YANG WANG AND BIN HU
[2024] NZHC 2852
•2 October 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-808
[2024] NZHC 2852
UNDER Part 12 of the High Court Rules 2016 IN THE MATTER
of a summary judgment application
BETWEEN
YANG WANG
Plaintiff
AND
BIN HU
Defendant
Hearing: 23 September 2024 (by AVL) Appearances:
N J Scampion and A West for Plaintiff W E Andrews for Defendant
Judgment:
2 October 2024
JUDGMENT OF ASSOCIATE JUDGE LESTER
This judgment was delivered by me on 2 October 2024 at 11:00 am pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
…………………………………
WANG v HU [2024] NZHC 2852 [2 October 2024]
[1] Mr Wang seeks summary judgment against Ms Hu for $1,000,000 which Mr Wang says Ms Hu owes him under an oral loan agreement made in February 2021.
[2] That Mr Wang paid a total of $1,000,000 in February and March 2021 to the solicitors acting for Ms Hu is not disputed — however, that is where the common ground in respect of the $1,000,000 transaction ends.
[3] The actions of a third party, Min Nean, also known as Catherine, are also relevant.
The St Heliers purchase
[4] In December 2020, Ms Hu signed a contract to purchase a substantial St Heliers property (the Property). The purchase price was $12,300,000, with a deposit of four per cent payable upon the contract becoming unconditional, and a second deposit of four per cent due on 30 March 2021. The purchaser’s due diligence decision had to be confirmed by 5.00pm on 19 February 2021, which is when the first deposit would become due.
Mr Wang’s account of making the $1,000,000 payment
[5] Mr Wang explains that in February 2021, Catherine, who he describes as being a good friend, told him that one of her friends, Ms Hu, had purchased the Property and that she needed a deposit of $1,000,000.
[6] Mr Wang describes Catherine as having a good professional background, apparently at the time holding a senior position with the Chinese Construction Bank. Mr Wang said there was mutual trust between them and he says Catherine told him that, while she had not known Ms Hu for a long time, she trusted Ms Hu.
[7] Mr Wang recounts that Catherine told him that Ms Hu originally had another business partner with whom she planned to develop the Property but that her relationship with that business partner had come to an end. The breakup of that commercial arrangement apparently meant Ms Hu did not have the funds to pay the
$1,000,000 deposit and that she hoped to find someone who could lend her the money for that purpose.
[8] Mr Wang then describes speaking to Ms Hu, who expressed confidence that the Property was in a good location, was good value for money, that the market was on the rise and the future development potential of the Property was good. Mr Wang says:
[Ms Hu] said that she was not worried about finding investors (settlement was a long way out), and she did not rule out cooperation between the three of us in the future for the investment and development of the Property. I was interested in the future opportunity.
[9] Mr Wang describes that he considered the risk of the advance was relatively low because of the trust between the parties and because the funds would be transferred directly to Ms Hu’s lawyer’s trust account for the purpose of paying the deposit.
[10] Mr Wang describes the absence of writing in respect of the transaction as being due to the tight timeframe and that the discussions were during the COVID-19 epidemic. He said there was no discussion of a repayment date, nor was an interest rate discussed.
[11] Mr Wang describes making two payments of NZ$500,000 to Ms Hu’s solicitors trust account. The first payment was made on 22 February 2021 and the second made on 30 March 2021.
[12] Mr Wang’s counsel, Mr Scampion, places significance on the narrative on the receipts issued by Ms Hu’s solicitors. The funds were credited to Ms Hu with the receipt for the payment on 22 February 2021 recording, “Deposit funds from Yang Wang to Hu Bin to purchase [St Heliers property]”. The receipt issued on 30 March 2021 adopted the same wording.
[13] On the same day the funds were transferred, Ms Hu paid the two deposits for the purchase of the Property.
Mr Wang becomes involved in the development of the Property
[14] The narrative in Mr Wang’s affidavit in support of his application for summary judgment jumps from the payment of the second deposit to him being a director and his trust being a shareholder in a company called, “WMV St Heliers 297 Investment NZ Group Limited” (WMV), a company incorporated by Ms Hu to develop the Property. WMV was incorporated on 10 May 2021. The directors were Mr Wang and Ms Hu. 24 shares in WMV were held by Castor Bay Family Trust (the Castor Bay Trust), being Mr Wang’s family trust, and 76 shares were held by ABH Corporate Trustee Limited (the ABH Trust), being Ms Hu’s trust.
[15] Mr Wang then describes a shareholders agreement dated 16 July 2021. The shareholders agreement was entered into between the Castor Bay Trust, ABH Trust and Tenet Trustee Limited (Tenet). Mr Wang does not explain in his affidavit the identity of Tenet, and I will refer to this below.
[16] The shareholders agreement recorded that the purpose of WMV was to subdivide and develop the Property. The shareholding had changed so that the 100 shares in WMV were held by Castor Bay Trust as to 24, by ABH Trust as to 33 and by ABH Trust for Tenet as to 43.
[17] The shareholders agreement estimated that the shareholders would have to contribute in the vicinity of $6,000,000 to complete the development of the Property and that the parties would provide funding to WMV by way of shareholder advances in proportion to their shareholding. Shareholder advances to WMV could be documented by way of a shareholder advance deed in a form attached as a schedule to the shareholders agreement. I say could as the shareholder agreement does not make use of the form compulsory.
[18] On 6 August 2021, by way of a deed of nomination prepared by Ms Hu’s solicitors, Ms Hu nominated WMV to take title to the Property.
[19]The nomination agreement contains the following clause:
6.REIMBURSEMENT BY NOMINEE
[I have inserted the names of the parties]
6.1On the Operative Date, [WMV] must reimburse [Ms Hu] for all money paid by [Ms Hu] to the Vendor under the Agreement, being the deposit of $984,000.00.
[20] The agreement was signed by Ms Hu, both in her capacity as the nominator and by Ms Hu and Mr Wang as directors of WMV.
[21] Mr Wang’s narrative then skips to 9 November 2022, when his solicitors made demand on Ms Hu for repayment of the alleged advance plus interest under the Interest on Money Claims Act 2016. Mr Wang explains that the letter of demand sent by his solicitors incorrectly stated that the lender was the Castor Bay Trust rather than Mr Wang personally.
[22]The solicitors who replied on behalf of Ms Hu responded as follows:
1.1 With respect to your letter making demand for repayment of the purported loan – please confirm whether the purported loan was a loan to [the defendant] or to [WMV]. We would anticipate that this was in fact the Nominee [WMV] complying with its obligations under the Deed of Nomination entered into between our client and [WMV].
[23] Ms Andrews, counsel for Ms Hu, submits it is uncertain who allegedly lent the funds to Ms Hu, that is, Mr Wang or the Castor Bay Trust. There is nothing in this point. Mr Wang, whether he was trustee or not, made funds available to Ms Hu. Mr Wang does not have to sue in his capacity as trustee. Mr Wang’s capacity as trustee is relevant to his obligations to the beneficiaries of the Castor Bay Trust. It is not relevant to contractual obligations Mr Wang may make, as trustee, with third parties unless, for example, he seeks to limit his liability to the assets of the Trust. The issue in this case is whether there is a debt owed by Ms Hu to Mr Wang. Whether Mr Wang holds the beneficial interest in that debt upon trust is irrelevant to whether there is a contractual relationship between him and Ms Hu.
[24] Mr Scampion relies on the letter set out at [22] not denying Mr Wang had made an advance — rather it sought clarification as to whom the advance was made.
[25]Accordingly, Mr Wang’s position is as follows.
(a)an oral loan agreement was made in February 2021;
(b)the receipts issued by Ms Hu’s solicitors record the money paid by Mr Wang to Ms Hu were for the deposit on a purchase made by Ms Hu and the money was used by Ms Hu to meet her personal obligation;
(c)the deed of nomination acknowledges that WMV owed Ms Hu the deposit expressed to be $984,000; and
(d)Mr Wang says it follows that with him having paid the funds to Ms Hu, her then paying the funds to the vendor and with WMV acknowledging it had to refund that payment to Ms Hu, that Ms Hu must owe that money to Mr Wang.
[26] In short, Mr Wang says the $1,000,000 was not a gift — it was a loan and could only have been made to Ms Hu as WMV did not exist until months after the payments.
The failure of the Project
[27] Mr Wang says the shareholders, other than the Castor Bay Trust, defaulted on their obligations under the shareholders agreement to provide funding to WMV. Mr Wang says this meant WMV never secured funds to repay Ms Hu meaning she could not repay him as contemplated by the shareholders agreement and the deed of nomination.
[28] WMV secured enough funding to settle the purchase, however, it defaulted on its obligations to the mortgagee and the Property was ultimately sold at mortgagee auction with there being a shortfall to the secured creditors. WMV is now insolvent.
Ms Hu’s account of the transactions
[29] Ms Hu’s position is that all Mr Wang’s initial dealings regarding what she describes as the “joint venture development” were with Catherine. She denies the discussions alleged by Mr Wang, that is, the discussion that I have referred to at [8] above where Mr Wang says he spoke to Ms Hu who expressed confidence in the
development of the Property. In short, Ms Hu’s sworn evidence is that she denies there was an oral loan agreement with Mr Wang and that the payments made by Ms Wang were organised by Catherine.
[30] On Ms Hu’s account of matters, Catherine had an interest in the development of the Property essentially from the outset. Ms Hu asserts she had funds to pay her share of the first deposit of $500,000, having deposited $250,000 into her solicitors trust account on 19 February 2021, and it was Catherine who arranged for Mr Wang to deposit the first $500,000 on 22 February 2021 as Catherine’s half-share, that is, Catherine’s half-share of both deposits. Ms Hu refers to the second $500,000 paid into her solicitors trust account on 30 March 2021 and says these funds represented “the Wangs’ initial investment by their trust”.
[31] Accordingly, there is a mixture of ideas in Ms Hu’s evidence. The first is that it was Catherine who arranged for Mr Wang to deposit the money as being Catherine’s half-share but also that the funds represented the Wangs’ investment. The payments cannot have been both. As will be explained below, Ms Hu’s claim that she had paid her half-share of the first deposit was false.
[32] Ms Hu describes what is essentially a joint venture from the outset of Mr Wang’s involvement. She describes Catherine as having the role of organising the funds and introducing investors. Ms Hu describes Catherine as being her bank manager at the China Construction Bank and it is apparently through that role that Catherine also knew Mr Wang.
[33] Ms Hu says it was always being her intention to incorporate a company to complete the development of the Property. Ms Hu describes Catherine introducing Mr and Mrs Wang and she said that they wanted to invest in the joint venture through their trust. Ms Hu says she did not meet Mr Wang until mid-March 2021, well after the Wangs’ initial payment on 22 February 2021.
[34] Ms Hu says Mr Wang agreed to the incorporation of a company and the entry into a shareholders agreement, but I note this must have been after the funds were paid by Mr Wang as Ms Hu denies speaking to Mr Wang prior to the first transfer of funds
by Mr Wang to Ms Hu’s solicitors trust account. Ms Hu denies that at any stage it was agreed or even contemplated that Mr Wang’s contribution would be personal loans to her. She says the money the Wangs introduced was an investment in a joint venture which she says took place through their trust, that is, the Castor Bay Trust.
[35] Ms Hu does not say when Mr Wang orally agreed to incorporate a company but again, it must have been on her own evidence after the first payment were made. Ms Hu says there is no significance in the payment being made to her personally at the outset. Ms Hu explains there was no particular urgency in having documents signed as settlement of the purchase of the Property was not due until March 2022 and in fact settlement was deferred until December 2022. The Wangs also used the same firm of solicitors as Ms Hu and the Wangs did not engage their own independent solicitors until 2022.
[36] Ms Hu’s evidence is that nine of the 43 shares recorded in the shareholders agreement as being held by the ABH on trust for Tenet were in fact held on an oral side agreement for the Castor Bay Trust so that each of the shareholders ultimately had a 33 per cent interest in the development. Ms Hu says that was because as Mr Wang was not a New Zealand citizen, he could not hold more than a 25 per cent share in a residential property.
[37] As to cl 6.1 of the deed of nomination referred to at [19] above, Ms Hu says she does not know why that was included. She says:
It is redundant because, to the best of my knowledge at that time, neither I nor my trust were owed any money. If that money deposited into the trust account was supposed to be loan, I didn’t know about and presumably nor did [the solicitors]. It was not documented.
[38] Ms Hu never intended that Mr Wang and her would be involved in a joint venture in their personal capacities. The joint venture was always going to be through a company held by their respective trusts.
[39] Ms Hu does not dispute that neither her trust, the ABH Trust, nor Tenet (being Catherine’s trust), failed to contribute their share of the development funds. She
alleges Mr Wang used the mortgagee sale process to take ownership of the development for himself.
[40] Ms Hu also notes that in October 2022 documents were drafted by Mr Wang’s new solicitors to record the money paid by the Castor Bay Trust as advances to WMV. Ms Hu did not sign those documents. The loan agreement prepared on behalf of the Castor Bay Trust only records funds advanced to WMV and not the $1,000,000 in issue in this proceeding.
[41] Ms Hu recounts a shareholders’ meeting in October 2022 attended by Catherine who at that time had stopped working at the China Construction Bank and had returned to China. Upon Catherine’s return to New Zealand to attend the shareholders meeting, Ms Hu alleges Mr Wang agreed to pay Catherine $300,000 for her shares in WMV and that from that time Catherine has had no involvement in the development. Apparently, this is not recorded in the Minutes of that meeting, although Ms Hu implies that is because the Minutes were completed by an employee of Mr Wang.
[42] In early 2023, Ms Hu describes what amounts to a falling out between her and Mr Wang resulting in Mr Wang acquiring the debt over the Property and through a mortgagee sale, taking ownership of the Property through a related entity.
Mr Wang’s reply evidence
[43] Mr Wang corrects his earlier affidavit by saying that it was actually in January 2021, not February 2021, when Catherine approached him to make the
$1,000,000 advance to Ms Hu.
[44] Mr Wang rejects the idea there was an agreed joint venture at the time of the advance and he emphasises he made the advance to Ms Hu personally. Mr Wang emphasises Ms Hu’s idea of a joint venture from the outset appears to be of an entirely oral agreement with no details given by Ms Hu as to when or where the alleged discussions in respect of this alleged oral joint venture took place. He says there are no contemporary documents, that is, documents from early 2021, supporting Ms Hu’s
claim of a joint venture from the outset. Mr Wang describes the idea of there being such an oral joint venture as fiction.
[45] While I have noted Ms Hu denies talking to Mr Wang until after the first advance, Ms Hu does not expressly say Catherine was agent for the joint venture — at that time being Ms Hu and Catherine — to obtain other investors, but that is the tenor of her evidence. If Ms Hu allowed Catherine to obtain funds on her behalf as a loan rather as an investment, Ms Hu may have remedies against Catherine.
[46] As to the claim by Ms Hu that she did not meet Mr Wang until mid-March 2021, Mr Wang responds that Catherine arranged for him to meet Ms Hu in January 2021 at a social occasion in order for him to be satisfied that Ms Hu was a trustworthy person before lending her the money. He describes this as being at an Americas Cup function on 30 January 2021 and he produces a photograph showing Ms Hu, Catherine, him and another friend of Ms Hu’s at the meeting. It was as a result of talking in general terms to Ms Hu at this meeting that Mr Wang says he confirmed that he would lend the money.
[47] Mr Wang emphasises that the documentary evidence shows the advances were from him to Ms Hu, with the company incorporation coming much later, that the records show the $1,000,000 he paid was used to pay the deposit payable by Ms Hu and he tests his position by saying that if the agreement had not been confirmed, the deposit would have been paid back to Ms Hu, who would have to have repaid it back to him.
[48] Mr Wang says that his Trust was not invited to be an investor until well after the original loan advance to Ms Hu.
[49] Mr Wang says the shareholders agreement does not record the $1,000,000 he paid to Ms Hu as a shareholder advance from his Trust to WMV. Again, Mr Wang says the deed of nomination recording that WMV would repay the deposit to Ms Hu confirms his position.
Ms Hu replies to evidence in respect of the meeting at the Americas Cup function
[50] Ms Hu says she forgot about the meeting at the Americas Cup function and says that it was a crowded function. She said she was not introduced to Mr Wang as a potential investor at that time and that she did not even know Mr Wang’s name.
[51] Ms Hu adds in this reply that she organised for Catherine’s $250,000 share of the first deposit to be borrowed from a friend of Ms Hu’s — I address this in more detail below.
The obvious conflict on the evidence
[52] The above lengthy summary of the evidence highlights the stark conflict between the parties. Ms Hu denies even having discussions with Mr Wang before the first advance was made, from which it follows she denies the entire basis of Mr Wang’s claim that there was an oral loan agreement between them.
Summary judgment principles
[53] These are well known. The starting point is that the Court refrains from attempting to resolve genuine conflicts of evidence or to assess credibility of the parties’ statements in their affidavits.1
[54] Equally, it is recognised that the object of the summary judgment procedure will be thwarted if spurious defences or plainly contrived factual conflicts were permitted to prevent judgment being obtained.
[55]The classic passage is from Attorney General v Rakiura Holdings, as follows:2
In a matter such as this it would not be normal for a judge to attempt to resolve any conflicts in evidence contained in affidavits or to assess the credibility or plausibility of averments in them. On the other hand, in the words of Lord Diplock in Eng Mee Yong v Letchumanan [1980] AC 331 at 341 E, the Judge is not bound: ‘to accept uncritically, as raising a dispute of fact which calls for further investigation, every statement on an affidavit however equivocal, lacking in precision, inconsistent with undisputed contemporary documents or
1 Jessica Gorman and others McGechan on Procedure (online ed, Thomson Reuters) at [HR12.2.08].
2 Attorney General v Rakiura Holdings (1986) 1 PRNZ 1214.
other statements by the same deponent, or inherently improbable in itself it may be’.
[56] On the one hand, we have the principle that if there are unequivocal statements which amount to an arguable defence, that will generally be sufficient to justify a refusal of summary judgment.3 On the other hand, it is recognised that the Court is entitled to take a robust approach to summary judgment applications and that a defendant’s position must have an aura of credibility and not be contradicted by undisputed contemporary documents.4
[57]The application for summary judgment here rests on:
(a)The advance coming from Mr Wang’s personal account.
(b)The money being receipted into Ms Hu’s personal account as the deposit. For “Hu Bin to purchase [St Heliers]” — and not a purchase by a joint venture.
(c)The funds were applied to Ms Hu’s deposit obligation in respect of her purchase of the Property.
(d)The deed of nomination requiring WMV to repay Ms Hu the deposit.
(e)The shareholders in WMV being obliged to contribute to the company funds in proportion to their shareholding to complete the development which would include meeting the purchase price of the property and accordingly, the deposit.
[58] Mr Wang says Ms Hu’s position is inconsistent with the shareholders agreement because that document required the shareholders to contribute to the development expenses in proportion to their shareholdings, yet Ms Hu maintains that Mr Wang intended to fully fund the two deposits. Again, Mr Wang says Ms Hu’s position is also inconsistent with the deed of nomination.
3 Local Courier Service Ltd v Kesha (1995) 8 PRNZ 690.
4 Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
[59] Ms Hu, in her final reply affidavit, suggests that neither she or Mr Wang “really understood the deed of nomination”. Ms Hu says she had nothing to do with drafting the nomination agreement and that she “just turned up and signed it”. Ms Hu says she does not remember cl 6.1 of the agreement being explained to her. However, of course, the fact is Ms Hu did sign the nomination agreement.
A little more detail about the shareholders agreement
[60] The parties to the shareholders agreement are the respective parties’ Trusts. The agreement recorded, “The parties agree to provide funding to the Company by way of shareholder advances in proportion to their shareholding in the Company.” This provision was in the context of the clause recording an expectation that funding of $6,000,000 would be required. Clause 6.2 provided that, “Except as provided in clause 6.1, Shareholders cannot be required to advance further capital to the Company by way of shareholder advance without their consent.”
[61] Clause 6.4 records, “Any shareholder advance may be documented by way of a Shareholder Advance Deed in the form attached as Schedule 4 to this agreement.” Schedule 4 is a short form loan agreement recording the amount of an advance, an interest rate, with a default provision that the loan is repayable three years after the drawdown or earlier at the borrower’s option. Schedule 4 provides for the company to grant a security agreement to the lender.
Evidence supporting Mr Wang’s case
[62] The evidence shows that Catherine had some involvement in the purchase from at least 19 February 2021 as on that day she paid into Ms Hu’s solicitors trust account the sum of $250,000. This is the sum Ms Hu claims she said was her share of the first deposit as noted at [30] above. While the trust account narration says the money came from Ms Hu, Catherine’s bank records show she provided the money. In what capacity Catherine paid the money into Ms Hu’s solicitors trust account is not explained, that is, as a joint venturer or as an advance, but the payment is consistent with Ms Hu’s evidence that she and Catherine had decided to develop the Property as joint venture partners.
[63]However, of this payment, Ms Hu said in her first affidavit:
6.I had the funds to pay my share of the first installment for the deposit of $500,000 and I deposited $250,000 into the trust account on 19 February 2021. It was Catherine who arranged for Mr Wang to deposit further funs into the trust account on 22 February 2021 for her half share, and a further $500,000 on 30 March 2021. These funds represented the Wangs’ initial investment by their trust.
7.On 23 February 2021 Catherine withdrew $250,000 from the trust account and paid it to herself. A copy of the trust account transactions for the purchase of the property between 19 February 2021 and 12 December 2022 is annexed marked A. I was not aware that she had withdrawn these funds until I obtained a copy of the trust account transactions from Heritage Law earlier this month.
[64] As I noted at [30] above, this evidence is false unless Catherine had advanced the $250,000 to Ms Hu in order for Ms Hu to pay her share of the first instalment of the deposit. If it was Catherine paying her half of the deposit then Ms Hu’s evidence above is, as I have said, not accurate. Further, the idea that Ms Hu was not aware that
$250,000 had been taken from her trust account in February 2021 until May 2024 speaks for itself. How Catherine could operate Ms Hu’s trust account is not explained. The trust account is only in the name of Ms Hu, not Ms Hu and Catherine nor in the name of a joint venture. Only Ms Hu could explain who had authority to operate her account held in her solicitors trust account — she has not done so.
[65] Before Mr Wang filed reply evidence to Ms Hu’s claim that her $250,000 had been taken by Catherine, she said in a subsequent affidavit:
6. As I said in my last affidavit, I paid my share of the first deposit of
$250,000 on 22 February 2021. If I had known [Mr Wang] was going to invest I would not have paid the initial $250,000.
[66]Ms Hu then says:
8. I had organised for Catherine’s $250,000 share to be borrowed from a friend. Annexed marked B are WeChat communications with my friend Luan. On 21 February I let him know it was not needed as Catherine had told me about Mr Wang investing.
[67] Ms Hu produces the WeChat message with her friend. The actual amount required for the payment of the deposit was $492,000. On 20 February 2021, Ms Hu sent a WeChat message to her friend asking him to lend her $242,000 and giving the
account number of the trust account and she said, “I will pay you back before February 2026” with the translation showing Ms Hu as borrower.
[68] Accordingly, with the money Catherine had paid into the trust account on 19 February 2021, Ms Hu needed to borrow a further $242,000 to pay her share of the first deposit.
[69]Ms Andrews proposes the rhetorical question:
Regardless of whether the funds were arranged for Catherine, Ms Hu, or both of them, the question must be asked, why did they need a loan from Mr Wang when payment of the first instalment of the deposit was taken care of.
[70] This point would have carried more weight but for Ms Hu’s false evidence. Why Catherine immediately removed her funds when she was apparently to be a joint venturer is unexplained. Again, the idea that Ms Hu was unaware these funds had been withdrawn is simply not credible.
[71] Ms Hu sent a WeChat to her friend on 21 February 2021 saying that she had already sorted out the funds and that there was no need to proceed with the loan.
[72] Accordingly, Ms Hu was looking to borrow her contribution to the deposit as late as 20 February 2021 given Catherine had paid $250,000. Ms Hu’s evidence that she was assisting Catherine to borrow her $250,000 share of the first deposit from Ms Hu’s friend is false.
[73] The receipts issued by the solicitors for each of the $500,000 deposits have, as already noted, the narration: “Deposit funds from Yang Wang for Hu Bin to purchase [the Property].” It is Ms Hu who would have given Heritage Law the description for the trust account receipt — solicitors look to their client for confirmation as to what the funds are for. The funds are not described in a way that is consistent with Mr Wang having become a joint venturer at that time.
[74] The fact that Ms Hu was looking to borrow her contribution to the first deposit from her friend is consistent with Mr Wang’s position that Ms Hu was at that time looking to borrow funds.
[75] Of course, Ms Hu finding the money only for the first deposit was in a sense a mixed blessing. Having paid $492,000 on 22 February 2021, the second deposit also of $492,000 was payable on 30 March 2021. There was no point paying the first deposit only to put it at risk if the second deposit could not be paid. In a sense, that explains why $1,000,000 was sought from Mr Wang.
[76] The shareholders agreement is also consistent with Mr Wang’s position in that it records the parties were to fund the purchase in proportion to their shareholdings. If Ms Hu, Mr Wang (or his Trust) and Catherine were equal joint venturers in February 2021 then they should have each contributed one-third of the deposit. Ms Hu put no money into the deposit.
[77] There is merit in Mr Scampion’s submission that on Ms Hu’s case, the only one who was at risk if the settlement did not take place was Mr Wang, that is, if the vendors could forfeit the deposit on Ms Hu’s case, only Mr Wang lost out.
[78] However, for me the deciding factor in concluding that the application for summary judgment should be granted, are the terms of the deed of nomination set out at [19] above.
[79] Clause 6 of the deed required WMV to reimburse Ms Hu for all money she paid to the vendor for the deposit. On this clause, Ms Hu says:
23. [The solicitors] drafted a Deed creating a nominee so that the property would settle in the name of WMV on 6 August 2021 which I signed. I do not know why [the solicitors] included clause 6. It is redundant because, to the best of my knowledge at the time, neither I nor my trust were owed any money. If that money deposited into the trust account was supposed to be a loan, I didn’t know about and presumably nor did [the solicitors]. It was not documented.
…
Deed of Nomination
13.I do not think either of us really understood the Deed of Nomination. Mr Wang cannot read English, but as directors of WMV we instructed [the solicitors] that WMV would be the nominee for the purposes of settling the agreement of sale and purchase. This was always our plan. I had nothing to do with drafting the agreement. I just turned up and signed it. I was not given a copy of the agreement in advance.
14.I do not remember clause 6.1 being explained to me or Mr Wang. We talked in Chinese, and it was never suggested that I had borrowed money off Mr Wang.
[80] The deed of nomination would have been drafted on the basis of instructions from either Ms Hu or WMV of which Ms Hu was a director. Clause 6 of the deed of nomination cannot be described as a boiler-plate provision — its terms are particular to the circumstances of this case. That the solicitor acting for Ms Hu and WMV on the nomination agreement understood the deposit was repayable by WMV to Ms Hu must reflect their instructions and it is consistent with the way in which the funds were receipted into Ms Hu’s solicitors trust account in the first place.
[81] It is no answer for Ms Hu to say she did not read or understand the clause in the deed of nomination. Ms Hu signed the deed on behalf of herself and as a director of WMV as nominee with the deed containing the following clause:
7.NOMINEE’S ACKNOWLEDGMENT
7.1The Nominee acknowledges that the Nominee has executed this deed with notice of all terms and conditions contained or implied in the Agreement.
[82] Ms Hu is, in her own words, experienced in property development. In her first affidavit she says she always intended to incorporate a company for the purposes of the development of the Property with her and Catherine’s family trust to be shareholders. She says, “This is the way all developments I am involved in proceed”. Ms Hu’s affidavit is in English and has not been translated.
[83] Clause 6 of the deed of nomination is in plain terms but in any event, it has never been an answer to an inconvenient term of a contract to say it was not read or understood. I do not accept Ms Andrews submission that the deed of nomination is not easy to understand — nor is it an answer to cl 6 to say Mr Wang does not read English, therefore he did not understand the document. There is no evidence as to what occurred at the time the deed of nomination was signed. The evidence is there are lawyers at the solicitors firm who can speak English and Mandarin. A responsible solicitor dealing with a non-English speaker, being asked to sign a document in English, would explain that document in the signatory’s language prior to signing.
[84] If Mr Wang’s payments in February and March 2021 were his contribution to the joint venture, there is no possible basis upon which the deposit would be repayable by WMV to Ms Hu. Clause 6 is only consistent with the deed of nomination recognising that Ms Hu paid the deposit with her own money which she had obtained from Mr Wang. Had WMV repaid the deposit to Ms Hu, there is no basis suggested which would mean Ms Hu did not owe those funds to Mr Wang.
[85] Mr Wang did not insist on repayment at the time of signing the deed of nomination — when cl 6 refers to the operative date, that is defined as the date of the deed which was 6 August 2021. The short point is that at the time of nomination the parties were working towards completing the development of the Property.
[86] Ms Andrews submitted that Mr Wang making the advance without agreeing to interest or other key terms such as the repayment date, was uncommercial. The mere fact that $1,000,000 was advanced on the basis of an oral agreement with someone Mr Wang had only briefly met might be said to be uncommercial, but Mr Wang explains that both he and Ms Hu shared a common connection through Catherine whom they both trusted. Mr Wang says he was interested in possibly getting involved in the venture in the future. The lack of clear terms, if anything, gave Mr Wang the ability to bring pressure to bear in respect of his possible involvement in a future venture because he was entitled to call upon Ms Hu to repay the $1,000,000, putting him in a powerful bargaining position with her.
[87] I raised with counsel at the commencement of the hearing whether there was significance in this being a pre-incorporation contract in respect of WMV as Ms Hu’s position was in substance that Mr Wang had made advances to WMV.5
[88]Section 182(1) of the Companies Act 1993 provides:
182 Pre-incorporation contracts may be ratified
(1)In this section and in sections 183 to 185, the term pre-incorporation contract means—
5 Ms Andrews submitted there were three possible scenarios – (1) a loan from Mr Wang to Ms Hu;
(2)a loan from Castor Bay to Ms Hu; or (3) a loan from Mr Wang/Castor Bay to WMV.
(a)a contract purporting to be made by a company before its incorporation; or
(b)a contract made by a person on behalf of a company before and in contemplation of its incorporation.
[89] Counsel filed brief further submissions on this issue given it was raised by me at the hearing. Section 182(1) provides that in order to be a pre-incorporation contract, the contract needs to indicate that it was made on behalf of a company whose incorporation was in contemplation at the time of the contract. There is no evidence that Mr Wang was told anything about the incorporation of a company for the joint venture prior to making the deposits — as I noted earlier, Ms Hu does not say when she alleges Mr Wang agreed to the incorporation of a company.
[90] As Ms Andrews submitted, there is a clear conflict on the evidence in respect of the key aspects of the claim — the existence of the oral agreement. However, Ms Hu’s evidence has been demonstrated to be unreliable on important claims, that is, her claim that she paid $250,000 towards the initial deposit and those funds were “taken” by Catherine. Ms Hu was looking to borrow money at the time to fund her share of the first deposit. Given no basis for reconciling Ms Hu’s position with cl 6 of the deed of nomination has been advanced and given Ms Hu did not put any of her own money into the joint venture (which she was obliged to do by the shareholder agreement if the $1,000,000 was Mr Wang’s contribution), I reject her evidence that she did not request the loan from Mr Wang as inherently unreliable and inconsistent with the contemporary documents.
[91] Ms Andrews also referred to a subsequent WeChat discussion between Mr Wang and Ms Hu which Ms Andrews submits was confirmation from Mr Wang they did not discuss lending. However, this discussion from context is aimed at a different time period, that is, after the incorporation of WMV.
[92] Ms Andrews appropriately emphasises the lack of a loan agreement or contemporaneous emails or WeChat messages about a loan. Equally, however, there is a similar absence of material concerning a joint venture. That is why I have placed emphasis on the subsequent documents.
[93] Ms Hu did not produce any evidence from her solicitor in relation to how the trust account receipts came to have the narration they did, nor in relation to the deed of nomination. While I recognise the onus is always on the plaintiff in a summary judgment application, the absence of evidence in relation to documents that call for an explanation, especially in this case the deed of nomination, can be taken into account.
[94] This is one of those rare summary judgment cases where I am satisfied that Ms Hu’s denial of the oral agreement is not credible. At the risk of labouring the point, there is simply no way to reconcile her evidence with the deed of nomination she signed in two capacities.
[95] Ms Andrews referred to a number of authorities where oral contracts had been in issue. I do not consider those authorities to be helpful. This case is very much one on its own facts, as are the authorities referred to by Ms Andrews.
[96]Accordingly, there is judgment for Mr Wang against Ms Hu for $1,000,000.
[97] Counsel did not make detailed submissions as to when the appropriate date for interest should commence. Given no interest was payable pursuant to the agreement, in my view, interest should only begin to run from 9 November 2022 when demand was made for repayment and I so order.
[98] Mr Wang is entitled to costs on a 2B basis plus disbursements as fixed by the Registrar. There is an order accordingly.
Associate Judge Lester
Solicitors:
Glaister Ennor, Auckland Vodanovich Law, Auckland
Copy to counsel:
W Andrews, Barrister, Auckland
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