Wei v Wu

[2022] NZHC 1057

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-524

[2022] NZHC 1057

BETWEEN

ZIXIN WEI

Plaintiff

AND

JIACI WU

First Defendant

XIANGYU CHEN
Second Defendant

PENG XIE
Third Defendant

BOGONG ZHENG

Fourth Defendant

Hearing:	11 May 2022
Appearances:	C LaHatte for the plaintiff D Mitchell for Mr Chen
Judgment:	16 May 2022

JUDGMENT OF ROBINSON J

This judgment was delivered by me on 16 May 2022 at 9:00am pursuant to Rule 11.5 of the High Court Rules

…………………………………………………………………… Registrar/Deputy Registrar

Solicitors/Counsel:

Ord Legal, Wellington

C LaHatte, Barrister, Wellington DM Law, Auckland

WEI v WU [2022] NZHC 1057 [16 May 2022]

Introduction

[1]    This is an application for pre-commencement discovery. The application came before me in the Duty Judge List on Wednesday 11 May 2022.

Background

[2]    The applicant lives with her 15-month-old son at 1 Chapletown Drive, East Tamaki, Auckland 2016 (Property). The applicant’s husband and father of her son, Mr Wu, is the sole registered proprietor of the Property. He no longer lives at the property, having left in February 2022 and not come back.

[3]    The applicant deposes that although Mr Wu is the sole registered proprietor of the Property it was purchased with $800,000 borrowed from her parents. The balance of the purchase price (approximately $500,000) was borrowed from ANZ. The ANZ loan was secured by a first ranking mortgage over the Property and serviced by the applicant’s parents. She says her name was not put on the title because at the time the terms of student visa precluded her from owning property in New Zealand. The applicant’s evidence includes a translation of a letter from Mr Wu’s parents confirming that the house in which he lived with the applicant was purchased with funds borrowed from her parents.

[4]    Mr Chen now has a first ranking registered mortgage over the Property. The Certificate of Title shows that his mortgage was registered on 8 July 2021. ANZ’s mortgage was discharged on the same day which suggests that Mr Chen effectively refinanced ANZ.

[5]    On 8 February 2022 the applicant lodged a Notice of Claim of Interest over the Property pursuant to section 42(2) of the Property (Relationships) Act 1976.

[6]    On 18 February 2022 Peng Xie lodged a caveat against dealings against the title to the Property. On 21 February 2022 Bogong Zheng did the same. The applicant is unaware of any basis upon which either of them could claim a caveatable interest in the Property.

[7]    On 9 March 2022 Mr Chen served a Property Law Act Notice (PLAN) on Mr Wu demanding payment of $1,320,850 within 40 working days failing which Mr Chen would be empowered to take possession of the property and sell it. The amount demanded demonstrates that Mr Chen’s advances to Mr Wu were far in excess of what was required to refinance ANZ.

Application

[8]    The applicant now applies for pre-commencement discovery against each of Mr Wu; Mr Chen; Mr Xie and Mr Zheng. She seeks discovery of documents relating to the advance of funds to Mr Wu, AML compliance documents, trust account records and any other documents relating to the property. She says that she requires these documents in order to bring proceedings against Mr Wu. She says she has no knowledge of the advances he has received using the Property as security, and that as such it is impossible or impracticable to formulate her claim without the documents sought.

Service

[9]    An affidavit of service sworn by a lawyer acting for the applicant shows that service has been attempted on each Messrs Wu, Chen, Xie and Zheng in the following ways:

(a)Mr Wu: Sending an email to Mr Wu’s solicitor, Joy Yuan at Turner Hopkins. On 13 April 2022 Ms Yuan advised Ms Wei’s lawyers that she had no instructions to act on that matter but that she would check with Mr Wu and seek instructions. Counsel for the applicant, Mr LaHatte, advises that they have not heard back from Turner Hopkins since then. On 13 April 2022 the applicant’s lawyers also sent an email to an email address which Mr LaHatte ways the applicant understands to be her husband’s personal email address. No response has been received.

(b)Mr Chen: Mr Chen was served in the same email via his solicitors. He has responsibly instructed Mr Mitchell and filed a Notice of Opposition and a supporting affidavit (discussed further below).

(c)Mr Xie: The applicant’s lawyers attempted to serve Mr Xie via his lawyer, Eva Ho at Focus Law. Ms Ho’s email in reply dated 12 April 2022 advised that she was not authorised to accept service and had no instructions to act on the matter.

(d)Mr Zheng: The applicant’s lawyers attempted to serve Mr Zheng by email to Peter Zhang at Forest Harrison on 12 April 2022. No response has been received.

[10]   The applicant’s evidence is that when Mr Wu did not come home in February 2022 she told the Police he was missing. However, the Police were able to confirm he is still in Auckland. He appears to have signed an acknowledgment of service of the PLAN on 9 March 2022. It is also clear that he has previously instructed Turner Hopkins.

[11]   In these circumstances I indicated to Mr LaHatte that if the applicant were to file evidence to satisfy the Court that the application had been sent to Mr Wu’s personal email address I would be inclined to make deemed service orders in respect of the application.

[12]   As for Messrs Xie and Zhong, Mr LaHatte asked that the application for pre- commencement discovery against them be adjourned to enable further steps to be taken to serve them. I direct accordingly.

Mr Chen’s opposition

[13]   As noted Mr Chen filed a Notice of Opposition and supporting affidavit. He opposes the application on the basis that:

(a)the applicant is not entitled to bring a claim against him;

(b)if the applicant does have a claim against him it is not impossible or impracticable for the plaintiff to formulate the plaintiff’s claim without reference to the documents sought;

(c)the applicant should be able to obtain the documents she seeks from Mr Wu; and

(d)the orders are unnecessary because the documents sought are confidential.

[14]   When the matter was called (at the end of a relatively short Duty Judge List) Mr Mitchell asked that a fixture be allocated for the matter to be heard. Whilst that would be the usual course it appeared to me that there was some degree of urgency to the matter given that the PLAN had expired. I asked Mr Mitchell whether Mr Chen would be prepared to undertake not to exercise any powers that might be available to him to enforce the mortgage pending determination of the application. Mr Mitchell had no instructions to that effect.

[15]   In those circumstances, and in light of: the Court time that was available at the end of the Duty Judge List; the appearances of counsel; and the fulsome affidavit evidence I had the opportunity to read in advance, I determined that the application for pre-commencement discovery against Mr Chen could proceed.

[16]   In oral submissions Mr Mitchell emphasised that there was no basis upon which the applicant could assert a claim against Mr Chen. In that regard Mr Chen’s evidence is that he was interested in making a short-term loan secured against the property as it was a low risk investment alterative to directly investing in property. He was introduced to Mr Wu by a mutual friend who owns the Big World Internet Café in central Auckland. He agreed to lend Mr Wu $1.2m secured against the Property. His lawyers prepared a Loan Agreement, Mortgage and GSA.

[17]   When the loan went into default Mr Wu gave Mr Chen possession of a motor vehicle as supplementary security. On 6 December 2021 the loan was increased and the term was extended. Mr Chen returned the vehicle to Mr Wu. Mr Chen says that

he has only met Mr Wu twice, the first time being after the loan variation was signed in December 2021. He says he contacted the applicant in February 2022 looking for Mr Wu. He told her that if the loan was not repaid on the due date of 7 March 2022 then penalty interest of 25% would apply and the Property might be sold at mortgagee sale.

[18]   Mr Chen says he did not know “Mr Wu was having problems with his marriage and/or there was a potential relationship property claim against the Property”. He says that if he had known of these matters he would not have lent Mr Wu the money.

[19]   Mr Mitchell also submitted that the application is speculative, and that the applicant is “fishing”.

Discussion

[20]   The Court may make pre-commencement orders pursuant to r 8.20 of the High Court Rules 2016. The relevant principles are well established. Applicants must show that they may have a claim against another person; that it is impossible or impracticable to formulate the claim without reference to documents; and that there are grounds to believe the documents may be in the possession of another person.

[21]   Importantly, the person who has possession of the documents may or may not be the intended defendant. Regardless of whether or not the applicant might have a claim against Mr Chen, she says she requires the documents sought in order to formulate a claim against Mr Wu, including in relation to their relationship property.

[22]   I am satisfied that the applicant appears to have grounds to pursue a claim against Mr Wu. His mother has confirmed the applicant’s evidence that the property was bought with funds advanced by the applicant’s parents. The applicant has also explained why she is not registered as a proprietor of the Property.

[23]   I am also satisfied that it is impossible and impracticable to formulate her claim without the documents sought. She is unaware of the arrangements Mr Wu appears to have entered into with Messrs Chen, Xie and Zheng. These arrangements will be

relevant to the claim she appears to have against Mr Wu such that she cannot meaningfully formulate that claim without them.

[24]   I am also satisfied that Messrs Chen, Xie and Zheng are in possession of those documents. For his part Mr Chen has referred to: Term Loan and security documents; dealings between solicitors; and drawdown documents. It seems likely there will be other documents within the category of those the applicant has sought that will enable her to formulate her claim against Mr Wu.

[25]    Finally, Mr Mitchell may well be correct to submit that the documents Mr Chen holds are confidential to him and Mr Wu. But that confidentiality does not preclude the Court making pre-commencement discovery orders when it is otherwise appropriate to do so. Indeed, such confidentiality arrangements between an intended defendant and third party may in part be why such orders are required.

Result

[26]The application for pre-commencement discovery against Mr Chen is granted.

[27]   The application for pre-commencement discovery against Messrs Wu, Xie and Zheng is adjourned to enable the applicant to take further steps to arrange service.

[28]   The matter is to be relisted for mention in the Duty Judge List in the week of 7 June 2022. Counsel for the applicant has leave to apply further, including for any orders for deemed and/or substituted service that may be appropriate.

[29]   Mr LaHatte advises that the applicant is legally aided. In those circumstances I will not make the usual order that the applicant must pay Mr Chen’s costs of complying with the order. But nor will I order costs against Mr Chen on the application.

Robinson J