Zhang v Honest Deal Holdings Company Limited

[2017] NZHC 1206

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2017-404-000493 [2017] NZHC 1206

BETWEEN

YIHUA ZHANG

Plaintiff

AND

HONEST DEAL HOLDINGS COMPANY LIMITED Defendant

Hearing:

30 May 2017

Appearances:

Y Zhang (Self-represented) Plaintiff in person

[together with Mr Young (Interpreter)] No Appearance of, or for the Defendant

Judgment:

6 June 2017

JUDGMENT OF EDWARDS J

This judgment was delivered by Justice Edwards on 6 June 2017 at 12.00 PM, pursuant to

r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

To:      Y Zhang, Auckland

ZHANG v HONEST DEAL HOLDINGS CO LTD [2017] NZHC 1206 [6 June 2017]

[1]      By application for summary judgment, Ms Zhang seeks an order “freezing or sequestering”  residential  property  in  Dannemora,  Auckland.     That  residential property is the last known address of Ms Yu, who was the former director of the defendant (Honest Deal).

[2]      The application is not opposed and was listed for mention in the summary judgment list on 30 May 2017.  Despite the lack of opposition, summary judgment cannot be entered against Honest Deal, as I explain further below.

Failed investment

[3]      In  an  affidavit  sworn  in  support  of  the  application,  Ms  Zhang  says  her husband visited Ms Yu at her Dannemora address and observed her making investment deals.  On this basis, both Ms Zhang and her husband decided to invest with Ms Yu, and they mortgaged their properties to do so.

[4]      On 6 September 2015, Ms Zhang signed an agreement of investment advice and service with Finawin Finance Management Ltd (Finawin).  Finawin is a Chinese company which appears to operate an investment and financial services business. Ms Yu was a director of this company also.  Ms Zhang alleges that Honest Deal was Finawin’s subsidiary, although there is no evidence in support of that submission.

[5]      The English translation of the investment agreement provides for Ms Zhang to  pay the  sum  of RMB$2,180,000  which  Ms  Zhang  contends  is  equivalent  to NZ$500,000.    The  term  of  the  agreement  was  to  expire  in  December  2015. Ms Zhang paid the sum of RMB $2,180,000 to Finawin on 6 September 2015.

[6]      Ms Zhang then says that Ms Yu informed her that the NZ$500,000 would be transferred to New Zealand to be used for foreign currency speculation.  Ms Zhang says that the monies were in fact going to be used to apply for an entrepreneurial work visa which requires the amount of NZ$500,000.   However, Ms Yu allegedly disappeared around October 2015 and did not refund the investment of NZ$500,000.

[7]      In a second affidavit, Ms Zhang attaches a Chinese newspaper article, the translation of which suggests that Ms Yu has been arrested and branches of Finawin have been shut down in that jurisdiction.

The claim

[8]      The proceeding was commenced by statement of claim and application for summary judgment filed 23 March 2017.  It is supported by two affidavits filed by Ms Zhang which have been translated from Mandarin.

[9]      The named defendant to the proceeding is Honest Deal.  That is apparently a New Zealand registered company, although Ms Zhang alleges that it has since been removed from the Companies’ register.  Ms Yu was a director of Honest Deal and her last known address was Dannemora.

[10]    An affidavit of service filed on behalf of the plaintiff confirms that the proceedings were served on the last known registered office of Honest Deal, the Dannemora  address,  and  by  email.    The  property  manager  for  the  Dannemora address,  the  accountant  at  the previous  registered  office of Honest  Deal,  and  a previous general manager for Finawin have all confirmed that the documents were received.

[11]     No opposition documents have been filed.

Analysis

[12]     The application and proceedings are misconceived.  Any claim arising out of the investment agreement must be brought against Finawin as the corresponding party to that agreement.   That company appears to be based overseas and the proceedings would need to be served on Finawin in that jurisdiction.

[13]     But Ms Zhang’s complaint does not appear to arise out of the investment agreement.  Rather, her claim is against Ms Yu for failure to honour the promise to repay the investment sums or for misusing the investment funds.

[14]     There is currently no pleaded claim against Finawin or Ms Yu.  The claim is against Honest Deal but there is no cause of action against Honest Deal.  I am not therefore  satisfied  that  there  is  any  basis  to  issue  summary  judgment  against Honest Deal and the application for summary judgment must be dismissed.

[15]     If  the  underlying  proceeding  is  to  continue,  it  will  need  substantial amendment.  Additional parties will need to be added, and directions as to service are likely to be required.  If an application for a freezing order is to be pursued then it must be brought in accordance with Part 32 of the High Court Rules.  Given the large sums of money involved, I strongly urge Ms Zhang to seek legal advice on the future form of her claim.

Result

[16]     The application for summary judgment is dismissed.  I direct the Registrar to allocate a case management conference for the proceeding at the next available date

to ascertain the future direction and form of the claim.

Edwards J