Xing v Chen - [2025] NZHC 2301

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-002989 [2025] NZHC 2301

BETWEEN HUINA XING
Plaintiff / Respondent

AND YIN CHEN
Defendant / Applicant

Hearing: 11 August 2025

Appearances: A T Grant / D E Archibald for the Plaintiff/Respondent K Sun / T S Jones for the Defendant/Applicant

Judgment: 14 August 2025

JUDGMENT OF ASSOCIATE JUDGE COGSWELL

This judgment was delivered by me on 14 August 2025 at 11.00 a.m. pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date.......................................

Solicitors:

Capstone Law Ltd, Auckland Lighthouse Law, Auckland

A T Grant / D E Archibald, Auckland

XING v CHEN [2025] NZHC 2301 [14 August 2025]

Introduction

[1] Ms Chen and Ms Xing were friends until Ms Xing invested in Ms Chen’s beauty business. They have now fallen out and are party to litigation. The litigation centres around allegations that Ms Chen misrepresented the business. There are claims for damages and for relief under s 174 of the Companies Act 1993.

[2] The proceedings are set down for trial in November 2026. Ms Chen has applied for security for costs against Ms Xing. In the alternative, Ms Chen seeks orders freezing assets of Ms Xing equivalent to her claim for security for costs.

[3] The key issue in this application is resolving a stark conflict of evidence in statements made by Ms Xing.

[4] On deciding that she no longer wanted to be part of the business and wanted her investment back, Ms Xing wrote to Ms Chen saying that she was in an impecunious position, had no assets, and extensive debts. I will not set out all of those statements, but they included a statement that, “now I am not only completely broke, but also deep in debts”. Ms Xing said that her home was mortgaged and that she had debts of $1.6 million.

[5] To support her argument that she was utterly impecunious, Ms Xing also sent a screenshot to Ms Chen which was said to be a screenshot of her bank accounts. They show a poor financial position with effectively no funds available.

[6] Faced with this evidence, and the very real risk that if correct Ms Chen would likely be left without a remedy in costs, she has sought security for costs. Alternatively, she seeks an order freezing Ms Xing’s assets to an amount equivalent to the amount of the security sought.

Security for costs

[7] The approach to an application for security for costs is well-settled. The determination under r 5.45 of the High Court Rules involves a two-step analysis:

(a)Has the applicant satisfied the Court of the threshold issue, that there is a reason to believe the plaintiff will be unable to pay costs if unsuccessful?

(b)If so, how should the Court exercise its broad discretion under r 5.45(2)?

[8] The decision to award security for costs and the quantum of any security ordered are discretionary matters. The cases are clear that 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 Xing v Chen

Details

AGLC: Xing v Chen [2025] NZHC 2301
Case: [2025] NZHC 2301
Decision Date: 14 August 2025

CaseChat Overview and Summary

In the High Court of New Zealand, Auckland Registry, the case of Xing v Chen was heard. The plaintiff, Huina Xing, sued the defendant, Yin Chen, over allegations of misrepresentation in connection with a business investment. The litigation includes claims for damages and relief under section 174 of the Companies Act 1993. Chen applied for security for costs against Xing and, in the alternative, sought orders to freeze Xing’s assets equivalent to her claim for security for costs.

The primary issue in this application was reconciling the stark conflict in evidence regarding Xing’s financial status. Xing had previously stated that she was in an impecunious position with no assets and substantial debts, including a $1.6 million debt. Xing provided a screenshot of her bank accounts to support this claim. However, in her sworn affidavit, Xing stated she had significant assets, including an unencumbered property valued at $900,000, over $300,000 in savings, and additional term deposits and savings accounts. She also denied the existence of the alleged $1.6 million debt, explaining her earlier statements were attempts to manipulate Chen into returning her investment without litigation.

The Court considered the approach to an application for security for costs, which involves a two-step analysis. Firstly, the Court must determine if there is a reason to believe the plaintiff will be unable to pay costs if unsuccessful. If so, the Court then exercises its broad discretion under rule 5.45(2) of the High Court Rules. The Court found that Chen had not satisfied the threshold issue that Xing would be unable to pay costs if unsuccessful. The Court gave significant weight to Xing’s sworn evidence and the documentary evidence supporting her financial position. The Court also rejected the argument that there was a risk of dissipation of assets as there was no evidence to support such a risk. Consequently, Chen’s application for security for costs was declined. Additionally, the application for a freezing order was also dismissed as there was no evidence to suggest a risk of dissipation or absconding.

The Court ordered that costs lie where they fall due to the inconsistent and dishonest statements made by Xing that Chen relied on when making the application for security for costs.

Orders