Wu v Chen - [2025] NZHC 173

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-001103

[2025] NZHC 173

BETWEEN
LINZHEN WU

Plaintiff

AND

JUN CHEN

First Defendant

YANG CAO

Second Defendant

Hearing: 12 February 2025

Appearances:

J Taylor for the Plaintiff

A V Shinkarenko for the Defendants

Judgment:

18 February 2025

JUDGMENT OF ASSOCIATE JUDGE COGSWELL

This judgment was delivered by me on 18 February 2025 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date.......................................

Solicitors:

Bylatus Legal, Auckland Forest Harrison, Auckland

A Shinkarenko, Auckland

WU v CHEN [2025] NZHC 173 [18 February 2025]

Introduction

[1]The plaintiff seeks summary judgment against the first and second defendants.

[2]The first defendant opposes summary judgment.

[3] The second defendant has been served by substituted service. An affidavit of service of the proceedings on the second defendant has been filed. I am satisfied that service was affected on the second defendant in terms of the order for substituted service. The second defendant has taken no steps.

The claim

[4]The plaintiff’s claim is straightforward.

[5] The plaintiff seeks judgment for an advance (Advance) made to the first defendant which he has failed to repay. The terms of the Advance are set out in a deed of acknowledgement of debt (Deed) between the plaintiff, the first defendant and the first defendant’s wife.

[6]The relevant terms of the Deed are:

(a)the Advance was $1.5 million;

(b)the borrowers were the first named defendant and his wife, Ping Zhu;

(c)the repayment date was 7 June 2022;

(d)interest was payable at the rate of 25 per cent per annum; and

(e)the first defendant and his wife’s family home was offered as security for the Advance.

[7]The Advance was not repaid on the repayment date.

[8] The terms of the Deed were then varied by a deed of variation (Variation Deed). The Variation Deed is between the plaintiff, the first defendant and his wife and Cao Yang, the second defendant.

[9]The relevant terms of the Variation Deed are:

(a)the first defendant’s wife was released from liability as a borrower— clause 2.1.2;

(b)the first defendant and his wife’s family home was released as security for the advance;

(c)the second defendant became a joint obligor with the first defendant;

(d)the date for repayment of the Advance was extended to 7 June 2023;

(e)the applicable interest rate was changed to 15 per cent per annum from the date of the Variation Deed to the date of actual repayment; and

(f)the new borrower provided his shares in Binary Group Limited (Binary) and granted a right to purchase properties owned by Binary as security for the Advance.

[10] The first and second defendants did not repay the Advance on the new repayment date.

[11] Demand was made on both defendants to repay the Advance on 30 October 2023.

[12]Neither defendant has repaid the Advance.

Approach to summary judgment

[13] The Court may grant summary judgment under r 12.2…

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.

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Details

Case: [2025] NZHC 173
Decision Date: 18 February 2025

CaseChat Overview and Summary

The High Court of New Zealand in Auckland heard the case of Linzhen Wu against Jun Chen and Yang Cao, where Wu sought summary judgment for an unpaid loan of $1.5 million made to Chen. The loan, detailed in a Deed of Acknowledgement of Debt, was not repaid on its due date of June 7, 2022, and subsequent variations of the agreement did not relieve Chen of his obligation to repay the loan. The court assessed the arguments put forward by Chen that the Variation Deed released him from liability, but dismissed this claim on the basis that the documents clearly indicated Chen's continued liability for the loan. The court also rejected Chen's arguments that the plaintiff's actions in China and the so-called "Sunlight transaction" were relevant to his liability in New Zealand.

The court held that the documents governing the loan clearly stated Chen's ongoing obligation to repay the loan, and Chen's submissions regarding his subjective understanding of the agreements were irrelevant. Chen's contention that the Variation Deed constituted a novation, which would have released him from liability, was also rejected. The court found that the Variation Deed did not transfer the obligation to a third party or release Chen, but merely added a new borrower and changed some terms of the loan. The court concluded that Chen had no arguable defence to Wu's claim and granted summary judgment in favour of Wu against both Chen and Cao, ordering them to repay the loan with interest and costs.

The final orders of the court included judgment for the principal amount of $1.5 million, interest at specified rates from the original due date to the date of judgment, and costs. The court also noted that if the parties could not agree on the costs, they could submit written arguments for the court's determination. This case highlights the importance of clear contractual language and the court's willingness to enforce agreements as written, without considering subjective interpretations of the parties involved.

Orders