Zhao v Zheng - [2025] NZHC 2569

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-1109

[2025] NZHC 2569

IN THE MATTER OF a breach of contract

BETWEEN

TENG ZHAO

Plaintiff

AND

JING ZHENG

Defendant

Hearing: On the papers

Counsel:

T Zhao, Plaintiff in Person

E St John and D Liu for the Defendant

Judgment:

15 September 2025

JUDGMENT OF ASSOCIATE JUDGE SUSSOCK

This judgment was delivered by me on 15 September 2025 at 10 am pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors:
Heritage Law, Auckland O'Connell Chambers, Auckland

TENG ZHAO v JING ZHENG [2025] NZHC 2569 [15 September 2025]

Contents

Introduction [1]

Relevant legal principles [13]

Discovery obligations [13]
Strike out for discovery breaches [14]

Issues [20]

Has there been a deliberate and continuing refusal to comply with discovery

obligations? [21]

Discovery chronology [21]

Does Ms Zhao’s default make a fair trial possible? [104]

If so, is it just to strike out the proceeding? [109]

Conclusion [113]

Application to vary inspection orders [115]

Should indemnity costs be awarded? [116]

Contempt of Court [118]

Result [119]

Costs [121]

Introduction

[1] The defendant seeks an order striking out the plaintiff’s claim on the grounds that she has deliberately failed to comply with discovery orders made during the course of this proceeding, including for inspection of her iPhone. The plaintiff claims her non-compliance was inadvertent and instead seeks an order discharging the inspection order made by Associate Judge Paulsen on 4 September 2024.

[2] The proceeding was filed following my 28 April 2023 determination of the plaintiff’s application to sustain a caveat over the defendant’s property in Taupo, Zhao v Zheng (Caveat Decision).1 The caveat relied on a handwritten loan agreement signed in front of a Justice of the Peace on 17 January 2018 (Repayment Agreement). The agreement recorded that the defendant promised to pay the plaintiff $200,000 within five years and:
[i]f payment has failed within this range of time, [the defendant] should sell the property of 198 Taharepa Road, Taupo. Certificate of title as attached.

[3] I granted leave to Ms Zhao to lodge a second caveat claiming an equitable charge on condition that she file and serve any claim against the defendant within one month and pursue that claim with due diligence. This led to the present proceeding.

1 Zhao v Zheng [2023] NZHC 983.

[4] The plaintiff claims that during the course of a joint business venture with the defendant, she advanced funds totalling $128,851.93 to pay for company related costs and that between 2015 and 2018 the defendant received “benefits of goods from the company with an aggregate value of at least $72,000”. The plaintiff says she discovered in about January 2018 that the defendant had used the funds for his personal benefit rather than for the business. After confronting the defendant, the plaintiff says he promised to repay the misappropriated funds within 5 years, and that this was recorded in the Repayment Agreement referred to…

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 Zhao v Zheng

Details

AGLC: Zhao v Zheng [2025] NZHC 2569
Case: [2025] NZHC 2569
Decision Date: 15 September 2025

CaseChat Overview and Summary

Teng Zhao has sued Jing Zheng in relation to a business relationship gone wrong. Zhao claims that Zheng misappropriated funds belonging to their joint business and has sued Zheng for the return of these funds. Zheng denies the claim and has counterclaimed for the return of his own funds. Zhao's claim is based on a handwritten loan agreement between the parties which Zheng signed on 17 January 2018. Zhao has caveated Zheng’s property in Taupo to secure her claim. Zheng seeks an order striking out Zhao’s claim on the basis that Zhao has deliberately failed to comply with discovery obligations including for inspection of her iPhone. Zhao denies deliberately failing to comply with the discovery obligations and instead seeks a variation of the inspection orders. The court was required to determine whether Zhao has deliberately failed to comply with her discovery obligations and if so, whether it is just to strike out the proceeding. The court found that Zhao has deliberately and continuously refused to comply with her discovery obligations and that this has made a fair trial impossible. The court found Zhao’s evidence to be not credible and that she had deliberately withheld WeChat messages which were highly relevant to the issues in the case. The court granted Zheng’s application to strike out Zhao’s claim and ordered the caveat over Zheng’s Taupo property to lapse. The court also directed the defendant to file a costs memorandum addressing both costs on the strike out application and the caveat proceedings together with any memorandum seeking orders under the Contempt of Court Act by 6 October 2025. The plaintiff was to file a costs memorandum in response and any memorandum in response to any defendant’s memorandum seeking orders under the Contempt of Court Act (if filed) by 20 October 2025. Costs will then be determined on the papers and any Contempt of Court memoranda will be referred to a High Court Justice for determination.

Orders