Tian v Xu - [2023] NZHC 2443

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-735

[2023] NZHC 2443

BETWEEN
YANG TIAN

Plaintiff/Respondent

AND

CHEN XU

First Defendant/First Applicant

KNOX X TRUSTEE LIMITED

Second Defendant/Second Applicant

Hearing: 30 August 2023

Counsel:

C Huang for Plaintiff K Sun for Defendants

Judgment:

30 August 2023

Reasons:

4 September 2023

REASONS FOR JUDGMENT OF LANG J

[application for discharge of freezing orders]

This judgment was delivered by Justice Lang On 4 September 2023 at 11.00 am

Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:
Great Wall Lawyers, Auckland Capstone Law Ltd, Auckland

TIAN v XU [2023] NZHC 2443 [4 September 2023]

[1] In this proceeding the plaintiff, Mr Tian, applies for summary judgment to enforce judgments he has obtained in China against the respondent, Mr Xu. Mr Xu is a New Zealand resident but has been living in China since 2019. He was served with the proceeding by way of substituted service but has now instructed counsel in New Zealand to oppose the application for summary judgment. The application will be heard on 13 November 2023.

[2] On 26 May 2023, Mr Tian obtained freezing orders over Mr Xu’s assets on a without notice basis.1 These included his bank accounts and the shares that he owns in the second applicant, Knox X Trustee Ltd (Knox X Trustee). That company owns a residential property (the property) that was to be sold on 31 August 2023. The property was also subject to the freezing order. In the event that the property was sold to a third party in an “arms length” transaction, the sum of $592,227.65 from the net sale proceeds was to be subject to a freezing order.

[3] Mr Xu and Knox X Trustee applied for an order discharging the freezing order to the extent that it affected the sale proceeds. This was opposed by Mr Tian. At the end of the hearing on 30 August 2023 I dismissed the application and now give my reasons for doing so.

Background

The loans

[4] Between 2015 and 2019, Mr Tian loaned the sum of RMB 15,097,100 to Mr Xu. In addition, he loaned the sum of RMB 650,000 to Mr Xu’s business associate, Mr Zhang. Mr Xu personally guaranteed this loan. At that stage he and Mr Tian were close friends and Mr Tian did not require Mr Xu to pay interest on the loan.

[5] Mr Xu and Mr Tian signed a “loan details” agreement on 7 January 2020. This document contained an acknowledgement by Mr Xu that he had received loans from Mr Tian totalling RMB 15,747,100. The loan by Mr Zhang has never been repaid. The loan outstanding by Mr Xu has been repaid in part through the sale of a property owned by Mr Xu in China. The Lubei District People’s Court of Tangshan City in the

1 Tian v Xu [2023] NZHC 1261.

People’s Republic of China’s Hebei Province (the…

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 Tian v Xu

Details

AGLC: Tian v Xu [2023] NZHC 2443
Case: [2023] NZHC 2443
Decision Date: 30 August 2023

CaseChat Overview and Summary

The High Court of New Zealand, Auckland Registry, was presented with an application for the discharge of freezing orders over assets belonging to Chen Xu and Knox X Trustee Ltd (Knox X Trustee), a company of which Mr Xu is the sole shareholder. The plaintiff, Yang Tian, sought to enforce judgments obtained against Mr Xu in China through these orders. Mr Xu and Knox X Trustee applied to discharge the freezing orders to allow the sale proceeds of a property owned by Knox X Trustee to be utilised for the purchase of another property. This application was opposed by Mr Tian.

Legal issues included whether Mr Tian had a good arguable case for retention of the freezing orders and whether there was a risk of dissipation of the sale proceeds if the orders were discharged. The court applied the tests established in relevant case law and statutory provisions. It found that Mr Tian had established a good arguable case for claims against Knox X Trustee under certain sections of the Property Law Act 2007. The court concluded that there was a significant risk that the sale proceeds would be dissipated if the freezing orders were discharged, and the balance of convenience favoured retention of the orders. Therefore, the application for discharge of the freezing orders was dismissed. Knox X Trustee was granted leave to apply for an order permitting the use of sale proceeds for the purchase of a replacement property, subject to compliance with the Overseas Investment Act 2005. Mr Tian was awarded costs on a category 2B basis.

Orders