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Zheng v Deng

Zheng v Deng

Case [2019] NZHC 3236 10 December 2019

Contract Formation

Unconscionable Conduct

Fiduciary Duty

Unjust Enrichment

Statutory Interpretation

Commercial Law

Corporate Law & Governance

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2017-404-002730

[2019] NZHC 3236

BETWEEN
LU ZHENG

First Plaintiff

ORIENT CONSTRUCTION LIMITED
Second Plaintiff

AND

DONGLIN DENG

First Defendant

BIN JIANG
Second Defendant

ORIENT HOMES LIMITED
Third Defendant

.../intituling cont over

Hearing: 18 – 29 November and 3 December 2019

Counsel:

D Zhang and E Tie for Plaintiffs

JD Turner and L Huang for First and Third Defendants

Judgment:

10 December 2019

JUDGMENT OF DOWNS J

This judgment was delivered by me on Tuesday, 10 December 2019 at 2.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors/Counsel:
Amicus Law, Auckland.
McVeagh Fleming Lawyers, Auckland.

ZHENG v DENG [2019] NZHC 3236 [10 December 2019]

EVERSOLID CONSTRUCTION LIMITED
Fourth Defendant

HONGLAN LIU
Fifth Defendant

D & R HOMES LIMITED
Sixth Defendant

YAN JIN
Seventh Defendant

TONG ZHU
Eighth Defendant

YAOKUN CHEN
Ninth Defendant

Table of Contents

Para No

What the case is and is not about [1]

Background [5]
A precis (only) of the competing cases [15]

The defendants’ cases [20]

Partnerships? Or joint ventures attracting fiduciary obligations? [26]

Principle [27]

An overview of the evidence in relation to the alleged partnerships

and joint ventures [40]

Analysis [68]

Other causes of action in relation to the Bella Vista project [90]

A loan? Something else? [99]

A debt? Unjust enrichment? [129]

Set off defences [145]

Results and costs [146]

Addendum: admissibility of evidence [148]

What the case is and is not about

[1] Lu Zheng is a businessman. He is the sole director and shareholder of Orient Construction Ltd.1 Mr Zheng and Orient Construction sue Donglin Deng and two other defendants.2 No fewer than eight causes of action are pursued, in an inadequate statement of claim. The primary actions allege the existence of partnerships; alternatively, joint ventures attracting fiduciary duties. A final account is sought as the foremost remedy.

[2] Given these features, the case might have been approached by focussing on the alleged relationships, and features said to make these fiduciary. Instead, Mr Zheng adduced much evidence about what Mr Deng owed him, and why. Mr Deng responded in kind. This dynamic established an irreversible life of its own, compounded by an array of factual disputes, including a set of impenetrable, internal business accounts.3 In turn, much time was spent on what these meant, how the figures were calculated, and who the accounts reveal as debtor: Mr Zheng or Mr Deng?

1      Orient Construction.
2      Orient Homes Ltd and Eversolid Construction Ltd. Mr Zheng settled his claims against the second, fifth and sixth defendants on day five of the trial. He abandoned his claims against the seventh, eighth and ninth defendants on the last day of trial.
3      The internal accounts.

[3] None of the causes of action poses this question. None requires it be answered. Indeed, the foremost remedy sought by Mr Zheng presupposes this question should not be answered. In any event, it could not be—at least…

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 [2019] NZHC 3236
Case: [2019] NZHC 3236
Decision Date: 10 December 2019

CaseChat Overview and Summary

Lu Zheng and Orient Construction Ltd sued Donglin Deng and others on multiple grounds, including the existence of partnerships or joint ventures attracting fiduciary duties. The plaintiffs sought a final account as the foremost remedy. The defendants denied the existence of any partnerships or joint ventures, and raised set-off defences. The court found that no evidence supported the existence of any partnership or joint venture. The internal accounts were described as “bizarre”, “enigmatic”, and a “moving feast of numbers”. No evidence suggested the existence of mutual loyalty, reliance, and trust that typically characterises such relationships. The court found the defendants did not owe the plaintiffs any money. The court dismissed all causes of action and ordered the plaintiffs to pay the defendants’ costs.

Orders