Xiao v Sun - [2018] NZHC 536

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

CIV-2015-404-2872

[2018] NZHC 536

UNDER the Credit Contracts and Consumer Finance Act 2003

BETWEEN

HANYUE XIAO

Plaintiff

AND

XIUFANG SUN

Defendant

Hearing: 24-31 July, 1-18 August and 28-29 November 2017

Appearances:

AJB Holmes and L E Mannis for the Plaintiff B OʼCallahan and M Chen for the Defendant

Judgment:

26 March 2018

JUDGMENT OF GORDON J

This judgment was delivered by me
on 26 March 2018 at 3.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors: Loo & Koo, Auckland
K3 Legal Limited, Auckland

Counsel: AJB Holmes, Auckland

XIAO v SUN [2018] NZHC 536 [26 March 2018]

TABLE OF CONTENTS

Introduction............................................................................................................... [1]
Ms Xiao’s position..................................................................................................... [8]
Ms Sun’s position................................................................................................... [113]
Ms Xiao and Ms Sun – a credibility contest.......................................................... [169]
The evidence of Ye Shinkarenko........................................................................... [173]
SkyCity records..................................................................................................... [195]
Financial analysis................................................................................................... [240]
Evidence of Mr White........................................................................................... [241]
Evidence of Mr Browning..................................................................................... [275]
Cash available to Ms Sun...................................................................................... [285]
Other evidence regarding charging of interest....................................................... [312]
WeChat messages – allegations of fabrication and deletion................................. [327]
WINZ application forms........................................................................................ [349]
Ms Xiao’s evidence............................................................................................... [380]
Ms Sun’s involvement with others at SkyCity...................................................... [387]
Amount received by Ms Xiao from Ms Sun.......................................................... [389]
Causes of action..................................................................................................... [392]
Illegal contracts..................................................................................................... [395]
CCCFA non-disclosure.......................................................................................... [459]
CCCFA oppression................................................................................................ [480]
Counterclaim.......................................................................................................... [491]
Conclusion............................................................................................................. [492]
Orders and declarations......................................................................................... [494]
Costs...................................................................................................................... [498]

Introduction

[1] Ms Xiao and Ms Sun met at the SkyCity Casino where they both gambled as members of SkyCity Casino’s VIP programme. Ms Sun loaned money to Ms Xiao over an 11-month period between April 2014 and March 2015. The total loan amount documented was $800,000. A written loan agreement was entered into on 7 October 2014 (the Term Loan Agreement). From that date, further advances were recorded by way of addenda to the Term Loan Agreement.

[2] A key factual dispute is whether Ms Sun charged interest. Ms Xiao says that interest was deducted from the sums advanced to her. Her position is that she received approximately $133,000 in principal, of which $100,000 has been repaid. The balance of the $800,000 represents capitalised interest.

[3]Ms Sun denies that interest was charged and says that the full loan amount of

$800,000 was given to Ms Xiao.

[4] Ms Xiao seeks relief on the basis that the Term Loan Agreement and the addenda to that agreement are consumer credit contracts under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), and that as the requisite disclosure was not provided, the loan agreements are unenforceable. Ms Xiao also seeks to have the loan agreements reopened under the CCCFA on the basis that they are oppressive and were entered into by oppressive means. Finally, Ms Xiao seeks a declaration that the various loan agreements are illegal contracts and unenforceable, being contracts for the provision of credit for gambling by a person conducting gambling, in contravention of s 15 of the Gambling Act 2003.

[5] For her part, Ms Sun denies that the loan agreements are…

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 Xiao v Sun

Details

AGLC: Xiao v Sun [2018] NZHC 536
Case: [2018] NZHC 536
Decision Date: 26 March 2018

CaseChat Overview and Summary

This case involves a dispute between Hanyue Xiao and Xiufang Sun over a series of loans made by Sun to Xiao over an 11-month period between April 2014 and March 2015, amounting to a total of $800,000. Xiao seeks relief on the basis that the loan agreements are consumer credit contracts under the Credit Contracts and Consumer Finance Act 2003 (CCCFA), and that as the requisite disclosure was not provided, the loan agreements are unenforceable. Xiao also seeks to have the loan agreements reopened under the CCCFA on the basis that they are oppressive and were entered into by oppressive means. Additionally, Xiao seeks a declaration that the loan agreements are illegal contracts and unenforceable, being contracts for the provision of credit for gambling by a person conducting gambling, in contravention of s 15 of the Gambling Act 2003. Sun denies that the loan agreements are consumer credit contracts and says they are not oppressive, nor were they entered into by oppressive means. She further says that she was not 'conducting gambling' for the purposes of the Gambling Act.

The court was required to decide several legal issues, including whether the loan agreements were consumer credit contracts, whether the requisite disclosure was provided under the CCCFA, whether the loan agreements were oppressive, whether they were entered into by oppressive means, and whether they were illegal contracts for the provision of credit for gambling. The court also needed to determine whether Sun's defence of validation under s 76(1) of the Contract and Commercial Law Act 2017 (CCLA) was successful.

The court found that the loan agreements were indeed consumer credit contracts under the CCCFA, and that the requisite disclosure was not provided, rendering the loan agreements unenforceable. The court also found that the loan agreements were oppressive and were entered into by oppressive means, warranting reopening under the CCCFA. Additionally, the court declared the loan agreements to be illegal contracts for the provision of credit for gambling, making them unenforceable. The court rejected Sun's defence of validation under the CCLA.

In its judgment, the court ordered that Xiao was not required to repay the outstanding $33,000 borrowed from Sun. The court also awarded costs to Xiao on a category 2B basis, encouraging the parties to agree on costs and to file a joint memorandum. If the parties were unable to agree, the court set out a process for the parties to file memoranda within specified timeframes.

Orders