Zhang v Yu

Case [2020] NZCA 592


IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA75/2019
 [2020] NZCA 592

BETWEEN

YIHUIA ZHANG
First Appellant

DR WEI HU
Second Appellant

AND

CHUNLIN YU
Respondent

Hearing:

29 July 2020

Court:

Collins, Peters and Whata JJ

Counsel:

C J C McLean for Appellants
W E Andrews for Respondent

Judgment:

1 December 2020 at 3.30 pm

JUDGMENT OF THE COURT

AThe appeal is allowed insofar as it relates to the protest as to jurisdiction.  The appeal is otherwise dismissed.

BThe decision in relation to protest as to jurisdiction, quashing the freezing order and dismissing the proceedings is set aside.

C        The protest to jurisdiction is referred back to the High Court for reconsideration. 

DThe respondent is to pay one set of costs to the appellants for a standard appeal on a band B basis.

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REASONS OF THE COURT

(Given by Whata J)

Introduction

  1. On 27 August 2018 Ms Zhang and Dr Hu obtained judgment by default against Ms Yu for deceit in relation to an investment into a foreign currency dealer operated by Ms Yu, Honest Deal Holdings Company Ltd (Honest Deal) in New Zealand (default judgment).[1]  Ms Yu subsequently invited van Bohemen J to recall his default judgment.  She claimed, among other things, that Ms Zhang and Dr Hu misled the Court about key facts, including that a meeting about the investment took place at Ms Yu’s New Zealand home in July 2014.  Immigration records show Ms Yu was not in New Zealand in July 2014.  Ms Yu also filed a protest as to jurisdiction, claiming that China is forum conveniens, because that is where the agreement to invest was executed.

    [1]Zhang v Yu [2018] NZHC 2215 (Default judgment).

  2. On 29 January 2019 van Bohemen J recalled his default judgment and set it aside (first recall judgment).  He upheld the protest to jurisdiction.[2]  Ms Zhang and Dr Hu then applied to have the first recall judgment recalled, claiming that the Court misinterpreted the evidence about the July 2014 meeting.  This application was dismissed on 19 February 2019 by van Bohemen J (second recall judgment).[3]

    [2]Zhang v Yu [2019] NZHC 29 (First recall judgment).

    [3]Zhang v Yu [2019] NZHC 206 (Second recall judgment).

  3. This is an appeal against the decision to recall the default judgment, the protest to jurisdiction decision, and the refusal to recall the first recall judgment.

Issues on appeal

  1. The appeal raises three key issues:

    (a)whether the solicitors on the record are authorised to act for Ms Yu;

    (b)whether the High Court was correct to recall its judgment in advance of determining whether to uphold the protest as to jurisdiction; and

    (c)whether the High Court was correct to uphold the protest to jurisdiction.

  2. We see nothing in the first issue.  We have affirmation evidence of Ms Yu’s solicitor in China providing signed written confirmation of authority to act.  Mr McLean, counsel for the appellants, nevertheless maintained there was insufficient proof Ms Yu authorised the solicitors on the record…

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AGLC
Zhang v Yu [2020] NZCA 592
Case
[2020] NZCA 592
Decision Date

CaseChat Overview and Summary

In the matter of Zhang v Yu, the High Court was required to determine whether the Court had jurisdiction to hear the plaintiff's claim against the defendant, who had been served with the writ outside of New Zealand without leave. The case involved a dispute over whether the Court had the authority to assume jurisdiction under r 6.29(1)(a) of the rules governing overseas service. The plaintiff argued that the claim fell within the relevant provisions of r 6.27, while the defendant contended that the claim did not satisfy the "good arguable case" test, and therefore, the Court should not assume jurisdiction.

The Court examined the two-stage inquiry outlined in Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, which requires the party effecting service to establish that there is a "good arguable case" their claim falls within one or more paragraphs of r 6.27. The Court found that the plaintiff had provided a sufficiently plausible foundation for the claim to fall within r 6.27(2)(a). However, the Court also considered the matters listed at r 6.28(5)(b)-(d) and determined that there were insufficient grounds for the Court to properly assume jurisdiction. The Court found that the claim did not meet the threshold required under r 6.29(1)(a) and dismissed the proceeding.

The Court's decision hinged on the interpretation of the "good arguable case" test and the factors relevant to the assumption of jurisdiction under r 6.29(1)(a). The Court found that the plaintiff had established a "good arguuable case" that the claim fell within r 6.27(2)(a), but the factors considered under r 6.28(5)(b)-(d) did not support an assumption of jurisdiction. The Court's decision was based on a careful analysis of the relevant rules and authorities, and the Court's finding that the plaintiff had not met the required threshold for the assumption of jurisdiction.

The final orders of the Court were that the proceeding was dismissed, and the defendant was awarded costs. The Court found that the plaintiff had not established a "good arguable case" that the claim fell within one or more of the paragraphs of r 6.27, and the factors considered under r 6.28(5)(b)-(d) did not support an assumption of jurisdiction. The Court's decision was based on a careful analysis of the relevant rules and authorities, and the Court's finding that the plaintiff had not met the required threshold for the assumption of jurisdiction.

Orders

Orders of the court

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Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

The power to recall judgments is stated at r 11.9: 11.9 Recalling judgmentA Judge may recall a judgment given orally or in writing at any time before a formal record of it is drawn up and sealed. The principal categories for recall are well-known:[4] (a)where since the hearing there has been an amendment to a relevant statute or regulation, or a new judicial decision of relevance and high authority; (b)where counsel have failed to direct the Court’s attention to a legislative provision or authoritative decision of plain relevance; and(c)where for some other very special reason justice requires that the judgment be recalled. [4]Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC) Only the last category is relevant to this case. For present purposes, it is sufficient to note that this category is intended to be narrow[5] and does not extend to a challenge of any substantive findings of fact and law in the judgment.[6] As Ms Yu was served without leave overseas, jurisdiction to hear the plaintiffs’ claim is governed by r 6.29(1)(a) which states: 6.29Court’s discretion whether to assume jurisdiction(1)If service of process has been effected out of New Zealand without leave, and the court’s jurisdiction is protested under rule 5.49, the court must dismiss the proceeding unless the party effecting service establishes—(a)that there is—(i)a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and(ii)the court should assume jurisdiction by reason of the matters set out in rule 6.28(5) (b) to (d); or Relevantly, r 6.27(2)(a) permits service out of New Zealand without leave in the following circumstances:(a) when a claim is made in tort and—(i)any act or omission in respect of which damage was sustained was done or occurred in New Zealand; or(ii)the damage was sustained in New Zealand: As stated by this Court in Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd, r 6.29(1)(a) envisages a two-stage inquiry.[7] The party effecting service must first establish that there is a “good arguable case” their claim falls within one or more paragraphs of r 6.27.[8] This first stage may be regarded as a “gateway or threshold” which must be established before moving to consider stage two issues.[9] The “good arguable case” test does not relate to the merits of the case but to whether the claim falls within one or more circumstances specified at r 6.27(2). Furthermore, the test does not require the plaintiff to establish a prima facie case because disputed questions of fact cannot be resolved on affidavit evidence. Rather, there must be a “sufficiently plausible foundation established that the claim falls within one or more of the headings in r 6.27(2).”[10] [7]Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 at [32].[8]At [32].[9]At [32]. [10]At [41]. The second stage of the assessment requires consideration of the matters listed at r 6.28(5)(b)–(d), namely whether there is a serious issue to be tried, whether New Zealand is the appropriate forum and whether there are any other relevant circumstances that support an assumption of jurisdiction. The ultimate issue is whether there are sufficient grounds for the Court to properly assume jurisdiction.[11][11]Kuwait Asia Bank EC v National Mutual Life Nominees Ltd (No 2) [1989] 2 NZLR 50 (CA) at 54. This approach was not disturbed by the Privy Council on appeal: Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1990] 3 NZLR 513 (PC) at 524–525.

Ratio Decidendi

Legal Principle Established

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