final and conclusive; and the proceedings involved breaches of natural justice.
[3] Mr Xu’s notice of opposition and affidavit were prepared by his solicitor and counsel, Mr Sun. On 9 November 2023, I made orders declaring that Mr Sun had ceased to be the solicitor on the record for Mr Xu, and confirming that the hearing of the application for summary judgment would proceed on 13 November 2023.
[4] There was no appearance by or on behalf of Mr Xu when this matter was heard on 13 November 2023.
Background to the judgments
[5] From 2015 to 2019, Mr Tian provided loans to Mr Xu, and to Mr Xu’s business associate Nan Zhang. The loan to Mr Zhang was guaranteed by Mr Xu.
[6] In July 2021, Mr Tian commenced a proceeding against Mr Xu in the LDPC to recover the amount outstanding on the Xu loans (the Xu proceeding).
[7] On 30 August 2021, Mr Tian and Mr Xu attended a judicial mediation conducted by the LDPC. Mr Tian and Mr Xu agreed terms of settlement, which were recorded in a document issued by the LDPC the same day.
1 The judgments are not capable of registration under the Reciprocal Enforcement of Judgments Act 1934 or s 172 of the Senior Courts Act 2016.
[8] Dr Zhixiong Liao, a member of the New Zealand Society of Translators and Interpreters and an expert on Chinese law, gave affidavit evidence for Mr Tian. Dr Liao translated the title of the document issued by the LDPC to be “Civil Mediation Settlement Agreement Confirmation.” For ease of reference, I will refer to that document as the Confirmation.
[9] The Confirmation recorded that the debt of RMB 2,887,249.34 was to be repaid by 1 September 2021, together with interest. Mr Xu failed to comply with the terms of the Confirmation.
[10] On 26 October 2021, the Intermediate People’s Court of Tangshan City, Hebei Province (IPC) issued a document requiring Mr Xu to immediately perform the Confirmation. Dr Liao has translated the title of the document as “Enforcement/Execution Notice.” For ease of reference, I refer to that document as the Execution Notice.
[11] Mr Xu failed to comply with the Execution Notice, resulting in the IPC issuing a further enforcement ruling on 23 May 2022, ordering the sale of real estate owned by Mr Xu. Mr Tian received RMB 1,170,651 from the proceeds of sale, leaving the amount of RMB 1,716,589.34 outstanding under the Confirmation and the Execution Notice, together with interest.
[12] In September 2021, Mr Tian commenced a separate proceeding against Mr Zhang and Mr Xu in the LDPC, seeking recovery of the outstanding balance on the Zhang loan (the Zhang proceeding).
[13] On 18 May 2022, the LDPC issued a document requiring Mr Zhang to repay the loan of RMB 650,000 to Mr Tian, together with interest, and recording that Mr Xu was jointly and severally liable for the debt. Dr Liao has translated the title of the document to be “Civil judgment”. For ease of reference, I refer to that document as the Judgment.
[14] Mr Tian seeks to enforce the Confirmation and the Judgment against Mr Xu in New Zealand.
Legal Principles
Enforcement of a foreign judgment
[15] The legal test for recognition and enforcement of an unregistered foreign judgment in this Court comprises three prerequisites:2
(a)the foreign court must have had jurisdiction to give judgment;
(b)the judgment must be for a definite sum of money; and
(c)the judgment must be final and conclusive.
[16] The burden of establishing these prerequisites lies on the party seeking to enforce the foreign judgment.
If this test is met, there are three settled exceptions to recognition, where:3
(a)the judgment was obtained by fraud;
(b)enforcement of the judgment would be contrary to public policy; or
(c)the proceedings in which the judgment was obtained were contrary to natural justice.
[18] A foreign judgment is not otherwise impeachable on its merits for error of fact or law. The burden lies on the party seeking to impeach the judgment.4
Summary judgment
[19] The Court may give judgment against a defendant if satisfied that the defendant has no defence to a cause of action in the statement of claim.
2 Eilenberg v Gutierrez [2017] NZCA 270, [2017] NZFLR 471 at [30].
3 At [30].
4 Kemp v Kemp [1996] 2 NZLR 454 (HC) at 458.
[20] The leading authority on applications for summary judgment is Krukziener v Hanover Finance Ltd.5 The Court of Appeal set out the following principles:6
(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. The Court must be left without any real doubt or uncertainty.
(b)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.
(c)The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as, for example, where the evidence is not consistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable. 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.
[21] The defendant is under an obligation to lay a proper foundation for the defence in the affidavits filed in support of the notice of opposition.7
[22] It is well established that if the defendant fails to provide an evidential foundation for a defence, then the plaintiff’s verification of the statement of claim stands unchallenged and ought to be accepted, unless it is patently wrong.8
5 Krukziener v Hanover Finance Ltd [2008] NZCA 187, (2008) 19 PRNZ 162.
6 At [26].
7 Middleditch v New Zealand Hotel Investments Ltd (1992) 5 PRNZ 392 (CA) at 394.
8 Australian Guarantee Corp (NZ) Ltd v McBeth [1992] 3 NZLR 54 (CA) at 58–59.
Analysis
Is the LDPC a foreign court of judicature with jurisdiction to give judgment?
[23] The thrust of Mr Xu’s argument is that the PRC courts are not courts of judicature due to fundamental matters such as inadequate separation of powers, and political interference in judicial decision-making.
[24] The issues raised by Mr Xu can fairly be characterised as an attack on the PRC courts generally, relying on observations of this Court in two interlocutory decisions in Hebei Huaneng Industrial Development Co Ltd v Shi.9
[25] Regarding this sort of broad attack on the Chinese judicial system, I favour the approach of Associate Judge Bell in the Hebei Huaneng Industrial Development Co Ltd litigation:10
[58] As to the complaint of improper outside interference in the court’s decisions, it would be an over-reaction to refuse to recognise all Chinese courts, because at times decisions have been made not because of the merits of a case, but because the judges consider that they must meet the expectations of the local people’s congress or branch of the Communist Party. In a proceeding to enforce the judgment of a Chinese court, the better approach is to see whether justice was done in the particular case. Instead of saying that China does not have courts, the inquiry is whether the judgment debtor has any of the standard affirmative defences, including breach of natural justice.
[59] That is borne out by the way that courts in common law jurisdictions have dealt with proceedings to enforce Chinese money judgments. They have not refused carte blanche to enforce the judgments but have considered in the particular case whether to enforce the Chinese judgment. As far as I am aware, this is the first case where it has been argued that in contemporary China there are no courts, as we understand them.
[26] Mr Xu faces evidential difficulties. Firstly, Mr Xu has not adduced any expert evidence to support his attack on the judicial system of Hebei Province. In his affidavit, Mr Xu makes averments regarding political input into decisions in the Chinese judicial system, largely replicating arguments advanced in the Hebei Huang
9 Hebei Huaneng Industrial Development Co Ltd v Shi [2020] NZHC 2992; Hebei Huaneng Industrial Development Co Ltd v Shi [2021] NZHC 2687; and see also Hebei Huaneng Industrial Development Co Ltd v Shi [2022] NZCA 534.
10 Hebei Huaneng Industrial Development Co Ltd v Shi [2020] NZHC 2992 at [58] and [59] (footnotes omitted).
Industrial Development Co Ltd litigation. Mr Xu is not a competent witness to give such opinion evidence.
[27] Secondly, the context of the dispute in this case is debt collection between private citizens. It is difficult to envisage the PRC government having any interest in the outcome of the Xu and Zhang proceedings.
[28] Thirdly, both the Confirmation and the Judgment were issued by a single judge. There is nothing on the face of the Confirmation or the Judgment to suggest any input from any non-judicial source into the decision-making.
[29] The only evidence from Mr Xu directed to the specific proceedings in question in this case is his assertion that:
The applicant is a very powerful individual in China. I understand the applicant has significant influence with judicial committees. I believe the Xu Proceedings and Zhang Proceedings may have been referred to judicial committees behind the scenes.
[30] Mr Xu has not provided any particularised evidence regarding political power that Mr Tian may wield in China. The comment regarding Mr Tian’s influence with judicial committees, and any role that a judicial committee may have had in the Confirmation and Judgment, is nothing more than baseless speculation.
[31] Mr Xu’s evidence is insufficient to discharge the evidential onus on Mr Xu in the context of Mr Tian’s application for summary judgment.
Are the judgments for a definite sum of money?
[32] Mr Xu did not raise any issue of this nature. The Confirmation and the Judgment set out the exact amount of the principal for which judgment was entered, and the interest rates applicable.
Are the Confirmation and the Judgment final and conclusive?
[33] I accept that Dr Liao is qualified to give expert evidence on Chinese law. Dr Liao’s opinion is that the People’s Court of the PRC is, in principle, required to
conduct a judicial mediation on the basis of voluntary participation by the parties and where the facts and legal relationship between the parties are clear.
[34] In the case of the Xu proceeding, the terms agreed by the parties at mediation were formalised by a judge at the conclusion of the mediation, by the issue of the Confirmation. Mr Liao describes this as a court judgment made with the consent of the parties, and he says it is equivalent to a court judgment once it is served on the parties.11
[35] I note the following features of the form of the Confirmation, as translated by Dr Liao:
(a)It records the parties’ names, and legal representation, if any.
(b)It records the date of the filing of the claim, and the type of procedure adopted.
(c)It records the relief sought by the plaintiff, Mr Tian.
(d)It summarised the facts and grounds in support of the claim.
(e)It records that the parties voluntarily reached an agreement, and then records the agreed terms.
(f)It states:
The above agreement does not violate the law, and this court confirms/approves it …
This mediation agreement shall have legal effect after the parties sign or seal the record and the court confirms it.
(g)It is signed by the presiding judge, and has the official seal of the LDPC affixed to it.
11 In Yoonwoo C & C Development Corp v Huh [2023] NZHC 1395, Duffy J recognised consent judgments of a Korean court entered following a judicial conciliation hearing in the court in question.
[36] The Confirmation bears the hallmarks of a consent judgment. Dr Liao’s evidence is that under Chinese law, the Confirmation became enforceable as a judgment after it was served on the parties.
[37] In his affidavit in opposition, Mr Xu confirms the history of the Xu proceeding as summarised in this judgment, including the enforcement steps taken by Mr Tian. Mr Xu takes no issue with service of the Confirmation.
[38] Mr Xu argues that the judgment was not conclusive, due to the operation of Chinese law on the enforcement of guarantees. Mr Xu offers no expert evidence in support of his argument, which appears to relate to the grounds for discharge of a guarantor, and the application of limitation periods, before a judgment is entered. Mr Xu has failed to discharge the evidential onus on him in respect of this ground of opposition. I accept Dr Liao’s evidence that the Confirmation was final and conclusive in the PRC, as a matter of law, once it was served on the parties.
[39] I find that the LDPC is a foreign Court that had jurisdiction to give judgment in the Xu proceeding and the Zhang proceeding. The Confirmation and the Judgment relate to fixed sums of money, and are final and conclusive. It is appropriate that this Court recognise and enforce the Confirmation and the Judgment unless one of the exceptions applies.
Natural justice
[40] The only exception to recognition raised by Mr Xu’s opposition is that the proceedings were contrary to natural justice.
[41] In respect of the Xu proceeding, Mr Xu says that he was not represented by a lawyer, and at the mediation he was not advised by the presiding judge of the implications of entering into the Confirmation.
[42] I reject these assertions by Mr Xu, as they are inconsistent with the face of the Confirmation. The Confirmation records in plain terms what was “voluntarily” agreed between the parties, and the Confirmation required Mr Xu’s signature before it became operative. There is no record of Mr Xu taking any issue with the Confirmation during
the enforcement steps commenced by Mr Tian in the LDPC and IPC, which resulted in the forced sale of real estate owned by Mr Xu.
[43] Regarding the Zhang proceeding, Mr Xu says that he was not represented by a lawyer and that he was not given a fair opportunity to present his case.
[44] The Judgment records that Mr Xu attended a summary hearing. Mr Xu’s arguments in support of his defence to the claim are summarised in the Judgment, including an acknowledgement of his role as guarantor. The Judgment records that the evidence included a certificate issued by Mr Xu, confirming that he had guaranteed the borrowing of Mr Zhang.
[45]There is no evidential foundation for a natural justice challenge.
Result
[46] This is an appropriate case for the Court to recognise the Confirmation and the Judgment.
[47] I enter Judgment for the plaintiff against the defendant for the following amounts:
(a) RMB 1,716,589.34;
(b)interest at the rate of 3.85 % per annum on the sum of RMB 2,887,240.34 for the period 2 September 2021 to 8 October 2022;
(c)interest at the rate of 3.85 % per annum on the sum of RMB 1,716,589.34 from 9 October 2022 to the date of repayment;
(d) RMB 650,000;
(e)interest on the sum of RMB 650,000 at the rate of 3.85 % per annum for the period from 8 September 2021 to 28 May 2022;
(f)interest on the sum of RMB 650,000 at the rate of 7.7 % per annum for the period from 29 May 2022 to the date of repayment; and
(g)costs on a 2B basis together with disbursements as fixed by the Registrar.
Associate Judge Brittain
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