Zhang v Yu
| Jurisdiction | New Zealand |
| Judge | Whata J |
| Judgment Date | 01 December 2020 |
| Neutral Citation | [2020] NZCA 592 |
| Court | Court of Appeal |
| Docket Number | CA75/2019 |
| Date | 01 December 2020 |
[2020] NZCA 592
Collins, Peters and Whata JJ
CA75/2019
IN THE COURT OF APPEAL OF NEW ZEALAND
I TE KŌTI PĪRA O AOTEAROA
Civil Procedure, International Law — appeal against a High Court decision to recall a default judgment, the protest to jurisdiction decision, and the refusal to recall the first recall judgment — appellants obtained judgment by default against the respondent for deceit in relation to an investment into a foreign currency dealer — the judgment was recalled and the court upheld the respondent's protest to jurisdiction — the Judge refused to recall the first recall judgment — the appellants were resident in China at the time where the agreement was entered into — whether China was forum conveniens — whether the Judge was wrong to entertain the recall judgment in advance of the protest to jurisdiction — High Court Rules 2016
C J C McLean for Appellants
W E Andrews for Respondent
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A The appeal is allowed insofar as it relates to the protest as to jurisdiction. The appeal is otherwise dismissed.
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B The decision in relation to protest as to jurisdiction, quashing the freezing order and dismissing the proceedings is set aside.
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C The protest to jurisdiction is referred back to the High Court for reconsideration.
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D The respondent is to pay one set of costs to the appellants for a standard appeal on a band B basis.
(Given by Whata J)
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.
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
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.
The appeal raises three key issues:
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(a) whether the solicitors on the record are authorised to act for Ms Yu;
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(b) whether the High Court was correct to recall its judgment in advance of determining whether to uphold the protest as to jurisdiction; and
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(c) whether the High Court was correct to uphold the protest to jurisdiction.
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 to act. Expert handwriting evidence was adduced to the effect that the signature on the authority to act was not Ms Yu's signature. However, that expert opinion is highly contestable on its face and in the absence of any complaint of Ms Yu, we see no reason to inquire further.
The remaining issues require careful consideration of the High Court Rules 2016 as they relate to the power of recall and protest to jurisdiction. It is helpful to briefly explain those rules before detailing the background.
The power to recall judgments is stated at r 11.9:
11.9 Recalling judgment
A 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
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(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;
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(b) where counsel have failed to direct the Court's attention to a legislative provision or authoritative decision of plain relevance; and
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(c) where for some other very special reason justice requires that the judgment be recalled.
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:
6.29 Court'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
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
In the present case, Ms Zhang and Dr Hu claim in the tort of deceit. That tort requires a false representation as to a past or existing fact made by a defendant who knew it to be untrue or who had no belief in its truth or who was reckless as to its truth; intention that the claimant should have acted on the representation; and action by the claimant in reliance on the representation. In addition, the plaintiff must suffer damage as a result of relying upon the representation. 12 Accordingly, Ms Zhang and Dr Hu had to show that there was a good arguable case that either, the acts or omissions in respect of which damage was sustained were done or occurred in New Zealand, or that the damage was sustained in New Zealand.
In 2014, Ms Zhang and her husband Dr Hu were resident in China. They have since migrated to New Zealand. Ms Yu was also resident in China in 2014, but owned a home in Auckland, New Zealand. Ms Yu was employed by Finawin Finance Management Jiansu Ltd (Finawin) and by this time had registered Honest Deal with the New Zealand Companies Office. In July 2014, Ms Zhang and Dr Hu travelled to
Ms Zhang and Dr Hu claim Ms Yu led them to believe Honest Deal was a legitimate foreign currency trading company registered with the Financial Markets Authority (FMA) in New Zealand. Ms Zhang and Dr Hu say that they invested with Finawin because of this and that they always understood from Ms Yu that their investment could be recouped in New Zealand. They also say that this proposal was discussed with Ms Yu in New Zealand and in China.
Ms Yu denies this. She says she never represented to them, in China or in New Zealand, that their investment would be returned in New Zealand. She observes the agreement with Finawin makes no reference to any repayment in New Zealand and that it is illegal to transfer more than USD 50,000 per year out of China.
In May 2017, Ms Zhang applied by way of summary judgment against Honest Deal for a freezing order over Ms Yu's...
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