Zeng v Cai
[2015] NZHC 1798
•28 July 2015
IN THE HIGH COURT OF NEW ZEALAND
AUCKLAND REGISTRY
CIV-2014-404-2012
[2015] NZHC 1798
BETWEEN JIANQIANG ZENG
Plaintiff
AND
OU CAI
First Defendant
FANG LI
Second Defendant
Hearing: 28 July 2015 Appearances:
C J R Baird and A V Shinkarenko for Plaintiff A Manuson for Defendant
Judgment:
28 July 2015
ORAL JUDGMENT OF ASSOCIATE JUDGE R M BELL
Solicitors:
Quinn Law (H L Quinn) St Heliers, Auckland, for Plaintiff
Prestige Lawyers Limited (A Manuson) Auckland, for Defendant
Copy for:
ZENG v CAI and LI [2015] NZHC 1798 [28 July 2015]
C J R Baird/A V Shinkarenko, Barristers, Auckland, for Plaintiff
[1] This matter was set down to hear the plaintiff’s application for further discovery under r 8.19 of the High Court Rules. At the start of the hearing, Mr Baird for the plaintiff also tendered a written application for an adjournment of the hearing to begin on 19 October 2015. In this decision I deal with both the discovery and the adjournment applications.
Background
[2] The plaintiff is an engineer who lives in China. He has sworn affidavits in Beijing. The first defendant, Ou Cai, is Chinese but has permanent New Zealand residence and lives in Auckland. The second defendant is her mother. She spends some time with the first defendant in Auckland, but also lives in Jilin City, Jilin Province, China. The first defendant has a brother, Yu Cai, who also lives in Jilin Province, although he also has spent time in New Zealand. The plaintiff’s parents live in New Zealand.
[3] Ms Cai is the mother of two children. One is Yunze Cai, who she says she adopted. She is also the mother of Dahai Cai, born about 30 April 2012. She says that Mr Zeng is the father. At present he disputes paternity but so far no arrangements have been made for paternity tests.
[4] All parties are Chinese. Their first language is Chinese. Notwithstanding that, all the documents that I have considered for this application (except for some exhibits to affidavits) are in English. It is desirable that those giving evidence be able to do so in their preferred language (invariably their first language). That way, they will have greater confidence that their evidence is true and correct. If evidence is given in a foreign language, it should be translated into English for the assistance of the other parties and the court. The Chinese language difficulties have added to the complexity of this case.
[5] Mr Zeng and Ms Cai were in a relationship which began about April 2010 and continued until about 2013. They did not live together as a couple. Theirs is not a relationship under s 2D of the Property (Relationships) Act 1976. Mr Zeng lived mainly in China and Ms Cai lived mainly in New Zealand but also travelled to China to spend time with him there.
[6] During their relationship, properties in Auckland were acquired. These were all held in the name of Fang Li, Ms Cai’s mother. There are four apartments - 1J/135 Victoria Street West, 3B/11 Howe Street, 9J/135 Victoria Street West and 12G/135 Victoria Street West. Mr Zeng says that he made various payments towards the purchase of these properties and as a consequence claims an interest in them. The apartments were rented out. He claims an interest in the rental payments, to be calculated according to his share of the contributions to buy the properties.
[7] There is also a residential property at 10 King Edward Avenue, Epsom, which was bought in 2012. Fang Li is the registered proprietor of that property as well. Mr Zeng says that he contributed initially $800,000 towards the purchase price of about $1.9 million. Yu Cai (Ou Cai’s brother) is said to have lent $280,000. There was also a mortgage from the ANZ Bank. Later, Mr Zeng paid USD665,000 which is said to have been required to pay off the ANZ loan. The loan from Yu Cai is also said to have been repaid. Mr Zeng claims the entire beneficial ownership of the property in King Edward Avenue.
[8] In his first statement of claim, Mr Zeng pleaded two causes of action, both based on resulting trust. The apartment at 1J/135 Victoria Street West had been sold. In the first cause of action he claimed a share of the proceeds of sale of that apartment, and sought a declaration as to his share in the remaining apartments, and his share of the rent. In the second cause of action, he sought a declaration based on a resulting trust that he was the sole beneficial owner of 10 King Edward Avenue.
[9] In the statement of defence to that statement of claim, Ms Cai and her mother say these things, amongst others:
(a)they admit receiving payments from Mr Zeng but contend that the payments made were cash gifts for Ms Cai;
(b)the apartment at 12G/135 Victoria Street West was bought entirely from funds belonging to Fang Li;
(c)Ms Cai bought the apartments at 3B/11 Howe Street and 9J/135 Victoria Street West from her personal savings, although she acknowledges that some of those personal savings came from cash gifts from Mr Zeng;
(d)They deny that Mr Zeng has any beneficial interest in the apartments, the proceeds of sale, or the rent from the apartments;
(e)They admit the payments that Mr Zeng made towards the purchase of 10 King Edward Avenue and also the payment he made to discharge the mortgage. It is less clear that they admit that money he paid went towards repayment of the loan from the brother;
(f)As to the purchase of 10 King Edward Avenue, Mr Zeng paid those funds as a gift for his newborn child.
[10] For this hearing, Mr Baird tendered a draft amended statement of claim. That contains more extensive allegations and more causes of action than the original statement of claim. The original statement of claim had been prepared by another lawyer who has now sadly passed away. Mr Baird has now taken over the proceeding. It is often the case when one lawyer takes over a case from another, that a fresh mind can see fresh approaches. The new statement of claim takes into account some matters that have come to light since the proceeding started. It also pleads additional causes of action so as to ensure that Mr Zeng’s claim is comprehensive and that if some causes of action do not succeed he may be able to recover under others instead.
[11] Putting matters rather generally, Mr Zeng has taken a two-fold approach to his claim. On the one hand he claims a beneficial interest in properties, the proceeds of
sale of the apartments, rent from the apartments and ownership of the King Edward Avenue property on the basis of arrangements made between him and Ms Cai. For that, he relies on claims of resulting trust, constructive trust as a result of fiduciary duties and the like.
[12] On the other hand, he says that if he cannot have those property interests, he ought to be compensated for being put out of pocket. For that, he makes misrepresentation claims. Those misrepresentation claims are made under the Contractual Remedies Act 1979 and also in tort. He also pleads deceit. Here are the causes of action in the draft statement of claim:
(a)The first cause of action is for a resulting trust in respect of the apartments, the proceeds of sale of apartment 1J/135 Victoria Street West and 10 King Edward Avenue.
(b)The second is a claim for misrepresentation under the Contractual Remedies Act.
(c)The third is for breach of fiduciary duty in respect of a joint venture between him and Ou Cai for the ownership of the apartments.
(d)The fourth is another claim under the Contractual Remedies Act for misrepresentation. In this case the misrepresentation is said to be in respect of statements made by Ms Cai to induce him to pay the funds to clear the loan secured against the King Edward Avenue property.
(e)The fifth is for deceit.
(f)The sixth is for restitution of money had and received.
[13] A factual aspect has come to light since the original statement of claim. Mr Zeng says that he has found out that although he put up funds for the purchase of apartment 1J, 135 Victoria Street West in August 2010, in fact Ou Cai had bought the property in May 2010 for $194,000. She had arranged for her brother, Yu Cai to take title to the property as nominee. He says that he was informed that the money he had
put up in August 2010 (that is, US$50,000) was to be applied towards the purchase of the property. He was unaware that Yu Cai had bought the property in May 2010. Ou Cai advised him that the vendors of the apartment were Korean – whereas it turns out that the registered proprietor of the property was in fact her own relative.
[14] For the hearing, Mr Baird tendered a chronology, which sets out a number of payments that Mr Zeng says he made to the defendants. He made those payments in US currency. The amounts are generally rounded sums. He has also provided the conversion of those payments into New Zealand currency. I understand from Ms Manuson that the defendants do not dispute that Mr Zeng made those payments. What appears to be disputed is the purpose of those payments and whether they were applied towards the purchase of those properties as Mr Zeng maintains.
[15] This case had its first case management conference in February 2015. Associate Judge Sargisson directed standard discovery to be completed by 10 April 2015. She recorded in her minute that the amount of the plaintiffs’ claim was believed to be in the order of $2.6 million. The defendants have so far provided three affidavits of documents. The first was given on 10 April 2015 – that is 51 pages long; the second on 14 April 2015 is two pages; and the third affidavit, given on 22 June 2015, runs to 10 pages. Mr Baird also advised that the defendants have made further informal discovery of documents. I am advised that there are at least 1500 pages of documents in Chinese. The plaintiffs have engaged professional interpreters to provide translations.
[16] Mr Zeng filed an application for further discovery on 12 June 2015. He filed another application on 25 June 2015 which sought wider discovery than his first application. And he filed a second amended application on 21 July 2015 seeking even more documents. Along with that second amended application, he filed the “new draft statement of claim”. There was a flurry of affidavits – in particular, the plaintiff filed two reply affidavits outside the time for filing reply affidavits, and an affidavit by an Auckland conveyancing lawyer, Mr Jones, which provided new evidence-in-chief. Notwithstanding that late filing, the defendants provided a further affidavit to address those matters.
The adjournment application
[17] At the first case management conference Associate Judge Sargisson allocated a hearing for this case for six days beginning 19 October 2015. It is desirable to allocate a date of hearing at the first case management conference if possible. Notwithstanding that, I accept the plaintiff’s submission that experience in this case has shown that it is now unrealistic to try to prepare for a hearing beginning on 19 October 2015.
[18] There are a number of practical difficulties standing in the way of this case being ready for hearing by then. The first aspect is the Chinese language element. An affidavit from the plaintiff’s interpreter explains that she has not yet completed translating all the documents. There are likely to be even further documents requiring translation, given the application for further discovery.
[19] The fact that on both sides there are witnesses out of the jurisdiction means more time is required for trial preparation. There are inevitable delays in dealing with parties outside the jurisdiction in terms of briefing evidence and preparing for trial, as opposed to dealing with witnesses who are in the centre where the case is to be heard.
[20] There is also the difficulty that parties and witnesses do not have English as their first language. That requires more time to ensure that evidence is properly prepared including time to translate documents.
[21]The plaintiff signals that he will wish to deliver interrogatories.
[22] Having seen the new proposed statement of claim, the defendants anticipate that they will apply for further discovery.
[23] Another matter that arose in the course of discussion is the need to amend pleadings. The close of pleadings date was initially set as 29 July 2015. It was changed to 14 August 2015 but it is quite plain that there is more work to be done on this case before the pleadings can be closed. 14 August is too early.
[24] A forensic accountant instructed by the plaintiff has sworn an affidavit indicating that he requires at least six weeks after receiving documents on discovery to prepare his evidence.
[25] The defendants oppose the application for an adjournment. They are keen to get the case on for hearing. They take the point that that plaintiff could have anticipated many of these problems earlier. They point out that the plaintiff could have amended his pleadings earlier. While I can understand the defendants’ desire to have a hearing so that the differences between the parties can be finally resolved, in my view I would be doing a disservice to both parties if I were to require them to proceed to a hearing on 19 October 2015. It is clear to me that there is much more work to be done on this case before it can be allocated a hearing date. I have no confidence that this case would be ready for trial by 19 October 2015 given the extensive interlocutory work required before a hearing.
[26] Accordingly I vacate the fixture for 19 October 2015. I do not allocate a new hearing date. The case will require further case management. Certainly until all interlocutory steps have been carried out, it will not be possible to estimate how much hearing time will be required. Given the sums at issue, it is appropriate to give proper time for interlocutory matters to be attended to.
The discovery application
[27] The most recent discovery application asks for discovery of various classes of documents both from the defendants, from conveyancing lawyers who acted on the purchase of the apartments and King Edward Avenue, and from Yu Cai (Ou Cai’s brother). For discovery from the defendants there are these classes of documents:
(i)conveyancing files, records and documents;
(ii)financial records;
(iii)tenancy agreements and property management agreements;
(iv)adoption and marriage dissolution documents; and
(v)Fang Li’s Immigration New Zealand records.
[28] Documents sought from the conveyancing lawyers are conveyancing files, records and documents.
[29] Discovery sought from Yu Cai are documents relating to the purchase and the later sale of the property at 1D Albury Avenue, Epsom.
Discovery by conveyancing lawyers
[30] Associate Judge Christiansen directed non-party discovery by lawyers who acted on both the purchase of the apartments and on the purchase of 10 King Edward Avenue. Disclosure of conveyancing files has already been made. An experienced Auckland property lawyer, Mr Tim Jones, has been shown those files and has sworn an affidavit commenting on their contents. As an experienced property lawyer, he says that there are documents missing from those lawyers’ files which he would normally expect to find on a standard conveyancing transaction. He notes, for example, the absence of letters of engagement, correspondence between lawyers and client, documentation as to nomination as when the purchaser has stipulated another person to take title, A & I forms and the like. I am informed that trust account records have been made available.
[31] The plaintiffs’ lawyers have dealt with the other law firms. Those lawyers have agreed to swear affidavits. It appears that while clients uplifted files, the lawyers took copies of the files. The thrust of the plaintiffs’ discovery application in respect of the conveyancing files is in effect to check that nothing has been omitted. It seems to me that a convenient way of dealing with that is that once the Y T Choi Lawyers and Yang Lawyers swear their affidavits as to the contents of the files, those affidavits should be provided to the defendants and that they should, in turn, depose whether they hold any further documents beyond those disclosed by the lawyers. That therefore leads on to discovery sought from the defendants.
Further discovery by defendants
Conveyancing documents
[32] The plaintiff also identifies two other documents which should be addressed. Apartment 3B/11 Howe Street was sold by auction but one document, the particulars of auction, is incomplete. The page showing the purchase price and other details of the sale is missing. Obviously that document is relevant particularly as it would record any deposit paid. No doubt those details could also be ascertained from lawyers’ settlement statements. I accept the submission for the plaintiff that that document is likely to be in the control of the defendants and should be disclosed.
[33] The other particular documents sought by the defendants under this head are written receipts issued by Yu Cai acknowledging payment of $100,000 by Ou Cai on or about 6 September 2010. There is uncertainty as to the validity of these receipts. The defendants now say that these receipts are fictitious and that no payment was ever made to Yu Cai. The receipts were issued so that Yu Cai, then owner of Apartment 1J/135 Victoria Street West, could transfer ownership to Fang Li. If this was fictitious, that may lead to a finding that no funds from the plaintiff were applied towards the purchase of 1J/135 Victoria Street West. On the other hand, if there was a genuine payment and the funds contributed by Mr Zeng may have gone to the purchase of the apartment, it is clearly important to establish whether Ou Cai or Fang Li did make any payment to Yu Cai for Apartment 1J. It is therefore necessary that the defendants depose as to whether they did make any payment and that they discovered any documents evidencing such payment.
Financial records
[34] The plaintiff has retained a forensic accountant, Mr McKay, to trace how monies have been applied. The application of monies is relevant in the following ways:
(a)To see whether the payments made by Mr Zeng were applied to the purchase of the apartments and, if so, which apartments.
(b)Assuming that Mr Zeng establishes a beneficial interest in apartment 1J, to see how the proceeds of sale of that apartment have been applied.
(c)To ascertain what rent has been received from the apartments.
(d)To deal with rent paid in respect of the King Edward Avenue property.
[35] On that last point, Ms Cai is receiving a WINZ benefit. King Edward Avenue is owned by her mother. She is paying rent to her mother for that property. Mr Zeng says that the mother is accordingly accountable for rent received from her daughter for living in that property.
[36] To ensure that all those matters can be properly accounted for, Mr McKay asks for discovery of extensive records. It turns out that the defendants had many accounts with the ANZ Bank, apparently 18 altogether. They also have four accounts in China. They used different foreign exchange companies to transmit funds from China to New Zealand. In particular, it appears that the channel for Mr Zeng’s payments was that he would pay Fang Li in China in most cases and that she in turn would transmit funds to Ou Cai in New Zealand. That was not always the case. The defendants have provided some of those bank accounts but the plaintiff says that what has been provided is incomplete. Generally the plaintiff wants all of the documents from 1 January 2010 to the present date. I explored with the parties whether it was possible to narrow the scope of discovery.
[37] I understand from Ms Manuson that there is no dispute that Mr Zeng made the payments to Ou Cai and Fang Li identified in the chronology handed up to me in the hearing. Given that there does not seem to be any controversy as to the fact of payment by Mr Zeng or the receipt of those payments by Ou Cai and Fang Li, the enquiry will be more as to the application of those funds. That will still require a tracing exercise. From Mr Zeng’s point of view, the end point of the tracing exercise for the purchase of the apartments will be whether the funds he contributed found their way into the solicitor’s trust account for the purchase of the apartments.
[38] It occurs to me that the defendants may be able to provide that tracing themselves. I note that the defendants have also engaged an accountant to provide accounting evidence for this proceeding. It is open to the defendants to do the tracing themselves by identifying the receipt of the payments from Mr Zeng into their own accounts, and then showing whether those payments do find their way into the lawyers’ trust accounts for the purchase of apartments. If they were to provide discovery that shows that linkage, I do not see that it is necessary for them to provide more extensive discovery (at least so far as tracing into the purchase of the apartments is concerned). I regard that as the most troublesome part of this discovery application as it may otherwise require trawling through records of banks in China as well as New Zealand banks.
[39] If the defendants do not provide discovery that shows that linkage, then the more extensive approach of the forensic accountant may have to be followed – that is, the defendants will be required to disclose all documents in all their accounts, both in China, in New Zealand, and any foreign exchange dealers so that all payments can be traced through to see what the ultimate destination of the funds sourced from Mr Zeng was. I intend, therefore, to provide for staggered discovery in respect of the financial records of the defendants. They will first have the option of showing the tracing themselves. If they decline to carry out that exercise themselves, even with the assistance of their accountant, they will then be required to provide more extensive discovery.
[40] I note that there is no dispute that the funds that Mr Zeng says he paid towards King Edward Avenue were in fact applied towards that property and discovery for that purpose is not required.
[41] For completeness, the defendants will still be required to make discovery of documents going towards the sale of apartment 1J/135 Victoria Street West and the application of those funds. They will also be required to disclose documents going to the rent received both from the apartments and also the rent payments made by Ou Cai to her mother for 10 King Edward Avenue.
Tenancy agreement and property management agreements
[42] The defendants have already discovered some tenancy and property management agreements for the apartments. The plaintiff has identified gaps and in some cases double-ups in respect of some apartments. I would expect the defendants, as residential landlords, to have proper business records for their tenancies. I would expect them to have annual financial statements so that their liability for income tax can be assessed, and I would expect them also to keep records as to rents payable and rents received in respect of each of their apartments. I accordingly direct additional discovery in respect of tenancy and property management agreements to ensure that there is comprehensive documentation as to rent received from the apartments.
[43] The plaintiff has asked for discovery under this head up to the present date. It will be necessary to consider later on what ongoing discovery also ought to be made for further rent received up until the date of hearing. I point out to the defendants that there is a risk for them if they fail to make adequate disclosure under this head. If they do not disclose the rent received from the apartments, it will be open to the plaintiff to call evidence from someone who deals in management of residential tenancies. Such a witness might give evidence as to the reasonable rent expected from the apartments, and as to the likely costs incurred by a landlord, so as to derive a notional rent. In the absence of evidence from the defendants the court might accept evidence from such a witness as to the income that the defendants received. I mention that so that they may appreciate the importance of making full and frank disclosure of the rent they received.
Adoption and marriage dissolution documents
[44] Under this head, the plaintiff seeks disclosure of documents relating to the parentage of Yunze Cai born on 8 January 2005 in Jilin, China. This is relevant to the claims by the plaintiff that he entered into the relationship with Ou Cai and made out money in reliance on representations that she made. One of the alleged misrepresentations is that she told him that she had adopted Yunze Cai. Mr Zeng alleges that was a lie. He contends that far from Ou Cai having adopted the child, Yunze Cai was in fact her ex-nuptial child and she went through an adoption as a way of covering up the fact that her child was born out of marriage.
[45] So far, there is attached to Ou Cai’s affidavit a Chinese adoption record, together with a translation. Some parts are now redacted. Mr Zeng seeks more extensive disclosure: the documents are not to be redacted, and he wants to see Yunze Cai’s original birth certificate together with the adoption application and any consents given by the biological parents.
[46] I accept the purpose of that application and I direct discovery but I emphasise that Ou Cai is required only to disclose documents in her control. To the extent that she is not in control of documents (and documents may be in her control even if not in her possession), she needs to depose as to the possible existence of those documents if they are known to her. She cannot be required to discover documents outside her control.
[47] She was also requisitioned for documents as to the dissolution of her marriage with her husband. She has provided some Family Court records but they have been redacted. I make it clear that documents disclosed in this proceeding are to be used only for the purpose of this proceeding. The plaintiff and his lawyers are under obligations of confidentiality. I direct that any documents disclosed under this head are to be made available only to the plaintiff’s lawyers, not to the plaintiff himself, pending further order of the court. That is on the basis that the lawyers can be expected to preserve the confidentiality of those records.
Fang Li’s Immigration New Zealand records
[48] This matter is relevant to representations alleged to have been made by Ou Cai to Mr Zeng to induce him to make a payment to clear the mortgage against the King Edward Avenue property. The misrepresentation alleged is that Ou Cai told Mr Zeng that her mother would not be able to take up a permit to live in New Zealand unless the debt against King Edward Avenue was cleared. Obviously her immigration records would be relevant to that issue. Again, I emphasise that the defendants are required only to disclose documents in their control. There will be a direction for discovery accordingly.
King Edward Avenue
[49] I come back to the matter of King Edward Avenue. Mr Zeng has sought discovery of documents relating to debts against King Edward Avenue, secured by the ANZ Bank mortgage. There is documentation on the file that shows that the initial loan by the ANZ Bank for the purchase of 10 King Edward Avenue has been repaid. The mortgage has not however been discharged from the title. Mr Zeng is concerned that the ANZ Bank may provide further accommodation against the security of the property. His lawyers have written to the ANZ Bank, noting that he has a caveat and asserting that his caveat will take priority over any advances that might be made against the property. Notwithstanding that, this issue can be cleared up if the defendants arrange for the mortgage to be taken off the title. That would then show that the ANZ Bank no longer has any interest in the property.
[50] The defendants will have the option of clearing the mortgage from the title. If they do so they will not be required to disclose documents relating to a debt to the ANZ Bank secured against that title. Failing that, the directions for discovery of the financial documents will go to that as well.
Discovery by Yu Cai
[51] As mentioned already, Yu Cai is in Jilin Province in China but he was for a period the owner of a property at 1D Albury Avenue, Epsom. I was initially concerned about making an order for non-party discovery against someone outside the jurisdiction. Normally, non-party discovery is ordered only against people within the jurisdiction of the court. That is for the simple reason of ensuring that the orders of the court are enforceable. An order for discovery made against someone overseas may well be ineffectual.
[52] I note that ordinarily leave to serve the application would be required under r 6.30 of the High Court Rules. So far there does not seem to be any guidance in the case law as to how this case might be decided under that rule. Notwithstanding that, the notice of opposition to the discovery application was lodged in the name of both the defendants and Yu Cai. He has accordingly submitted to the jurisdiction of this court.
[53] The relevance of Yu Cai’s investment in the Albury Avenue property is said to be that from the proceeds of sale of that property he lent his sister NZD280,000 which was applied towards the purchase of 10 King Edward Avenue. Mr Zeng and his lawyers are suspicious that in fact there was no loan from Yu Cai but that, instead, the NZD280,000 used towards the purchase of King Edward Avenue was Ou Cai’s all along.
[54] While Yu Cai has filed a notice of opposition with his sister and mother, as a non-party it may be more appropriate for him to receive independent advice about this discovery matter. He is not a party to the proceeding and his position should be one of neutrality. It may be more appropriate for him to have outside legal assistance.
[55] I make an order for non-party discovery against Yu Cai. The service of that order is to be made by serving the defendants’ lawyers as they appear to be in communication with him through Ou Cai. The orders are to be translated into Chinese. He is to make discovery of documents under Schedule 3 of the second defendant’s application for discovery. The order will advise him that he is entitled to instruct New Zealand lawyers of his choice to enable him to carry out his obligations under the order, and that those lawyers may communicate with the plaintiff’s lawyers as to the costs of carrying out discovery. Those lawyers may require tender of payment of their costs in enabling Yu Cai to make discovery.
[56] I give those directions so as to make compliance with the order as straightforward as possible for Yu Cai. I recognise, of course, that as he is outside the jurisdiction, any order I make will not be enforceable unless he comes to New Zealand. But if I make compliance with the order as straightforward as possible, it may encourage him to provide the documents sought.
Directions
[57]I give these directions:
(a)The plaintiff is to file and serve a new statement of claim. He is not required to follow exactly the draft statement of claim tendered at the
hearing. It would be helpful if that statement of claim could identify particular payments made by the plaintiff. A schedule similar to that provided in the chronology would be useful. That pleading will be without prejudice to the plaintiff’s right to interrogate the defendants as to the receipt and application of payments. No time is fixed for the plaintiff to file and serve the new statement of claim.
(b)The defendants will have 20 working days after service of that new pleading in which to file and serve a statement of defence. It would be helpful to have the defendants plead in response to each of the plaintiff’s payment how those funds were applied.
(c)The defendants will be required to make further discovery within a further 20 working days of filing the statement of defence. That is, they will need to make discovery no later than 40 working days after the plaintiff files and serves the amended statement of claim.
(d)The defendants’ further affidavit of documents is to address the following matters:
Discovery by conveyancing lawyers
(1)Whether the affidavits of documents of Y T Choi Lawyers and Yang Lawyers disclose fully the conveyancing documents relating to the sale and purchase of all apartments and the purchase of the King Edward Avenue property.
(2)If the lawyers’ affidavits of documents are incomplete, the defendants are required to identify those documents omitted by the lawyers. In particular, the affidavit of documents is to address these matters:
(a)the entire agreement for the purchase of the apartment at 3B Howe Street, including the page showing the purchase price and other details of the sale; and
(b)documents showing whether any payments were made to Yu Cai for the transfer of apartment 1J/135 Victoria Street West to Fang Li.
Financial records
(3)For the purpose of establishing whether payments made by the plaintiff were applied for the purchase of any of the apartments, the defendants have the option of disclosing only enough bank statements to show how the flow of funds can be traced from the plaintiff through to the apartments.
(4)On the other hand, if the defendants say that such tracing is not possible, they are required to make more extensive discovery, namely, all documents sought by the plaintiffs, including all bank accounts, both in China and New Zealand, and all documents of foreign exchange dealers so as to allow the plaintiff to undertake such tracing.
(5)The defendants are not required to disclose documents showing that funds from Mr Zeng were applied towards King Edward Avenue, as that is not in dispute.
(6)The defendants are required to disclose documents as to the sale of apartment 1J/135 Victoria Street West and the application of the proceeds of sale; documents showing any rent received from the apartments, and rent payments made by Ou Cai to her mother for 10 King Edward Avenue.
Tenancy agreements and property management agreements
(7)To the extent that they have not already done so, the defendants are to disclose all documents relating to the residential tenancies of the apartments, so as to show all income received from the apartments.
(8)To the extent that the defendants wish to claim deductions on account of costs incurred, they should disclose documents evidencing such costs (for example, rates, insurance and body corporate levies). They may include income tax returns for their earnings.
(9)Leave is reserved to give further directions for ongoing discovery under this head.
(10)The defendants are to disclose any residential tenancy agreement for King Edward Avenue.
Adoption and marriage dissolution documents
(11)The defendants are required to discover documents without redactions. Ou Cai is to disclose further documents relating to the adoption of Yunze Cai including, if they are in her control, Yunze Cai’s original birth certificate, the adoption application, consents given by biological parents and any documents in her control identifying the biological parents. Similarly, documents relating to the dissolution of her marriage should not be redacted.
(l2) Documents under this head are to be made available only to the plaintiff’s lawyers, not to the plaintiff himself, pending further order of the court. The lawyers are required to preserve the confidentiality of these records.
Fang Li’s Immigration New Zealand record
(13)The affidavit of documents is to include Fang Li’s Immigration New Zealand record including any documents showing whether it was a requirement for her to obtain residence in New Zealand that the mortgage on King Edward Avenue should be discharged.
Debt to the ANZ Bank
(14)The defendants are required to disclose documents showing debt to the ANZ Bank, including relevant bank statements, but they will not be required to make discovery under this head if they arrange for the mortgage against King Edward Avenue to be discharged.
[58] Yu Cai is to file and serve an affidavit of documents addressing the documents in Schedule 3 of plaintiff’s application. That is subject to the following conditions:
(a)The order requiring him to make discovery is to be translated into Chinese.
(b)Yu Cai will be entitled to instruct independent solicitors (that is, solicitors not acting for other parties) to advise him and assist him to comply with the order. The lawyers he instructs may require tender of payment of their costs by the plaintiff in enabling him to make discovery.
(c)The plaintiff is to pay Yu Cai’s costs of complying with the discovery
order.
(d)His affidavit of documents is to be in Chinese, being his preferred language.
[59] The defendants are to file and serve any application for further discovery by the plaintiff no later than 40 working days after they are served with the plaintiff’s new statement of claim.
[60] The plaintiff says that he will also interrogate. The plaintiff will appreciate that the delay in the delivery of interrogatories may only delay the allocation of a hearing date. It is in the plaintiff’s own interests to deliver interrogatories as soon as possible.
[61] I direct a case management conference to take place no earlier than 50 working days in time – that is with a view to reviewing compliance with these directions and giving directions for any further interlocutory applications.
[62] Leave is reserved to apply further, including in respect of discovery to be made by the conveyancing lawyers.
Costs
[63] On costs, the plaintiff has succeeded on the applications and is entitled to costs. Category 2 costs are appropriate. I invite the parties to confer as to costs. If they cannot agree costs memoranda may be filed.
[64] The defendants should file and serve their memorandum as to costs no later than five working days after receiving the plaintiff’s memorandum. I would expect the parties to resolve costs during the month of August.
………………………………………..
Associate Judge R M Bell
0
0