Legal Research
Cases
Zheng v Deng

Zheng v Deng

Case [2020] NZCA 614 3 December 2020

Partnership Formation

Type to search within this case.

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA37/2020
[2020] NZCA 614

BETWEEN	LU ZHENG First Appellant ORIENT CONSTRUCTION LIMITED Second Appellant
AND	DONGLIN DENG First Respondent ORIENT HOMES LIMITED Second Respondent

CA303/2020
BETWEEN	LU ZHENG Appellant
AND	DONGLIN DENG Respondent

Hearing:	3 November 2020
Court:	Goddard, Duffy and Nation JJ
Counsel:	D Zhang and E Tie for Appellants J D Turner and L X Huang for Respondents
Judgment:	3 December 2020 at 3.00 pm

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe judgment of the High Court is set aside insofar as it relates to Mr Zheng’s claim for a declaration that there was a partnership and the consequential taking of an account (Mr Zheng’s second cause of action against Mr Deng) and Mr Zheng’s claim in relation to the payments to Mr Deng of $290,000 (Mr Zheng’s first cause of action against Mr Deng).
C We make an order that an account be taken of the dealings of the partnership. The proceeding is remitted to the High Court for the taking of that account.
DWe make an order that such amount as may be due by one party to the other on that account be paid accordingly. Any question of interest on the net amount due is to be dealt with in the High Court, having regard to the findings made in the course of taking the account between the parties.
EMr Deng must pay costs to Mr Zheng for a standard appeal on a band B basis. We do not certify for second counsel.
FWe set aside the order for costs made in the High Court. Costs in that Court should be determined by that Court in light of the outcome of this appeal.

____________________________________________________________________

Table of contents

Para No

Background

The proceedings

High Court trial

The High Court judgment

Findings in relation to partnership/joint venture causes of action
Other causes of action in relation to the Bella Vista Project
Loan/Unjust enrichment claim in relation to $290,000
Claim by OCL to recover miscellaneous payments
Costs judgment

Mr Zheng’s submissions on appeal

Mr Deng’s submissions on appeal

Discussion

A note of caution
The test for a partnership
Our assessment of the evidence
Our response to the Judge’s reasons for not accepting Mr Zheng’s evidence
Terminology used and omitted
The relevance of the various companies
“Likely impropriety”
Excluding RAL from the partnership
Discovery of the Principles in Separation document

Conclusion
The Bella Vista sections
The dispute about the $290,000 transferred to Mr Deng
Mr Deng’s set-off defences

The implications of our findings

The costs appeal

Result

REASONS OF THE COURT

(Given by Goddard J)

The first appellant, Mr Lu Zheng, and the first respondent, Mr Donglin Deng, had a longstanding business association. They carried out a number of property development and construction projects. Those projects were conducted through various companies, including the second appellant Orient Construction Ltd (OCL) and the second respondent Orient Homes Ltd (OHL). The two men agreed 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 Zheng v Deng

Details

AGLC: Zheng v Deng [2020] NZCA 614
Case: [2020] NZCA 614
Decision Date: 3 December 2020

CaseChat Overview and Summary

The Court of Appeal of New Zealand recently handed down a decision in Zheng v Deng, a case that involved a complex web of business relationships and corporate structures between two individuals, Lu Zheng and Donglin Deng. The central issue in the appeal was whether a partnership existed between Zheng and Deng, and if so, what remained to be done to effect the separation of their business interests. The Court of Appeal allowed the appeal, finding that a partnership did exist between the two men, and that an account should be taken to determine the balances owing between the parties. The Court of Appeal set aside the High Court judgment in relation to Zheng's claims for a declaration of partnership and the consequential taking of an account, as well as Zheng's claim for a sum of $290,000 against Deng. The Court of Appeal held that the evidence, including internal accounts and the "Principles in Separation" document, established that Zheng and Deng were carrying on a property development and construction business in common with a view to profit, and that they had equal shares in that partnership. The Court of Appeal also held that the dismissal of Zheng's claim for $290,000 should be set aside to allow for the relevant payments to be taken into account in the course of taking an account as between the partners. The Court of Appeal remitted the proceedings to the High Court for the taking of that account, and ordered that any balance due to one party to the other should be paid accordingly. The Court of Appeal also set aside the costs order made in the High Court, with costs issues to be determined by that Court in light of the outcome before the Court of Appeal.

Orders