Zheng v Mai

[2025] NZHC 2117

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2024-404-1420

[2025] NZHC 2117

BETWEEN

JUNYU ZHENG

Plaintiff

AND

JINGYI MAI

Defendant

Hearing:	30 July 2025
Appearances:	J Leenoh and R Y Wang for Plaintiff No appearance for Defendant
Judgment:	31 July 2025

JUDGMENT OF O’GORMAN J

This judgment was delivered by me on 31 July 2025 at 4 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors:

K3 Legal Ltd, Auckland

ZHENG v MAI [2025] NZHC 2117 [31 July 2025]

Introduction

[1]                 The plaintiff, Junyu Zheng, brings a claim against the defendant, Jingyi Mai, seeking repayment of various sums of money advanced to her. The claim is based on the existence of a written loan agreement and subsequent advances, which the plaintiff alleges were loans to be repaid.

[2]                 The claim was filed on 11 June 2024. It was personally served on the defendant on 26 June 2024 at her residence in Cleveland Road, Parnell, Auckland (the Property).

[3]                 On 1 August 2024, the defendant filed a statement of defence disputing the characterisation of most advances as loans, except for one specific sum. The defendant subsequently failed to take steps in the proceeding.

[4]                 Unbeknownst to the plaintiff, in February 2025 the defendant sold the Property and disposed of her shares in a company called Prime Sports Ltd, operating under the trading name Cheapskates Khyber. It seems the defendant has since moved to China.

[5]                 On 7 May 2025, Venning J made an order that unless the defendant filed and served her list of documents for discovery by 30 June 2025, the defence would be struck out and the plaintiff would be entitled to seek judgment by way of formal proof.

[6]                 This was a hearing of that formal proof application. There was no appearance for the defendant.

Formal proof hearings

[7]                 Under r 15.9(4) of the High Court Rules 2016, the plaintiff must, before or at the formal proof hearing, file affidavit evidence establishing, to a judge’s satisfaction, each cause of action relied on and, if damages are sought, providing sufficient information to enable the judge to calculate and fix the damages.

[8]                 The need to be “satisfied” calls for the exercise of judgement and does not necessarily import any particular burden of proof standard.1 Subject to that flexibility, the test commonly adopted is the civil trial standard of balance of probabilities.2 However, the plaintiff is only required to prove a cause of action so far as the burden of proof lies on the plaintiff. The plaintiff is not required to engage with any matters of affirmative defences, set-off or counterclaim.3

Legal principles for characterising the advances

[9]                 In various cases it has been held that an evidentiary presumption of an obligation to repay (a loan) arises where there has been a payment of money (and the presumption of advancement does not apply), such that if the recipient denies that obligation, the onus is on them to prove a gift.4

[10]             When payments are used to acquire property, the alternative categorisation is often a resulting trust:5

… where A makes a voluntary payment to B or pays (wholly or in part) for the purchase of property which is vested either in B alone or in the joint names of A and B, there is a presumption that A did not intend to make a gift to B: the money or property is held on trust for A (if he is the sole provider of the money) or in the case of a joint purchase by A and B in shares proportionate to their contributions. It is important to stress that this is only a presumption, which presumption is easily rebutted either by the counter-presumption of advancement or by direct evidence of A’s intention to make an outright transfer … A resulting trust is not imposed by law against the intentions of the trustee (as is a constructive trust) but gives effect to his presumed intention …

1      R v Leitch [1998] 1 NZLR 420 (CA) at 428.

2      Mokotupu v Rakei-Clark [2024] NZHC 2412 at [23]; Ferreira v Stockinger [2015] NZHC 2916 at [35]; and Lambert v River [2024] NZHC 1690 at [25].

3      Ferreira v Stockinger, above n 2, at [36].

4      Zheng v Fan [2025] NZHC 701 at [20]–[22] and [52(a)], referencing Seldon v Davidson [1968] 1 WLR 1033(CA) at 1088; Milne v Armijo HC Christchurch CP7/88, 25 August 1989 at 2; and Hotchin v KA No.4 Trustee Ltd [2013] NZHC 1881 at [35].

5      Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] AC 669, [1996] 2 All ER 961 (HL) at 708, approved in Crampton-Smith v Crampton-Smith [2011] NZCA 308; [2012] 1 NZLR 5 at [35]–[36]; Chang v Lee [2017] NZCA 308; [2017] NZAR 1223 at [18]; Mo v Yang [2022] NZCA 573 at [57]–[59]; and Wang v Wang [2025] NZHC 951 at [76] and [78].

Defendant’s pleaded position

[11]             Although the statement of defence is struck out, that document provides some relevant admissions and provides background context for my assessment about whether the plaintiff has properly substantiated the matters alleged.

[12]In the statement of defence, the defendant:

(a)admitted the existence of the relationship and the advances, but denied that most of the funds were loans;

(b)asserted that the initial advances were part of a joint investment in the property, not loans;

(c)claimed that some advances were made out of love and affection, or as consideration for support provided to the plaintiff, not as loans; and

(d)admitted liability to repay only the RMB 300,000 advanced in March 2023, but denied liability for the other sums.

Facts

[13]             The following is a summary of facts proven to my satisfaction by affidavit evidence and exhibited documents.

[14]             In March 2020, the defendant approached the plaintiff asking to borrow money towards purchasing the Property. At the time, the parties were friends.

[15]The plaintiff advanced a total of NZD 488,640 to the defendant as follows:

(a)NZD 51,000 was advanced by the plaintiff to the defendant by international money transfer from RMB to NZD through a mutual acquaintance by agreement, Junwei Zhang:

(i)On  24  March  2020,  the  plaintiff  advanced  a  total  of RMB 220,000  to  Junwei  Zhang   in   two   tranches   of  RMB 200,000 and RMB 20,000.

(ii)An exchange rate of RMB 4.32 per New Zealand dollar was applied and agreed between the parties plus a fee of NZD 20 to record a total advance of NZD 51,000.

(b)RMB 2,000,000 was further advanced by the plaintiff to the defendant by using a third party remittance agent based in New Zealand chosen by the defendant:

(i)On 27 August 2020, the plaintiff transferred RMB 1,000,000 to the third party remittance agent in five equal instalments of RMB 200,000.

(ii)On 28  August  2020,  the  plaintiff  transferred  a  further RMB 1,000,000 to the third party remittance agent in five equal instalments of RMB 200,000.

(iii)The conversion rate applied for the transaction was RMB 4.57 per New Zealand dollar, and the recipient of the funds was recorded as being the defendant. The funds were transferred to the defendant.

[16]             On 28 August 2020, the parties signed a written loan agreement recording the advances referred to in para [15] (the Initial Advances), with terms including principal, interest at 8.5 per cent per annum, and weekly interest repayments to commence on  1 June 2021. The written contract was confirmed in chat messages between the parties, with a photo of the document included in those exchanges.

[17]             Beginning in 2022, the parties started a romantic relationship. From October 2022, they started living together.

[18]             In or around early 2023, the defendant said her business was in financial difficulty and asked the plaintiff to assist.

[19]             Between 27 February 2023 and 6 March 2023, at the defendant’s request, the plaintiff advanced RMB 300,000 in three tranches to the defendant’s nominated agent, converted to the sum of NZD 69,900:

(a)RMB 30,000 on 27 February 2023;

(b)RMB 100,000 on 1 March 2023; and

(c)       RMB 170,000 on 6 March 2023.

[20]             Between 12 July and October 2023, the plaintiff transferred further funds to the defendant’s New Zealand bank account at her request, totalling NZD 19,290:

(a)On 12 July 2023, the plaintiff advanced NZD 1,990 to the defendant’s personal bank account in New Zealand;

(b)On 27 July 2023, the plaintiff advanced NZD 4,000 to the joint account held with the defendant, which was predominantly used by the defendant for her own personal expenses; and

(c)On 13 October, 20 October, 23 October and 25 October 2023, the plaintiff advanced a total of NZD 13,300 to the defendant in four separate tranches (the arrangements confirmed via WeChat).

[21]             Between 1 July and November 2023, a total of RMB 164,737.11 was paid from the plaintiff’s Chinese credit card to the defendant via transactions processed at her store. The conversion of this amount is NZD 37,042.77.

[22]The parties separated in December 2023.

[23]             On 19 December 2023, the plaintiff demanded repayment of all the advances, but the defendant failed to make any payments.

Analysis

[24]             I accept that there is no presumption of advancement on the facts. That arises where there is a transfer from someone with a natural obligation to provide for the transferee, in which case the law presumes the transferor intended to relinquish his or her beneficial interest in the property.6 It typically arises in the relationship between parent and child.7 There is no such obligation here, between two independent adults.8 They were in a relationship for some of the material period, but the Property (Relationships) Act 1976 does not apply, among other reasons because they lived together for only a short time, and the relationship was of short duration.9

[25]             Against the background of a signed loan agreement for the Initial Advances, ongoing payments of a similar nature at the defendant’s request for business purposes, and an admission of liability to repay the advance referred to in [19] above, I accept loan obligations were either expressly or objectively implied (whether or not the evidential onus shifts under the principles referred to in [9] above). There is no evidence to support the intention of a gift, or otherwise rebut the claims.

[26]             Accordingly, I am satisfied that the defendant is liable to repay the plaintiff’s advances  totalling  NZD  614,872.77  and  interest  in   the   total   amount   of   NZD 219,998.17. Interest has been calculated from the date of the advances to 30 July 2025 as set out in the table below, based on applying a contractual rate of 8.5 per cent per annum pursuant to s 22 of the Interest on Money Claims Act 2016 for the Initial Advances, and in accordance with s 10 of the Interest on Money Claims Act 2016 for the remaining amounts.

6      Woolf v Kaye [2018] NZHC 2191, [2019] 3 NZLR 93 at [157] and [188].

7      See Reid v Castleton-Reid [2019] NZCA 372, [2019] NZAR 1655 at [85]; and Wang v Wang

[2025] NZHC 951 at [81]–[85].

8      For example, s 4(3) of the Property (Relationships) Act 1976 provides that the presumption of advancement does not apply between husband and wife, and the presumption that the use of a wife’s income by her husband with her consent during the marriage is a gift does not apply between husband and wife.

9      Property (Relationships) Act, s 2E.

[27]The principal and interest has been calculated as follows:

Date	Amount (RMB)	Amount (NZD)	Interest	Start date	End date	Interest (NZD)	Total outstanding (NZD)
30/03/2020	51,000.00	8.5%	28/08/2020	30/07/2025	21,342.45	72,342.45
28/08/2020	2,000,000.00	437,640.00	8.5%	28/08/2020	30/07/2025	183,143.35	620,783.35
6/03/2023	300,000.00	69,900.00	IMCA	6/03/2023	30/07/2025	9,678.86	79,578.86
12/07/2023	1,990.00	IMCA	12/07/2023	30/07/2025	239.09	2,229.09
27/07/2023	4,000.00	IMCA	27/07/2023	30/07/2025	471.12	4,471.12
13/10/2023	4,500.00	IMCA	13/10/2023	30/07/2025	472.61	4,972.61
20/10/2023	4,500.00	IMCA	20/10/2023	30/07/2025	467.28	4,967.28
23/10/2023	1,500.00	IMCA	23/10/2023	30/07/2025	155.00	1,655.00
25/10/2023	2,800.00	IMCA	25/10/2023	30/07/2025	288.38	3,088.38
6/11/2023	164,737.11	37,042.77	IMCA	6/11/2023	30/07/2025	3,740.03	40,782.80
614,872.77	219,998.17	834,870.94

Costs

[28]The plaintiff seeks indemnity costs or, in the alternative, increased costs.

[29]             Under r 14.6(4), the Court may order a party to pay indemnity costs if, relevantly:

(a)the party has acted vexatiously, frivolously, improperly, or unnecessarily in commencing, continuing, or defending a proceeding or a step in a proceeding; or

…

(f) some other reason exists which justifies the court making an order for indemnity costs despite the principle that the determination of costs should be predictable and expeditious.

[30]             The definition of indemnity costs in r 14.6(1)(b) requires that they be “reasonably incurred”.

[31]             Acting vexatiously, frivolously, improperly, or unnecessarily requires that the unsuccessful party has pursued a “hopeless case”,10 being a position “totally without merit” 11 and “bound to fail”,12 or one commenced or continued for an ulterior motive or where there has been wilful disregard of the known facts or the clearly established law.13

[32]             Rule 14.6(3) of the High Court Rules sets out the circumstances where an order for increased costs may be appropriate. They include where there is a failure by the paying party to act reasonably,14 or where the party opposing costs has contributed unnecessarily to the time or expense of the proceeding by pursuing an argument that lacks merit, failing to accept a legal argument or for some other reason justifying the Court making an order for increased costs. In such a case, the Court must consider the extent to which the failure to act reasonably contributed to the time or expense of the proceeding and it is only to that extent that any percentage uplift from scale can be justified.15

[33]             The plaintiff submits that indemnity, or at a minimum, increased costs are justified in this case on the following grounds:

(a)The defendant has contributed unnecessarily to the time and expense of the proceeding by failing to comply with the directions of the Court and further failing to comply with an order for discovery.

(b)Following the commencement of the proceedings, the defendant took deliberate steps to dissipate assets, including selling the Property and disposing of her shareholding in Prime Sports Ltd, despite having knowledge and admitting to her liabilities to the plaintiff and the

10     Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue [2014] NZCA 348, (2014) 22 PRNZ 322 at [17].

11     TheCircle.co.nz Ltd v Trends Publishing International Ltd (in liq and in rec) [2021] NZCA 235, (2021) 25 PRNZ 766 at [34].

12     Big Basin Ltd v Stockco Ltd [2023] NZHC 2130 at [45].

13     Ben Nevis Forestry Ventures Ltd v Commissioner of Inland Revenue, above n 10, at [17]; and Big Basin Ltd v Stockco Ltd, above n 12, at [53].

14     Bradbury v Westpac Banking Corp [2009] NZCA 234, [2009] 3 NZLR 400 at [27].

15     Commissioner of Inland Revenue v Chesterfields Preschools Ltd [2010] NZCA 400, (2010) 24 NZTC 24,500 at [165].

ongoing  proceeding.     On their face, the defendant’s actions are intentionally obstructive and calculated to frustrate recovery.

[34]             I accept that indemnity costs are appropriate on the facts, and consider they are reasonable in amount given the volume of work evidently involved in preparing the supporting evidence and bundles for hearing.

Result

[35]I give judgment in the sum of NZD 834,870.94.

[36]             Interest shall run under ss 9 and 10 of the Interest on Money Claims Act 2016 on the above sum from 30 July 2025 until the date of payment.

[37]             I award costs and disbursements on an indemnity basis in the total sum of NZD 46,996.02 (as set out in sch B of the memorandum of counsel dated 31 July 2025).

O’Gorman J