Li v 110 Formosa (NZ) Limited [2020] NZCA 492 (16 October 2020)

Last Updated: 19 October 2020

IN THE COURT OF APPEAL OF NEW ZEALAND I TE KŌTI PĪRA O AOTEAROA

CA44/2019 [2020] NZCA 492

	BETWEEN	JUN LI Appellant
	AND	110 FORMOSA (NZ) LIMITED First Respondent MENG WANG Second Respondent GOLDEN BEACHLANDS HOLDINGS LIMITED Third Respondent JENNY AND EAMON HOLDINGS LIMITED Fourth Respondent ARTHUR LOO AND FUI LOONG CHAN, TRADING AS LOO & KOO BARRISTERS, SOLICITORS, NOTARY PUBLIC Fifth Respondent

Hearing:	11 and 12 February 2020
Court:	Cooper, Brown and Collins JJ
Counsel:	N R Campbell QC for Appellant D W Grove for First Respondent J W A Johnson and W L Porter for Second Respondent No appearance for Third, Fourth and Fifth Respondents
Judgment:	16 October 2020 at 11 am

JUDGMENT OF THE COURT

1. The appeal is dismissed.
2. The order at [267(a)] of the High Court judgment is quashed, and substituted with an order that Mr Wang holds that proportion of his shareholding in 110 Formosa which represents an original contribution of $4.8 million on constructive trust for Mr Li.

100. The cross-appeal is dismissed.

4. In the circumstances, we make no order as to costs between Mr Li and Mr Wang.
5. 110 Formosa is entitled to costs in respect of both the appeal and the cross‑appeal on a band A basis and usual disbursements. Those costs are to be paid one half by Mr Li and one half by Mr Wang.

____________________________________________________________________

REASONS OF THE COURT

(Given by Cooper J)

Table of Contents

Para No

Introduction

• [1] This appeal arises out of a dispute between parties who had joined in arrangements for the purchase, subdivision and development of land in Beachlands, on which the Formosa golf course is located (the Formosa property). They decided it should be purchased by a company in which the shareholding would reflect the capital contributions made to fund the purchase and development.
• [2] In circumstances that we set out, the appellant, Jun Li, claimed that he provided $4.8 million towards the purchase of the land but received neither an interest in the property nor in the company that purchased it, that company being the first respondent, 110 Formosa (NZ) Ltd (110 Formosa). The second respondent, Meng (Eamon) Wang claimed in the High Court that the money Mr Li provided was not his, alleging that Mr Li had merely been a conduit for investment monies arranged by Mr Wang’s mother, Yanqin Zhao.^[1] But Mr Wang was unable to sustain those claims. At the hearing his counsel conceded that the evidence did not establish the allegations about the source of funds, but he claimed that Mr Li had not proved that the money in fact belonged to him. Fitzgerald J rejected that claim.^[2] The issues concerning the ownership of the $4.8 million investment are the principal subject of Mr Wang’s cross‑appeal.
• [3] The Judge held that Mr Wang’s use of the $4.8 million provided by Mr Li was in breach of a “Cooperation Agreement” to which Mr Li, Mr Wang and others were parties.^[3] Further, as Mr Li deposited money but never received his commensurate interest in the company that eventually purchased the Formosa property, the Judge held that the shares which Mr Wang held in 110 Formosa representing Mr Li’s contribution were subject to a resulting trust in favour of Mr Li.^[4]
• [4] Mr Li appeals against the Judge’s rejection of claims for a proprietary interest in the Formosa property on the basis of breach of fiduciary duty by Mr Wang and the third respondent, Golden Beachlands Holdings Ltd (GBHL, a company formed to purchase the Formosa property), and dishonest assistance by 110 Formosa. The fiduciary relationship is said to have arisen because Mr Wang became a Quistclose trustee on receipt of the $4.8 million, or alternatively because of the trust and confidence Mr Li was entitled to and did repose in Mr Wang. Mr Li also appeals against the Judge’s rejection of a cause of action based on money had and received.

The facts

• [5] Dingzhi (Jenny) Huang, described in evidence as a mortgage broker, assisted Mr Li and his mother Na Li to identify land for them to purchase in New Zealand and to arrange finance for that purpose. In June 2013, there was a meeting at the Formosa property to discuss other properties of possible interest in the Flat Bush area. During the meeting Ms Huang told Mr Li that the owners of the Formosa property were considering selling it.
• [6] Mr Li was interested in buying the Formosa property. He was employed as a sales manager at the time and could not afford to purchase the property himself, but gave evidence that his mother was also interested in purchasing the property and offered to lend him the money for that purpose, suggesting that he also try to find other investors.
• [7] Mrs Li had a prior business relationship with Weidong Jiang and thought he could be a potential co‑‑investor. In September 2013, Mr Li, Mrs Li and Mr Jiang visited the Formosa property. They confirmed their interest in purchasing it. Mr Li then introduced Mr Jiang to Ms Huang. He also instructed Harrison Grierson (a multidisciplinary advisory and design consultancy firm) to provide subdivision advice. In February 2014, Harrison Grierson advised that, subject to obtaining the necessary resource consents, the Formosa property could be subdivided into about 40 separate lots.
• [8] In March 2014, Mr Li entered into an agreement to purchase the Formosa property. The agreement was conditional on finance. The finance condition was not met, and the vendors cancelled the agreement.
• [9] Independently, in April 2014, Mr Wang’s mother, Mrs Zhao, was looking to purchase a commercial property in Auckland. She enlisted the services of a local real estate agent, Daniel Huang. When meeting with Mr Huang in a coffee shop at Bucklands Beach she was seen by and spoke with Jenny Huang, whom she had met before. It was Ms Huang who suggested that Mrs Zhao should purchase the Formosa property, which was being marketed for $36 million.
• [10] Mrs Zhao told Ms Huang that she did not have sufficient funds to purchase and develop the Formosa property. Ms Huang told Mrs Zhao that she knew another person who wished to purchase the property and suggested that they purchase it together. The other interested purchaser was Mr Jiang. Subsequently, Ms Huang introduced Mrs Zhao to Mr Jiang. Mrs Zhao said in evidence that Ms Huang had told her that Mr Jiang was very wealthy.
• [11] On 20 April 2014, Mr Wang, Mr Jiang and Ms Huang entered into an agreement which provided for the acquisition and ownership of the Formosa property in the respective shares of 30 per cent, 40 per cent and 30 per cent. It was agreed that Mr Wang and Ms Huang would enter into the agreement for sale and purchase, but Mr Wang would hold Mr Jiang’s share on his behalf.
• [12] A second agreement was made in the form of a letter of undertaking dated 21 April 2014, in which Mr Jiang promised as follows:

It is hereby promised that, I, Weidong JIANG ... on the basis of Madam Yanqin ZHAO’s ... need to arrange funds for the project of purchasing the Formosa Golf Resort in Auckland, New Zealand, will personally undertake to assist Madam Yanqin ZHAO in arranging RMB fifty million ... of funds from China, to be remitted into a receiving account in Auckland, New Zealand specified by Madam Yanqin ZHAO, as investment funds for the project, which are definitely not to be diverted for any other purpose.

• [13] Against that background, an agreement for sale and purchase of the Formosa property was entered into on 23 April 2014 (the April Agreement). Mr Wang was shown as the purchaser, although Ms Huang’s name was later added. The purchase price under the agreement was $36 million, with a $2 million deposit required to be paid on 30 April 2014. Settlement was to take place on 29 August 2014. Mr Wang and Ms Huang engaged a firm of solicitors, Loo & Koo, to act on the purchase. The $2 million deposit was paid by Mrs Zhao as required by the April Agreement. She delivered three separate cheques totalling that amount to Loo & Koo, who delivered them by courier to the vendors’ solicitors, Forrest Harrison.
• [14] Mr Wang and Ms Huang engaged Deloitte to arrange for the formation of a company through which the Formosa property would be held, which was incorporated as Jenny and Eamon Holdings Ltd (JEHL).
• [15] Mrs Zhao gave evidence that Mr Jiang told her around the beginning of August 2014 that he would not be able to invest because he was having financial difficulties. According to Mrs Zhao, Mr Jiang told her that he knew of someone who might be interested in joining in the purchase of the Formosa property. This was Mrs Li. Mrs Zhao said she spoke with Mrs Li by telephone, and that the latter expressed interest and asked her to get in touch with Mr Li about the property. In August 2014, Mr Li and Mrs Zhao met. The Judge noted there was a dispute as to whether Mr Wang was also present at the meeting, though she thought nothing turned on that.^[5] According to Mr Li, Mrs Zhao said at the meeting that she had $20 million in a New Zealand bank account which she would lend to Mr Wang to purchase the Formosa property. Mrs Zhao however said that no money was discussed at the meeting. Subsequently, Mr Li and Mr Wang met to discuss the Formosa property and its potential.
• [16] Between 19 and 27 August 2014, Mrs Li sent Mr Wang several drafts of a joint venture agreement for the purchase and development of the Formosa property. These agreements contemplated that the Formosa property would be purchased by a company in which the investors would have shareholdings proportionate to their contributions. Under the initial draft agreement Mrs Zhao and Mr Wang were described as “Party A”. Mrs Li and Mr Li were referred to as “Party B”. Successive drafts were produced which dealt with the respective interests of Party A and Party B. After various changes, Ms Huang sent an email to Deloitte, copied to Mr Wang, asking for the shareholding in JEHL to be changed to reflect the following percentages:

(a) Mr Li — 32 per cent;

(b) Mr Wang — 24 per cent;

(c) Mr Jiang — 24 per cent; and

(d) Xuming He —20 per cent.^[6]

• [17] Mr Li was added as a shareholder of JEHL on 27 August 2014. His 32 per cent shareholding was allocated from Mr He’s shareholding which was reduced from 52 per cent to 20 per cent. The Judge said it was unclear why Mr Jiang remained a shareholder given his earlier advice that he was in financial difficulties.^[7] She pointed out that Mr Wang’s evidence that Mr Jiang was to fund Mr He’s shareholding was also inconsistent with Mrs Zhao’s evidence about Mr Jiang’s financial position.
• [18] Also on 27 August 2014, a further draft joint venture agreement was sent by Mrs Li to Mr Wang. Under that agreement, Party A again comprised Mrs Zhao and Mr Wang, and Party B remained Mrs Li and Mr Li. Party C, Mr Jiang, had been added. This version of the agreement recorded that Party A had a 46 per cent shareholding, Party B a 32 per cent shareholding and Party C a 22 per cent shareholding. However, it also stated that Party C temporarily held its 22 per cent shareholding “on trust” and was to pay Party A $8.36 million by “bank loan(s) and self‑raised funds”. The draft agreement further provided:

The contract stipulates that Party B should raise NZD 8.96 million of funds by itself. However by the time of settlement of the land Party B could only manage to raise NZD 5.16 million (which includes mortgage loan on account with two real estate properties as collateral). Party A agrees to use its self‑owned real estate properties as its loan guarantor [sic], for a loan period of six months.

• [19] Subsequent drafts were sent by Mrs Li to Mr Wang later on 27 August 2014. That same day, Loo & Koo told the vendors’ solicitors that Mr Wang and Ms Huang had nominated JEHL as the purchaser under the April Agreement.
• [20] On 28 August 2014, Mr Li, Mr Jiang, Mrs Zhao and Ms Huang went to the offices of Loo & Koo. Mr Li brought three bank cheques with him, totalling $4 million. It was his evidence that he gave the cheques to a solicitor employed by Loo & Koo, Ms Lee, and she gave him a receipt in return. Ms Lee gave a different account, stating that she had not been present when the cheques were produced, but accepted that the group did attend the firm’s premises on that day. She said her secretary had attended on the group and taken the cheques, arranging for their receipt into Loo & Koo’s trust account. The receipt issued by Loo & Koo recorded Mr Li as the payer of the $4 million, and that the funds were held to the credit of Ms Huang and Mr Wang “on a/c purchase of [the Formosa Property]”. Mr Li deposited a further $200,000 with Loo & Koo on 29 August 2014. He received a trust account receipt recording that the money was held for the credit of Ms Huang. The narration was “purchase funds”. Mr Wang also deposited the sum of $200,000 with the solicitors which was receipted for the credit of Ms Huang for the “purchase price”.
• [21] There were insufficient funds for settlement to occur on the due date of 29 August 2014. A settlement notice was served by the vendors’ solicitors requiring settlement by 2 September 2014. The Judge found that although the vendors were then entitled to cancel the April Agreement as of that date, they kept it on foot while negotiations continued.^[8]
• [22] On 29 August 2014, Mr Li, Mr Wang, Mr He and Mr Jiang signed a “Cooperation Agreement” for the purchase and development of the Formosa property. This reflected the draft agreements previously prepared by Mrs Li. The parties were now Mr Wang and Mr He (Party A), Mr Li (Party B), and Mr Jiang (Party C). After stating the names of the parties, the Cooperation Agreement continued with these introductory words:^[9]

Based on the principles of mutual benefit, common development, joint investment and joint management, and after friendly consultation, Party A, Party B and Party C decided to tap fully on the strengths of the individual parties, and to enter into this Agreement to purchase the 170 ha land of Formosa Golf Resort (“the Land”) to be used for development.

• [23] Clause 1 of the Cooperation Agreement was headed “Cooperation and ownership ratio”. After the heading, the clause proceeded:
  1. Party A, Party B and Party C shall jointly purchase the 170 ha land of Formosa Golf Resort (“the Land”) in Auckland to be used for real estate development, land subdivision, property projects, etc.

2) Breakdown of the 100% ownership of the purchased land:

a) Party A holds 44%, Party C holds 24% and Party B holds 32% ownership of the Land (Party B’s first capital contribution is NZD 4.2 million; another NZD 7.96 million will be raised within six months).

b) Party A, Party B and Party C agree and Party A promise that the base price of the 100% ownership is NZD 38 million, which is the original price of the Land. Depending on the amount of capital they raise, Party B and Party C may, in future, acquire Party A’s ownership (e.g. pay NZD 3.8 million for acquiring 10% ownership).

• [24] The next heading was “Form of cooperation”. Relevantly, that section of the Agreement provided:
  1. Set up a (shareholding) limited company (“the Company”) to purchase and manage the Land and carry out joint investment and joint management and share risks as well as profits and losses. Party A, Party B and Party C shall purchase the Land at a total price of NZD 38 million.
  2. As the three Parties have agreed within a short period of time to jointly purchase the abovementioned property ownership, Party A agrees to use its property to get a loan of NZD 6 million from a financial company for Party B and act as a guarantor. Party B shall pay the actual loan interests charged by the financial company or a bank. The loan term is 6 months. Party B shall raise another NZD 1.96 million on his own.
  3. The three Parties agree that after settlement, the Land shall be pledged as collateral; Party B’s and Party C’s assets in China shall be used as guarantee to take a loan from a financial company or bank (switch to development loan of a bank when the conditions are mature) to be used for land subdivision. Loan interests and fees shall be shared based on ownership ratio.
  4. The rights and liabilities each Party has in respect to the Company shall be in proportion to their actual capital contribution.
  5. Following are the capital contribution and ownership ratio details:

(Unit NZD 10’000)

Owner	Party A		Party C	Party B	TOTAL
	Xuming HE	Meng WANG	Weidong JIANG	Jun LI
Ownership (%)	20	24	24	32	100
1st contribution	760	912	0	420	2092
2nd contribution	0	0	912	796	1708
Actual contribution	1672		912	1216	3800

1. Party A contributes NZD 16.72 million and owns 44% of the Company.
2. Party C contributes NZD 9.12 million and owns 24% of the Company.

100. Party B contributes NZD 12.16 million and owns 32% of the Company, Party B’s first capital contribution is NZD 4.2 million. Party B will raise NZD 1.96 million on his own and take a loan of NZD 6 million (Party A’s property is used as guarantee, so it is considered a loan taken from Party A; Party B shall pay the actual loan interests charged by the financial company or bank). The loan term is 6 months.

6. The Company’s working capital of NZD 1 million, which is collected based on actual capital contribution ratio, shall be used for general expenses.
7. Party A, Party B and Party C agree to use the Land to take a loan from a financial company or bank after settlement of the Land. Party B’s share shall first be used to repay Party A, and Party B shall pay the actual loan interests charged by the financial company or bank. Alternatively, Party B shall raise funds within six months to repay Party A. If Party B fails to do so, Party B’s ownership shall be calculated based on his actual capital contribution. If Party B fails to pay his capital contribution in full within three months, his ownership ratio shall be adjusted based on his actual capital contribution but it shall not be lower than 20%.

[25] Clause 3 was headed “Project development and plan”. Its provisions envisaged that the parties would decide on a land subdivision plan and try to find “average and high‑end customers”. The project was envisaged to involve “average to high‑end residential areas” and a subdivision into 30 lots, each of 5 ha. Clause 4 provided for profit distribution based on the actual capital contribution and ownership ratio.

• [26] The “organisation structure and management” of the company was dealt with in cl 5. Clause 5(1) was in the following terms:
  1. Board of Directors

The Board of Directors is made up of five directors, two of whom are appointed by Party A, two of whom are appointed by Party B and one of whom is appointed by Party C. The directors are: Meng WANG, Xuming HE, Weidong JIANG, Jun LI and Na LI. Meng WANG is the chairman of the Board and legal representative of the Company. Na LI is the CEO and Weidong JIANG (Party C) is the Executive Director. The Board of Directors is the highest governing body of the Company. It is accountable to the Board of Owners. The Board of Directors shall exercise the following functions and powers:

1. Make decisions regarding the Company’s business plans and investment plans.
2. Set up the Company’s annual financial budgets and accounting plans.

100. Set up the Company’s profit distribution plans and deficit recovery plans.

4. Set up the Company’s plans to increase or decrease investment.
5. Draft the Company’s plans for merger, split, change in company form and dissolution.
6. Handle other matters that in its opinion must be submitted to the Board of Directors for resolution in the management process.

• [27] In cl 5(2), Mr He was named as the company’s sole supervisor. Under the next sub-clause Mr Wang was identified as the general manager, Mr Jiang the finance director, and Mr Li the engineering director. These four individuals were to comprise the staff of the general manager’s office. There was provision for a project planning and marketing director to be hired from “outside the Company”.
• [28] Clause 5(5) provided:
  5. To let the owners of the Company recover their investment as soon as possible, the working management members are encouraged to increase their work efficiency, reduce costs and expenditures during the development process and seek maximum profit. All owners agree that the working management members may collect 10% of the net profit of a single project or 10% of annual net profit as bonus. The remaining 90% of the net profit shall be distributed as agreed in Provision 4.
• [29] Clause 6 dealt with financial management, requiring the company’s operating revenue to be “managed collectively”. It covered operation of the company’s bank account, signatories and custody of the company’s seal. Expenses were only to be accepted once signed and approved by the representatives of the parties.^[10] Any disputes between them about the company’s expenses were to be submitted to the Board of Directors for resolution.
• [30] Clause 9(1) provided that all disputes arising out of or in connection with the Cooperation Agreement would be resolved by the parties through “friendly consultation”. If that process failed, disputes would be resolved through legal proceedings with all resulting costs including lawyer’s fees borne by the losing party.
• [31] Other clauses dealt with extension of the “cooperation term and termination of cooperation”, liability for breach of the Cooperation Agreement and dissolution and liquidation. There was also a clause requiring confidentiality and another providing that any matters not dealt with would be resolved through consultation or addressed in a supplemental agreement.
• [32] On 3 September 2014, Mr Li and Mr Wang went to the premises of Loo & Koo. Mr Wang asked that the trust account receipt from 29 August 2014 which had confirmed receipt from him of $200,000 be amended to record that the sum had been received from Mr Li. That request was made because Mr Li had paid a further $200,000 directly into Mr Wang’s bank account. The receipt was amended accordingly. At the same time the receipt was also amended to show that the payment had been made for the credit of JEHL (the receipt had originally shown the payment as being for the credit of Ms Huang).
• [33] In the same meeting, Mr Wang requested that other trust account receipts, including those recording Mr Li’s deposits of $4 million on 28 August 2014 and $200,000 on 29 August 2014, be amended to show the funds as being held for the credit of JEHL. Those receipts were amended as requested. Finally, at that meeting Mr Li provided a further cheque in the sum of $400,000 towards the purchase of the Formosa property. Loo & Koo wrote a trust account receipt recording that payment and, again, that the funds were held for the credit of JEHL.
• [34] These events brought Mr Li’s total contribution to $4.8 million. It was demonstrated in evidence that that amount of money had come from bank accounts belonging to Mr Li. Indeed, that was not in dispute.
• [35] On 10 September 2014 the vendors formally cancelled the April Agreement. The deposit of $2 million was forfeited accordingly. However, according to Mrs Zhao, at about this time she and Ms Huang had been able to negotiate a new agreement in principle with the vendor. Under its terms the Formosa property would be purchased for $38 million with a deposit of $5 million, the balance to be paid in instalments down to 30 September 2015. A new company was to be formed for the purpose of completing the purchase. GBHL was incorporated on 26 September 2014 and nominated to be the purchaser.^[11] Mr Wang and Ms Huang were the initial directors, holding 70 per cent and 30 per cent of the shares respectively. On 29 September 2014 Ms Huang resigned as a director and arranged for the shareholding in GBHL to be changed to an 80 per cent shareholding for Mr Wang and a 20 per cent shareholding for herself.
• [36] Mr Li again visited the offices of Loo & Koo on 29 September 2014, when he met with Ms Lee. The Judge rejected Mr Li’s evidence that this was the first time he became aware that the April Agreement had been cancelled.^[12] She considered he would have been aware of the cancellation at some point prior to that meeting, although she could not make a finding as to when that was. Ms Lee said that Mr Li asked her to confirm the April Agreement had been cancelled, which she did. Ms Lee declined to give Mr Li copies of the files relating to the purchase of the Formosa property, on the basis that he was not Loo & Koo’s client. Later that day, Mr Li sent Ms Lee an email in which he asked her to call Mr Wang and him, noting that there was a “very important agreement” between him and Mr Wang “about the control of the 4.8 million we invested”. Ms Lee forwarded that email to Mr Wang stating that $4,600,000 of the deposit had been receipted by Loo & Koo for the credit of Mr Li. She continued:

We are now advised by Mr Jun Li that you are agreeable that we keep him informed of the agreement to purchase [the Formosa property] and to seek his consent prior to using the amount of $4,600,000.00

• [37] She asked Mr Wang to confirm that was acceptable to him. In her evidence Ms Lee said that her email was incorrect and did not reflect her understanding at the time of the party for whom the funds were held. She said that in fact, the funds had been deposited with the firm to the credit of Ms Huang and Mr Wang, and subsequently, on Mr Wang’s instructions, to the credit of JEHL. She confirmed that after a further exchange of emails between her and Mr Li on 30 September 2014, she accepted that the sum in fact deposited by him was $4.8 million, making an adjustment in respect of the $200,000 deposited on 29 August 2014 for which a receipt had initially been issued to Mr Wang.
• [38] On 30 September 2014, a new agreement for sale and purchase of the Formosa property (the September Agreement) was executed on terms which were consistent with the in‑principle agreement that had been negotiated with the vendors. As we have noted, the purchaser of the property was to be GBHL. Having received the executed September Agreement from the vendors’ solicitors, Loo & Koo, acting on Mr Wang’s instructions, paid the $5 million deposit to the vendors’ solicitors on 1 October 2014. It is clear that of that sum, $4.8 million had been deposited with Loo & Koo by Mr Li.
• [39] Mr Wang sent Mr Li a copy of the September Agreement on the afternoon of 1 October 2014. This followed a telephone discussion in which Mr Wang offered Mr Li shares in GBHL proportionate to a contribution of $4.8 million (13 per cent of the price of the property).^[13] Mr Wang’s evidence was that Mr Li had asked to see a copy of the September Agreement before considering that proposal. The Judge found that in a further discussion later that day Mr Li agreed to become a shareholder although it was unclear whether the conversation took place before or after payment of the deposit.^[14] However, Mr Wang accepted in cross-examination that he did not have Mr Li’s express consent to the $4.8 million being used by GBHL to pay the required deposit.
• [40] Later in the afternoon Mr Li emailed Ms Lee asking her to arrange for Mr Wang to contact him. He said that he and Mr Wang needed to talk to her “immediately”. Mr Li then went to the offices of Loo & Koo. Mr Wang was not there. Mr Li met with Ms Lee and a partner of the firm, Mr Chan. Ms Lee and Mr Chan gave evidence that it was not clear from what Mr Li said to them what his role was in the overall transaction.
• [41] The Judge found there was no evidence to suggest that up to this point Mr Li had told Mr Wang or any of the other parties to the Cooperation Agreement that he no longer wanted to participate in the purchase of the Formosa property or sought the return of his money.^[15] Consistently with that, Mr Li sent a text to Mr Wang on the morning of 2 October 2014 giving his details for the shares in GBHL to be allocated to him. Mr Wang replied that he had already added Mr Li as a shareholder although the change would probably “take overnight to show” on the Companies Office website.^[16]
• [42] However, later that day, Mr Li sent a text to Mr Wang. He stated that after “[serious] consideration” he did not want the shares in GBHL, and he asked for “any of our investment” to be returned within 10 working days. He explained in evidence that he had initially agreed to the shareholding because he felt he had no option, but he had subsequently decided he did not want to pursue the opportunity with Mr Wang, as he doubted whether Mr Wang would be able to settle the new contract in any event.
• [43] Mr Li telephoned Ms Lee on 3 October 2014. He asked how Mr Wang could have given instructions about the use of the $4.8 million which Mr Li had deposited. Ms Lee responded that the funds had been deposited by Mr Li for the credit of the firm’s clients and they were required to deal with the funds in accordance with their clients’ instructions. There was no further communication between Mr Wang and Mr Li until February 2015, when Mr Li lodged a caveat over the Formosa property. By then, Mr Wang had, on 4 December 2014, arranged for Mr Li’s shares in GBHL to be transferred back to himself.
• [44] In the meantime, Mrs Zhao had continued to look for new co‑investors for the purpose of settling the September Agreement. Ms Huang and Mr Jiang had not been able to invest in the project. Ultimately, Mr Huang (the real estate agent) and Gui Rong (Wendy) Wen (a property investor) became co‑investors and on 6 November 2014, 110 Formosa was incorporated. The shareholders were Mr Wang (who owned 30 per cent of the shares), Mr Huang (40 per cent) and Ms Wen (30 per cent). These three were the directors of the company.
• [45] Two agreements were made in December 2014. The first was a Deed of Nomination executed on 8 December 2014, by which GBHL nominated 110 Formosa as purchaser under the September Agreement, and the latter accepted the nomination. The Deed of Nomination specified the “Purchase Price” as $42 million, as opposed to $38 million which was the price under the September Agreement. Ms Wen’s evidence was that the increase accounted for $2 million paid to a real estate agent by way of commission and the $2 million deposit forfeited under the April Agreement. The Deed of Nomination also recorded that 110 Formosa would reimburse GBHL for all amounts GBHL had paid under the September Agreement. Effectively, this was the $5 million deposit. On 9 December 2014, Loo & Koo emailed the vendors’ solicitors to advise that GBHL was nominating 110 Formosa as the purchaser under the September Agreement. On 10 December 2014, 110 Formosa lodged a caveat on the Formosa property’s title.
• [46] The second agreement, made on 11 December 2014, was between the shareholders in 110 Formosa (the Shareholders’ Agreement). It recorded that GBHL had incurred costs of $5 million and that as part of the Deed of Nomination 110 Formosa was indebted to GBHL for that amount. It was also agreed that in satisfaction of 110 Formosa’s $5 million debt to GBHL, 110 Formosa would provide Mr Wang with a $5 million credit towards the subscription cost of his shares in the new company. It also recorded an arrangement for amounts Mr Wang was recorded as having paid to be set off against his acquisition of additional shares in 110 Formosa. Those amounts were $2 million paid by way of an “exclusivity fee” to the vendors so as to “retain” GBHL’s right to enter into the September Agreement,^[17] and $1 million representing half the real estate agent’s commission.^[18]
• [47] The Shareholders’ Agreement provided that the share capital of the company consisted of 100 ordinary shares each ranking “pari passu” in all respects except as otherwise provided in that agreement or the constitution of the company. Clause 2.5 provided that the shares in the company would be held as to 40 unpaid shares at $1 per share held by Mr Huang, 30 unpaid shares at $1 per share held by Mr Wang and 30 unpaid shares at $1 per share held by Ms Wen. Additional capital could be raised in accordance with cl 3.2 which provided that an additional 41,999,900 ordinary shares at $1 per share would be issued to shareholders with calls to be made on a basis set out. That clause envisaged the staged acquisition of the further shares by Mr Huang, Mr Wang and Ms Wen. Mr Huang was to acquire 16,800,000 shares, Mr Wang 12,600,000 shares and Ms Wen 12,600,000 shares in three tranches, clearly designed to pay for the staged provision of capital to fund completion of the purchase of the Formosa property.
• [48] Thereafter, Ms Wen made further capital contributions to 110 Formosa totalling $6 million in December 2014 and March 2015. These sums were used to pay further instalments on the purchase price due under the September Agreement.
• [49] Mr Li lodged a caveat over the Formosa property in February 2015. The caveat was said to protect Mr Li’s interest as “cestui que trust” and pursuant to the Cooperation Agreement.
• [50] Mrs Li came to New Zealand in March 2015 and met with Ms Wen. It was only at this point that Ms Wen and Mr Huang learned of the dispute which had arisen between Mr Wang and Mr Li about the use of the $4.8 million. In her evidence Ms Wen stated that the emergence of Mr Li’s claim led to further negotiations, resulting in the amount payable by 110 Formosa to GBHL under the Deed of Nomination being reduced to $40 million. It is not disputed that this was the amount actually paid by 110 Formosa to acquire the Formosa property.
• [51] With settlement due under the September Agreement in September 2015, the vendors applied to remove Mr Li’s caveat and he responded by seeking an order that it be sustained. The High Court ordered its removal, although the Judge noted that a new caveat could be lodged once 110 Formosa had acquired title.^[19] After settlement of the September Agreement occurred, Mr Li lodged a fresh caveat over the Formosa property on 2 October 2015.
• [52] Mr Wang was unable to find the remaining capital contributions he was required to make to 110 Formosa under the Shareholders’ Agreement. Ms Wen paid those sums and acquired the corresponding portion of Mr Wang’s shares. By that time, she had also purchased the majority of Mr Huang’s shares from him. As a result, the company’s shareholding was updated to reflect the actual contributions made by the participants, namely:

(a) Ms Wen — 75.25 per cent;

(b) Mr Wang — 19.75 per cent; and

(c) Mr Huang — five per cent.

• [53] The only shareholder in 110 Formosa who had signed the Cooperation Agreement on 29 August 2014 was Mr Wang. Although Mr Li had also signed that agreement, he was not of course the owner of any shares in 110 Formosa. His contribution of $4.8 million had been applied by Mr Wang towards the deposit payable by GBHL. While Mr Li became a shareholder in GBHL for the period from 2 October 2014 to 4 December 2014 his shares had essentially then been appropriated by Mr Wang.

The proceeding in the High Court

• [54] Mr Li pleaded eight causes of action in the High Court. We summarise these and the outcome in that Court in the following paragraphs.

First cause of action

• [55] In the first cause of action Mr Li alleged against 110 Formosa that the company held 32 per cent of its interest in the Formosa property on an institutional constructive trust for him, relying on the principles set out by this Court in Lankow v Rose.^[20] The trust was said to arise because he had paid $4.8 million of the purchase price, Mr Wang knew of Mr Li’s contribution and Mr Wang’s knowledge could be imputed to 110 Formosa. Mr Li reasonably expected that his contribution would yield an overall 32 per cent interest in the Formosa property (based on the terms of the Cooperation Agreement). On this basis, Mr Li sought a declaration recognising the constructive trust, and an order that 110 Formosa purchase his 32 per cent share for $8.96 million. Alternatively, he sought an account of profits from the company, calculated at $13 million. This sum comprised his contribution of $4.8 million and the alleged increase in market value of the Formosa property since it was acquired under the September Agreement.
• [56] The Judge rejected the claim to an institutional constructive trust. She found that Mr Li had not paid the $4.8 million in the expectation of securing an interest in the Formosa property itself, and that if he did have such an expectation, it was not a reasonable one.^[21] Rather, any expected interest was in the corporate vehicle which would purchase the property.^[22] This claim accordingly failed.

Second cause of action

• [57] The second cause of action was based on an alleged breach of fiduciary duty by Mr Wang and the other defendants and knowing assistance by Loo & Koo and 110 Formosa. It was claimed that Mr Wang owed fiduciary duties to Mr Li because of their relationship as parties to the Cooperation Agreement which created a joint venture in which the parties had agreed that they would act for each others’ mutual benefit. In these circumstances, Mr Wang had duties to act in the best interests of the parties to the joint venture, not to circumvent the Cooperation Agreement, to account fully for revenue and profits derived from the joint venture and to act with fidelity and candour. Essentially, this claim was advanced relying on the principles discussed by the Supreme Court in Chirnside v Fay.^[23]
• [58] It was alleged that Mr Wang breached his duties in several ways, in particular by utilising Mr Li’s $4.8 million other than for the purpose for which it was advanced by him. The other defendants were said to have knowingly assisted Mr Wang in breaching these fiduciary duties.
• [59] The Judge noted that counsel in closing did not pursue this cause of action against JEHL, GBHL and 110 Formosa beyond a simple assertion they owed fiduciary duties by virtue of Mr Wang being a director and shareholder of all three companies, coupled with a reference to him being a party to the Cooperation Agreement which contemplated formation of a company to acquire the Formosa property.^[24] She held, in any event, that there was no fiduciary relationship between Mr Li and any of JEHL, GBHL or 110 Formosa.^[25]
• [60] The Judge also rejected the claimed fiduciary relationship between Mr Wang and Mr Li.^[26] Mr Li had simply deposited funds with a firm of solicitors to be utilised for the purpose of purchasing the Formosa property. The mere fact he did that did not give rise to a relationship of trust and confidence of the kind discussed in Chirnside v Fay. She observed:

[204] The steps at this stage can be described as somewhat “mechanical” or “transactional” in nature. They were steps taken by a group of parties, who had no existing relationship with each other, to put a corporate vehicle into funds to purchase a property, with the subsequent operation of that corporate vehicle to be governed by a contractual arrangement. And, while the parties might have had to cooperate with each other in achieving their goal once the Formosa Property had been purchased, they were doing so for their own separate advantage, namely to be paid a share of any resulting profits in accordance with their capital contribution.

• [61] The reference in this passage to “steps taken by a group of parties, who had no existing relationship with each other” perhaps reflects the fact that Mr Li paid the bulk of the money prior to execution of the Cooperation Agreement. However, drafts of that agreement had been in discussion for some time and in substance the Cooperation Agreement as executed was the same as the drafts under discussion when the payments were made. Nevertheless, the Judge rejected the second cause of action on this basis.

Third cause of action

• [62] The third cause of action alleged a resulting trust. It was based upon a pleading that Mr Li made his contribution of $4.8 million solely for the specified purpose reflected in the receipt provided to Mr Li that the money was paid for the credit of JEHL, to go towards JEHL’s purchase of the Formosa property under the April Agreement. Mr Li relied on this Court’s judgment in Chang v Lee, arguing that where the terms of an advance are not agreed, there is an assumption of equitable ownership in the acquired property.^[27] He also relied on principles applicable to Quistclose trusts.^[28] It was alleged that the contribution of $4.8 million was impressed with a resulting trust, the terms of which required the contribution to be repaid to the plaintiff because the specified purpose could not be or was not fulfilled. The money had in fact not been used by JEHL to purchase the Formosa property, but had been applied toward the purchase by 110 Formosa, a company in which Mr Li was not a shareholder. This was a breach of the trust and the money should have been returned to Mr Li. It was claimed that the other defendants profited from the knowing breach of the trust or knowing assistance rendered by them.
• [63] The Judge found that the evidence did not establish a common intention, or any intention on the part of Mr Li himself, that he would have a beneficial interest in the Formosa property. There was, however, an intention that in return for their contribution of funds, each investor would receive a commensurate interest in the corporate vehicle used to purchase the property.^[29] There was no evidence that Mr Li intended the funds advanced by him to be a gift or a loan. The Judge continued:^[30]

To put it another way, there is no evidence to suggest Mr Li intended that proportion of Mr Wang’s registered shareholding in the corporate entity which now owns the Formosa Property, and which reflects Mr Li’s contribution, was the subject of an outright transfer to Mr Wang.

• [64] The Judge did not accept that Mr Li’s purpose was limited only to the acquisition of the Formosa property by JEHL.^[31] Rather, the payments were made for the general purpose of the funds being used in the transaction to acquire the Formosa property.^[32] It followed from this that Mr Li’s objective when making the various payments was met when the funds were used to pay the deposit under the September Agreement. Mr Li’s request that the money be returned to him was first made on 2 October 2014, after the funds had been paid towards the acquisition of the Formosa property.^[33] But despite finding that the purpose of making the payment had in the circumstances been satisfied, the Judge considered that there was nevertheless a resulting trust in Mr Li’s favour on the basis of the principles discussed in Chang v Lee.^[34]
• [65] She therefore considered that the third cause of action had been made out and made a declaration that Mr Wang held that proportion of his shares in 110 Formosa which represented the $4.8 million paid by Mr Li on a resulting trust for him.^[35]

Fourth cause of action

• [66] The fourth cause of action was advanced only against Mr Wang. The pleading referred to various clauses in the Cooperation Agreement alleged to have been breached. It is unnecessary to discuss all of those clauses. Most of the allegations were rejected by the Judge,^[36] but she considered that Mr Wang had breached cl 2(4) by depriving Mr Li of any rights and liabilities in the company owning the Formosa property.^[37] The Judge noted that Mr Wang had offered Mr Li a shareholding in GBHL proportionate to Mr Li’s contribution, and that Mr Li had accepted that offer, becoming a shareholder in that company.^[38] However, on 2 October 2014, after Mr Li became aware that he was a shareholder, he told Mr Wang that he did not want the shareholding and requested the return of his contribution.
• [67] The Judge considered that by seeking to withdraw from the transaction, Mr Li had arguably repudiated the Cooperation Agreement.^[39] However, there was no evidence that Mr Wang had accepted Mr Li’s repudiation or communicated such acceptance to Mr Li. Rather, he simply left Mr Li’s shareholding in GBHL as it was for some months. During that time, the Cooperation Agreement remained on foot as between Mr Wang and Mr Li. Mr Wang’s subsequent cancellation of Mr Li’s shareholding in GBHL, while retaining the benefit of Mr Li’s contribution, amounted to a breach of the Cooperation Agreement. The consequence of that breach was an entitlement to damages, confined to the equivalent of Mr Li’s contribution of $4.8 million.^[40] Aside from contesting Mr Li’s ownership of the $4.8 million, Mr Wang does not dispute this aspect of the judgment on appeal.

Fifth cause of action

• [68] The fifth cause of action was a claim in “unjust enrichment”. The Judge noted that counsel had not pressed this cause of action in closing submissions and held that as the law presently stands unjust enrichment was not a recognised cause of action.^[41] She did not address this claim any further. The issue has not been pursued on appeal, and for that reason we do not address it.

Sixth cause of action

• [69] The Judge dealt with the sixth cause of action, based on a constructive trust, in a similarly brief way. She noted that the statement of claim contained a list of dishonest actions on the part of the defendants, but continued:

[29] Mr Heaney says in his written closing submissions that “these issues have been traversed under the head of fiduciary duty” and “the factual matters raised in that section are equally applicable under this cause of action”. In his oral closing submissions, he described this cause of action as being “the second-limb to the second cause of action (breach of fiduciary duty)”.

[30] Given the way in which this cause of action has been pleaded and advanced at trial, it is not possible for the Court to consider it as a free‑standing claim (i.e. in addition to certain aspects of the second cause of action). For those reasons, I say nothing further in this judgment on the sixth cause of action.

Seventh cause of action

• [70] The seventh cause of action was a claim for money had and received. The Judge accepted that such a claim could be advanced when money has been paid for a particular purpose which does not eventuate.^[42]
• [71] However, the Judge’s previous conclusion that the money paid by Mr Li to the credit of Mr Wang and/or Ms Huang was for the purpose of putting a corporate vehicle in funds to purchase the Formosa property meant that the purpose for which the payment was made had been met. On this basis, the seventh cause of action failed.^[43]

Eighth cause of action

• [72] This was expressed to be a claim based on “negligent breach of statutory duty”.^[44] It was founded on ss 110 and 113 of the Lawyers and Conveyancers Act 2006, together with r 11.1 of the Lawyers and Conveyancers Act (Lawyers: Conduct and Client Care) Rules 2008. The Judge dismissed this claim for reasons set out in the judgment.^[45] We do not discuss it further because Mr Li has not pursued his appeal against Loo & Koo.

Summary

• [73] In the result, Mr Li succeeded on his third cause of action based on a resulting trust with the consequence that the Judge ordered that Mr Wang holds that proportion of his shareholding in 110 Formosa, which represents an original contribution of $4.8 million, on trust for Mr Li.^[46] The Judge issued a minute on 17 May 2019 in which she clarified the position: the appropriate percentage was that proportion of the capitalisation of 110 Formosa that represented Mr Li’s contribution of $4.8 million, with the consequence that Mr Wang held a 12 per cent shareholding in 110 Formosa on trust for Mr Li.^[47]
• [74] Mr Li also succeeded on his fourth cause of action, breach of contract, with the result that Mr Wang was liable to Mr Li for damages in the sum of $4.8 million.^[48]
• [75] The claims were otherwise dismissed.
• [76] The Judge recorded that the remedies on the third and fourth causes of action were inconsistent.^[49] Mr Li was required to elect which should be the subject of the entry of judgment by filing a memorandum within 20 working days. We understand that Mr Li subsequently selected the proprietary remedy, namely that Mr Wang hold a 12 per cent shareholding in 110 Formosa on trust for Mr Li.

The appeal

• [77] Mr Li appeals against the Judge’s rejection of the second cause of action, submitting that both Mr Wang and GBHL owed him fiduciary duties which they breached, and that 110 Formosa dishonestly assisted those breaches.
• [78] Mr Li also alleges on appeal that the third cause of action should have been upheld on the basis of a Quistclose trust, and that the Judge should have found 110 Formosa liable in addition to Mr Wang. If Mr Wang held the $4.8 million on a resulting trust for Mr Li, it is said that Mr Li could either trace his interest in that money into Mr Wang’s shares in 110 Formosa or trace it into the Formosa property itself.
• [79] In respect of the other determinations of the Judge, the only issue raised by Mr Li’s appeal concerns the Judge’s rejection of the seventh cause of action for money had and received. However, it is accepted that this aspect of the appeal raises no issues additional to those arising in respect of the second and third causes of action.
• [80] We deal with the issues relevant to Mr Li’s appeal on the basis that for reasons which we will later address, the cross‑appeal challenging the Judge’s conclusion that Mr Li had established a beneficial interest in the $4.8 million paid to Loo & Koo should be dismissed. Consequently, the appeal is to be considered on the basis that the money paid by Mr Li was his.

Breach of fiduciary duties and dishonest assistance

The argument for Mr Li

• [81] Mr Campbell QC submitted that both Mr Wang and GBHL owed and breached fiduciary duties to Mr Li. In addition, he argued that 110 Formosa dishonestly assisted the breaches, by being a party to GBHL’s assignment of its equitable purchase interest to 110 Formosa.
• [82] The fiduciary relationship was said to arise for two reasons. The first reason was because Mr Li was entitled to repose trust and confidence in Mr Wang on the basis of the principles discussed in Chirnside v Fay and Paper Reclaim Ltd v Aotearoa International Ltd.^[50] It is apparent from the terms of the High Court judgment that the argument under the second cause of action in that Court turned on this issue.
• [83] The argument that Mr Wang owed fiduciary duties to Mr Li on this basis was founded on a pleading in the third amended statement of claim asserting that the relationship between parties to the Cooperation Agreement was fiduciary because, amongst other things, one or more parties to that agreement might, and in fact did, control assets contributed by another party for the specified purpose of purchasing the Formosa property. But this was just one aspect of the relationship relied on. Other pleaded allegations addressed various other aspects of the Cooperation Agreement said to establish that the relationship of the parties was one in which they all agreed to advance a common purpose for mutual benefit.
• [84] On appeal, it was again contended for Mr Li that he was entitled to and did repose trust and confidence in Mr Wang in relation to the $4.8 million. Mr Campbell submitted that even if the purpose for which Mr Li had paid the $4.8 million was as general as the Judge had found, the money was to be used on Mr Li’s behalf as his contribution to a company, so that the company would be in a position to purchase the Formosa property. Mr Li depended on Mr Wang to apply the funds on his behalf. He was vulnerable, because Mr Wang was controlling the money. The circumstances meant Mr Li was entitled to repose trust and confidence in Mr Wang. Accordingly, Mr Wang owed Mr Li fiduciary duties in respect of the $4.8 million and the Judge had been wrong to hold there was no relationship of trust and confidence between Mr Li and Mr Wang. This was essentially the Chirnside v Fay argument.
• [85] The second reason Mr Campbell relied on in this Court was that Mr Li’s relationship with Mr Wang was inherently fiduciary, because Mr Wang was a trustee of the $4.8 million for Mr Li under a Quistclose trust. Such a trust arises where property is transferred for a specific purpose and is not at the free disposal of the recipient. The transferor retains a beneficial interest in the property throughout. The recipient holds the property on trust, but with power to use it for the specified purpose. In the event the purpose fails, the recipient is obliged to return the property.^[51]
• [86] Mr Johnson contended on behalf of Mr Wang that the argument that the relationship was inherently fiduciary because Mr Wang was a trustee of the $4.8 million under a Quistclose trust conflated the second cause of action (based on breach of fiduciary duties) with the third (breach of resulting trust). Mr Johnson pointed out that insofar as the argument arose under the second cause of action, the payment of the money had not been pleaded as a rationale for the fiduciary relationship. We have some sympathy for Mr Johnson’s submission, but nevertheless deal with the issue as it does not turn on any different facts from the similar argument presented under the second ground of appeal.
• [87] In developing the Quistclose trust argument, Mr Campbell submitted that Mr Li paid the $4.8 million so that JEHL could purchase the Formosa property under the April Agreement. The company was to be one in which Mr Li would hold 32 per cent of the shares, with Mr He, Mr Jiang and Mr Wang as co‑shareholders. Mr Wang, being in control of Mr Li’s money, was a Quistclose trustee and owed fiduciary duties to Mr Li. Mr Campbell argued that the Judge was wrong to hold that Mr Li paid the money for the general purpose of putting a corporate entity into funds to acquire the Formosa property, and that Mr Li had not paid the money for the specific purpose of the April Agreement. Rather, Mr Li had agreed to participate with particular shareholders in respect of an agreement at a particular purchase price with a particular settlement date. Mr Campbell submitted that on the Judge’s approach, Mr Wang was entitled to apply Mr Li’s money towards an agreement to purchase the Formosa property with a higher price, a later settlement date and the involvement of different shareholders. Mr Campbell said that this must be wrong.
• [88] Mr Campbell said it followed that, when Mr Wang used the $4.8 million to substantially meet the requirement that GBHL pay a $5 million deposit under the September Agreement, he breached his fiduciary duties. This was simply a misappropriation and use of money other than on Mr Li’s behalf. There was a further breach of duty when Mr Wang caused GBHL to assign its interest under the September Agreement to 110 Formosa.
• [89] As to GBHL, Mr Campbell argued that from the time Mr Wang breached his fiduciary duties to Mr Li, GBHL held its equitable interest as purchaser in the Formosa property on constructive trust for Mr Li. That was so because GBHL had been able to acquire its interest only because of Mr Wang’s breach of fiduciary duties, and GBHL knew of Mr Wang’s breaches because Mr Wang was GBHL’s sole director.^[52] As a constructive trustee aware of the circumstances giving rise to the trust, GBHL owed fiduciary duties to Mr Li, including a duty to convey its equitable purchase interest to Mr Li and to preserve it in the meantime. Those duties were breached when GBHL assigned its equitable interest in the Formosa property to 110 Formosa.
• [90] Insofar as 110 Formosa was concerned, Mr Campbell argued that the company dishonestly assisted Mr Wang’s breach of fiduciary duties by being a party to GBHL’s assignment of its equitable interest. Mr Wang knew all the relevant facts, and as one of three directors of the company at the time of assignment his knowledge was to be attributed to 110 Formosa. This was so even if the other directors were not personally aware of the misappropriation of Mr Li’s money.

The argument for Mr Wang

• [91] Mr Johnson submitted the Judge was correct to find that the relationship between Mr Li, Mr Wang and GBHL was not a fiduciary one. In this case, Mr Li had a contractual obligation to transfer the funds which he had accepted in evidence, and that obligation continued while the Cooperation Agreement remained on foot. In the circumstances it was wrong to say that Mr Wang owed Mr Li a fiduciary obligation to return the funds. That would be to ignore and override the terms of the contract. The question rather was whether Mr Wang owed any fiduciary obligation, over and above the contractual obligation, to ensure that Mr Li received a shareholding in the corporate vehicle or, as was pleaded, not to circumvent the Cooperation Agreement.
• [92] It was relevant that the parties were in a contractual relationship, they had expressly chosen to pursue the venture through an incorporated company, there was no power imbalance between them, they had separately identified the development potential of the Formosa property and each was pursuing the development for their own separate pecuniary advantage. Although Mr Li had control of Mr Wang’s money, in reality that only occurred when the signing of the Cooperation Agreement was imminent. That agreement was signed the day after Mr Li’s payment of the initial $4 million and became the governing document between the parties. Mr Li’s evidence was not that he paid the money because of his trust in Mr Wang, but rather because he would be in breach of the Cooperation Agreement if he did not.
• [93] Mr Johnson contended that the argument advanced for Mr Li on the basis of a Quistclose trust was misconceived for two reasons.^[53] First, because as the recipient of the funds, Mr Wang was entitled to use them in accordance with the purpose for which they were advanced. He could do that without giving rise to any fiduciary obligation, or breach of it. Secondly, the argument assumed that the full “suite” of fiduciary obligations should be imposed on Mr Wang as the recipient of the funds. However, that would not be justified in this case where Mr Wang’s only duty was in relation to the use of the money.
• [94] In all the circumstances, Mr Johnson submitted the Judge had correctly applied the relevant legal principles and the relationship was not one giving rise to fiduciary obligations.

The argument for 110 Formosa

• [95] Mr Grove accepted that at certain points in their relationship Mr Wang did owe fiduciary duties of a limited scope to Mr Li and he also accepted that Quistclose trusts existed over the $4.8 million, the purchase interest in the Formosa property and subsequently Mr Wang’s shares in 110 Formosa.
• [96] However, he argued that those trusts had not been breached by Mr Wang paying the money to GBHL, facilitating the September Agreement or transferring the benefit of GBHL’s purchase interest to 110 Formosa. He claimed that those actions were within the allowable applications of the money pursuant to the terms of the trusts. Without a breach, there could be no dishonest assistance by GBHL or 110 Formosa. The only possible breach occurred when Mr Wang took the benefit of Mr Li’s proportional shareholding in GBHL and 110 Formosa for himself. Neither GBHL nor 110 Formosa assisted in that breach: Mr Wang’s use of the funds as part payment of the purchase price occurred before 110 Formosa was incorporated. Mr Wang’s obligation to ensure Mr Li received his proportional shareholding was a personal obligation. 110 Formosa had no direct relationship with Mr Li and no obligation in relation to a shareholding in the company.

Analysis

• [97] Two contextual considerations must frame the analysis of this issue. The first is that of those who signed the Cooperation Agreement on 29 August 2014, only Mr Li and Mr Wang remained involved in the arrangements for acquisition of the Formosa property at the time the $5 million deposit was paid. The Judge nevertheless treated the Cooperation Agreement as remaining on foot and binding on both Mr Li and Mr Wang.^[54] In doing so, she upheld Mr Li’s claim that Mr Wang had breached the Cooperation Agreement. Mr Wang’s argument (under the cross‑appeal) is that no breach was shown because Mr Li had not proved the $4.8 million was his. As indicated earlier, we do not accept that proposition. The analysis that follows therefore proceeds on the basis that the Judge correctly found that Mr Wang had breached his obligations under the Cooperation Agreement and would be liable in contract.
• [98] The second consideration is that the Judge rejected Mr Li’s claim against 110 Formosa that the company held 32 per cent of its interest in the Formosa property on constructive trust for him.^[55] As has been seen, the Judge found that Mr Li paid the $4.8 million to secure an interest in the corporate vehicle the parties envisaged would be used to purchase the property.^[56] This was the issue pursued under the first cause of action. There is no appeal against that aspect of the judgment.
• [99] Mr Li now argues that the Judge was wrong to reject the second cause of action under which he claimed breach of fiduciary duties by Mr Wang and GBHL and knowing assistance by 110 Formosa.
• [100] We are not persuaded that the Judge was wrong. Mr Campbell’s first argument, asserting a fiduciary relationship based on the terms of the Cooperation Agreement, in fact attempts to enlarge the rights and obligations of the parties beyond those they assumed as parties to that agreement. We consider this is contrary to observations made by the Supreme Court in Chirnside v Fay,^[57] Paper Reclaim Ltd v Aotearoa International Ltd and Amaltal Corporation Ltd v Maruha Corporation.^[58]
• [101] The Judge referred to the relevant statements in those cases.^[59] In Chirnside v Fay, the judgment of Blanchard and Tipping JJ (with whom Gault J agreed on this point), made it plain that relationships which are inherently fiduciary have the common feature justifying the imposition of fiduciary duties that one party is entitled to place trust and confidence in the other.^[60] The party reposing such trust and confidence is entitled to rely on the other not to act in a way that is contrary to the first party’s interests.^[61] A joint venture, whether it is in the form of a pre‑contractual arrangement or understanding, or later expressed in a contract between the parties, will be one in which the parties are working together towards achieving a common objective, each depending on the other to make progress towards that objective.^[62] But as Blanchard and Tipping JJ noted:^[63]

Once the venture becomes contractual the contract will normally govern what is to happen on the termination of the venture or the withdrawal of a party from it. In the absence of contractual regulation, equitable principles will supply the solution.

• [102] Further, as noted by Gault J, the term “joint venture” can cover many forms of arrangement not all of which necessarily give rise to fiduciary obligations.^[64] Again, in Paper Reclaim Ltd v Aotearoa International Ltd, Blanchard J (writing for the Court) said on the facts of that case that the Courts below had been too ready to label as a joint venture an arrangement that was in reality no more than a contract of agency. He continued:^[65]

To style a contractual relationship as a joint venture may be apt to distract. It is a term to be applied with caution. When parties have formed a contract the correct approach is first to decide exactly what they have agreed upon. Only then should the Court consider whether any particular aspect of their agreement gives rise to a relationship which can properly be characterised as fiduciary, imposing an obligation of loyalty on one or both parties, which supplements the express or implied contractual terms. It is not enough to attract an obligation of loyalty that one party may have given up more than the other in entering into the contract or that the contract may be more advantageous for one party than for the other. Nor is a relationship fiduciary in nature merely because the parties may be depending upon one another to perform the contract in its terms. That would be true of many commercial contracts which require cooperation. A fiduciary relationship will be found where one party is entitled to repose and does repose trust and confidence in the other. The existence of an agreement, express or implied, to act on behalf of another and thus to put the interests of the other before one’s own is a frequent manifestation of a situation in which fiduciary obligations are owed. Partners are the classic example of parties in that situation. Their position is different from that of parties to a contract who may have to cooperate but are doing so for their separate advantages.

• [103] In Amaltal Corporation Ltd v Maruha Corporation the Supreme Court reiterated that characterising a commercial arrangement as a joint venture can be unhelpful as a guide to whether the parties owe each other fiduciary obligations.^[66] The Court observed that when commercial parties elect to use an incorporated vehicle for what can only loosely be called a joint venture, it is unlikely that their relationship as a whole will be fiduciary in nature. That was subject to the reservation that even in a commercial relationship which is not fiduciary overall, some aspects of the relationship might engage fiduciary obligations of loyalty.^[67]
• [104] In this case, we consider that the terms of the Cooperation Agreement may be described as providing for a joint venture. We have already summarised those terms. Quite apart from the use of the term “Cooperation Agreement”, and the references to “mutual benefit, common development, joint investment and joint management”, the Cooperation Agreement contained reasonably detailed terms which set out the basis upon which the parties would cooperate and make decisions about the acquisition and development of the Formosa property. These provisions indicate there was a joint venture. However, we do not consider the contractual terms describe a relationship which is of a generally fiduciary nature.
• [105] The parties, by the contract, stipulate their respective rights and obligations. While contractual terms may be supplemented by and co-exist with fiduciary obligations, the events said to have given rise to a breach of fiduciary duty in this case are all matters capable of constituting a breach of the Cooperation Agreement. In particular, as noted above, the Judge found that Mr Wang’s actions in cancelling Mr Li’s shareholding in GBHL while retaining the benefit of Mr Li’s contribution constituted a breach of the Cooperation Agreement entitling Mr Li to damages.^[68] However, we do not consider it is appropriate to analyse what happened on the basis that Mr Wang breached an obligation of loyalty to Mr Li. We accept Mr Johnson’s submission that there was no power imbalance between the parties, they had separately identified the development opportunity represented by the Formosa property and each was pursuing his own commercial advantage under the Cooperation Agreement. As we will later discuss, the facts are such as to engage other equitable principles, but we are not persuaded that Mr Wang should be liable as a party to the Cooperation Agreement who owed duties of loyalty to Mr Li.
• [106] In short, we see the Cooperation Agreement as providing the basis upon which the parties would cooperate for the purpose of making a profit from the acquisition and development of the Formosa property using a company as the vehicle for that purpose. It did not create a fiduciary relationship between the parties to it.
• [107] The argument that Mr Li’s payment of the $4.8 million created a Quistclose trust faces various obstacles. First, we think there is merit in the point made by Mr Johnson that there was no pleading of the creation of a Quistclose trust as a result of the payment of the $4.8 million. The relevant parts of the statement of claim turn very much on the relationship established by execution of the Cooperation Agreement.
• [108] Secondly, when Mr Li made the payments, he did so for the purposes of the Cooperation Agreement. As Mr Johnson submitted, this was in effect to enable use of those funds by the corporate vehicle the parties intended would complete the purchase and carry out the development of the Formosa property. Mr Wang was obliged to use the money for that purpose. In fact, by 29 August 2014 when the Cooperation Agreement was executed, Mr Li had already paid $4 million into the trust account of Loo & Koo on 28 August 2014. The money was received into Loo & Koo’s trust account essentially to be held at the direction of Mr Wang and Ms Huang for the purchase of the Formosa property. By this stage, Mr Li had become a shareholder in JEHL. The Cooperation Agreement envisaged that a company would be established to purchase and develop the land. However, although JEHL was already in existence when the Cooperation Agreement was signed, the Agreement did not refer specifically to that company.
• [109] In the circumstances, we consider the Judge was right to emphasise that when Mr Li deposited the funds with Loo & Koo on 28 and 29 August 2014 he did not stipulate that the money should only be used for purchase of the Formosa property by JEHL. As she put it:^[69]

... he did so to the credit of Mr Wang and/or Ms Huang, and for the general purpose of those funds being used in the transaction to acquire the Formosa Property. In other words, no specific purpose concerning JEHL was communicated by Mr Li at the time he advanced those funds. And, when Mr Li deposited further funds with Loo & Koo on 3 September 2014 ... there was no change in his purpose for that advance, namely for the general purpose of purchasing the Formosa Property. The instruction to change the various receipts to reflect the funds being held to the credit of JEHL came from Mr Wang, not Mr Li.

• [110] The principles upon which Mr Campbell sought to rely in this part of the argument were those explained by Lord Millett in Twinsectra Ltd v Yardley:^[70]

[68] Money advanced by way of loan normally becomes the property of the borrower. He is free to apply the money as he chooses, and save to the extent to which he may have taken security for repayment the lender takes the risk of the borrower's insolvency. But it is well established that a loan to a borrower for a specific purpose where the borrower is not free to apply the money for any other purpose gives rise to fiduciary obligations on the part of the borrower which a court of equity will enforce. In the earlier cases the purpose was to enable the borrower to pay his creditors or some of them, but the principle is not limited to such cases.

• [111] Lord Millett observed that such arrangements are commonly described as creating a “Quistclose trust”, with reference to the earlier House of Lords decision in Barclays Bank Ltd v Quistclose Investments Ltd.^[71] He summarised the relevant principles that had been stated by Lord Wilberforce in Quistclose Investments as follows:^[72]

When the money is advanced, the lender acquires a right, enforceable in equity, to see that it is applied for the stated purpose, or more accurately to prevent its application for any other purpose. This prevents the borrower from obtaining any beneficial interest in the money, at least while the designated purpose is still capable of being carried out. Once the purpose has been carried out, the lender has his normal remedy in debt. If for any reason the purpose cannot be carried out, the question arises whether the money falls within the general fund of the borrower’s assets, in which case it passes to his trustee in bankruptcy in the event of his insolvency and the lender is merely a loan creditor; or whether it is held on a resulting trust for the lender. This depends on the intention of the parties collected from the terms of the arrangement and the circumstances of the case.

• [112] In considering the application of these principles here it is important to bear in mind the sequence of events which has already been set out above.^[73] In summary, Mr Li became a shareholder of JEHL and that company was nominated as the purchaser of the Formosa property under the April Agreement on 27 August 2014. By that date, a number of drafts of what was to become the Cooperation Agreement had been circulated between the parties stipulating that a corporate vehicle would be used to purchase the property.
• [113] Mr Li’s payments totalling $4.2 million were made on 28 and 29 August 2014. Based on Mr Li’s evidence, it appears that the latter payment of $200,000 followed execution of the Cooperation Agreement on that day. In that agreement, it was again contemplated that a company would be the owner and developer of the Formosa property. Although JEHL was then in existence and Mr Li owned 32 per cent of the shares in it, the company was not specifically referred to in the Cooperation Agreement. However, it is clear that the Cooperation Agreement provided for a company to own and develop the property and recorded Party B (Mr Li alone) as having a shareholding of 32 per cent.
• [114] The vendors cancelled the April Agreement on 10 September 2014. On 26 September 2014, GBHL was incorporated and nominated as the purchaser under the new September Agreement. The only two shareholders in that company were Mr Wang, who came to hold 80 per cent of the shares, and Ms Huang, who came to hold the remaining 20 per cent.
• [115] The Judge found, and it is not challenged on appeal, that Mr Li knew of the cancellation of the April Agreement at some time prior to 29 September 2014. At least initially, he must have been prepared for the new September Agreement to proceed with GBHL as the purchaser. The deposit of $5 million pursuant to the September Agreement was made on 1 October 2014. The Judge said it was unclear whether the payment was made before or after Mr Li had agreed to become a shareholder in GBHL.^[74] Mr Li’s position was confirmed by a text he sent to Mr Wang on the morning of 2 October 2014 giving his details to facilitate the allocation of shares in GBHL to him. Mr Wang’ response was that he had already added Mr Li as a shareholder. It is clear from the Judge’s finding that Mr Li had initially agreed to the shareholding, albeit he said that he thought he had “no option”.^[75] He had however subsequently decided he did not want to pursue the opportunity, doubting Mr Wang’s ability to settle the September Agreement.
• [116] Pausing there, we do not consider the Judge’s findings would justify a conclusion that use of the $4.8 million to constitute the substantial part of the deposit paid towards the purchase of the Formosa property under the September Agreement was contrary to the purpose for which Mr Li had deposited the money with Loo & Koo. Nevertheless, on the basis of the findings the Judge made, we consider that the purpose for which Mr Li deposited the funds can accurately be described as being the acquisition of the Formosa property by a company to be owned by the parties to the Cooperation Agreement. Use of the money for that purpose was in accordance with the Cooperation Agreement. The discussions on 1 October 2014, and the subsequent steps taken to ensure that Mr Li had a shareholding in GBHL, are inconsistent with any intention on Mr Wang’s part not to comply with the Cooperation Agreement at that stage. The Cooperation Agreement did not name JEHL or any other company, and we see no basis to conclude that Mr Li’s approval was in any sense dependent on JEHL’s continued involvement.
• [117] Consequently, we reject the argument that the money was used other than for the stated purpose for which it had been provided. Consequently, no issue about breach of a Quistclose trust can arise.
• [118] These conclusions mean that the appeal against the Judge’s rejection of the second cause of action against Mr Wang must fail. They also mean that there can be no finding of dishonest assistance against 110 Formosa in respect of the second cause of action.

Resulting trust and proprietary remedy in respect of the Formosa property

• [119] It was in considering the third cause of action that the Judge dealt with the resulting trust arguments as they had been advanced in the High Court. In that Court the resulting trust argument was based only on the proposition that Mr Li had made his contribution of $4.8 million solely for the specified purpose of funding the purchase of the Formosa property by JEHL.^[76] In dealing with the argument the Judge referred to this Court’s judgment in Chang v Lee, in which Harrison J explained the rationale for resulting trusts as follows:^[77]

[20] The rationale for a resulting trust is that, absent evidence to the contrary, the law presumes a person intends to retain the beneficial ownership of funds which he or she advances towards the purchase price of a property. The legal owner holds title to the property subject to the payer’s equitable interest. In this way a trust results to the payer to the extent of his or her contribution. Evidence which might contradict or rebut the presumption is traditionally of an intention to gift or of consideration in the nature of satisfaction of independent indebtedness ...

• [120] The Judge also referred to two passages in the judgment of Lord Browne‑Wilkinson in Westdeutsche Landesbank Girozentrale v Islington London Borough Council. First, that a resulting trust arises where:^[78]

... A makes a voluntary payment to B or pays (wholly or in part) for the purchase of a property which is vested in 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 ...

• [121] And secondly:^[79]

... resulting trust[s] are traditionally regarded as examples of trusts giving effect to the common intention of the parties. 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. ... If the settlor has expressly, or by necessary implication, abandoned any beneficial interest in the trust property, there is in my view no resulting trust ...

• [122] As explained in Chang v Lee:^[80]

Lord Browne-Wilkinson’s reference to the parties’ common intention is to their respective intentions about beneficial ownership of the advance. While this language resembles that of contract, we are not here concerned with whether the parties agreed to be bound by a mutually beneficial bargain — it is accepted they did not. The question is whether their common intention was for Mr Chang to transfer the money for a specific purpose rather than to effect an outright transfer of ownership through which Ms Lee can now treat the property as her exclusive asset. In the former case equity fastens on Ms Lee’s conscience and presumes a common intention for Mr Chang to benefit from the application of the funds.

• [123] As noted above, the Judge found the evidence did not establish the common intention, or any intention on the part of Mr Li, that Mr Li would have a personal beneficial interest in the Formosa property. Rather, there was a common intention that in return for their contribution of funds, the parties to the Cooperation Agreement would receive a commensurate interest in the corporate vehicle used to purchase the Formosa property. Also, the evidence did not establish that Mr Li had intended the $4.8 million to be advanced by him as a gift or a loan. The Judge noted that while the concept of a resulting trust could be used to give a beneficial interest in real property, it could also be applied to other forms of property which have been acquired with funds advanced by a party other than their legal owner.^[81]
• [124] As the $4.8 million had been advanced by Mr Li for the general purpose of being used in the acquisition of the Formosa property, it followed that when the funds were used to pay the deposit under the September Agreement that was in accordance with Mr Li’s objectives. However, after the funds had been paid towards the acquisition of the Formosa property, Mr Li had requested that the money be returned to him, on 2 October 2014. The Judge said:

[230] Despite the purpose for which Mr Li advanced the $4.8 million having been met, a resulting trust in Mr Li’s favour nevertheless arises, on the basis of those principles discussed in Chang v Lee above. Mr Li deposited money (that I am satisfied was legally and beneficially his) but never received his commensurate shareholding in the corporate entity which acquired the Formosa Property. Rather, those shares went to Mr Wang. I am satisfied Mr Wang holds the shares on resulting trust for Mr Li.

• [125] This meant that the third cause of action had been made out, and the Judge concluded that there should be a declaration that Mr Wang held the proportion of his shares in 110 Formosa representing the $4.8 million paid by Mr Li on resulting trust for Mr Li.^[82]
• [126] In this Court, Mr Campbell repeated the argument that Mr Wang held the $4.8 million on a resulting trust for Mr Li. The purpose of the trust failed once the April Agreement was cancelled. From that point, Mr Campbell claimed Mr Wang’s duty was to return the money to Mr Li. When Mr Wang used the money to pay the deposit for GBHL under the September Agreement, he breached the trust under which he held the money. The Judge’s approach was wrong, because it relied on the payment being made for the general purpose of putting a corporate entity into funds to acquire the Formosa property. The finding that the purpose had been met when Mr Wang used the money to pay the deposit followed.
• [127] Mr Campbell argued that on the Judge’s analysis, the only property that was ever the subject of a resulting trust was a proportion of Mr Wang’s shareholding in 110 Formosa. On the approach she took, the Judge did not have to explore the consequences of findings, which should have been made, that the $4.8 million was subject to a resulting trust, and that Mr Wang breached that trust when he paid the deposit for GBHL. The Judge’s approach also meant that she did not address whether Mr Li could trace his $4.8 million into substitute assets in the hands of either Mr Wang or 110 Formosa, and the appropriate remedial response if Mr Li was entitled to trace the assets in this way.
• [128] Mr Johnson submitted the Judge was right to hold that Mr Li’s payment of the $4.8 million was not made for the specific purpose of funding the acquisition of the Formosa property under the April Agreement.
• [129] We have already expressed our agreement with the Judge’s approach concerning the purpose of Mr Li’s payment of the $4.8 million.^[83] At least initially, the money was used as intended to enable a company (GBHL) to pay the deposit required under the September Agreement. We accept the Judge’s finding that when that occurred, Mr Li knew that the April Agreement had been cancelled and if the Formosa property was to be purchased it would have to be pursuant to the September Agreement.^[84] That meant that GBHL had to be put in funds to pay the deposit.
• [130] What transpired of course was that GBHL did not complete the purchase of the property. Rather, 110 Formosa was nominated to complete the purchase in accordance with the Deed of Nomination executed on 8 December 2014.
• [131] In order to ascertain the respective rights and liabilities of Mr Li and Mr Wang it is necessary to focus on what happened on 4 December 2014. It was on that day that Mr Wang arranged for Mr Li’s shares in GBHL to be transferred back to himself. At that point, 110 Formosa had already been formed, but its shareholders were Mr Wang (30 per cent), Mr Huang (40 per cent) and Ms Wen (30 per cent). Mr Li was essentially cut out of any interest in GBHL, and then 110 Formosa. The arrangements consummated between the shareholders of 110 Formosa, reflected in the Deed of Nomination executed on 8 December 2014 and the Shareholders’ Agreement which followed on 11 December 2014, made no provision by which Mr Li could obtain a shareholding in the company which was to acquire and develop the Formosa property.
• [132] It is clear that on 4 December 2014 Mr Wang breached his obligations under the Cooperation Agreement. But we consider it is also clear that Mr Wang acted unconscionably by transferring Mr Li’s shares in GBHL to himself and retaining the benefit of the $4.8 million contributed by Mr Li. As a result of his appropriation of Mr Li’s shares, Mr Wang’s shareholding in 110 Formosa was unjustly enlarged.
• [133] We are not sure, however, that the Judge was right to analyse the position on the basis that Mr Wang’s obligations once the money had been used for the intended purpose were obligations that arose from a resulting trust. The money had after all been applied in accordance with the common intention of the parties and between 1 October 2014 and 4 December 2014 Mr Li owned shares in GBHL, a position contemplated by the Cooperation Agreement. On 4 December 2014 the position changed but the money that Mr Li had provided had already been used for the intended purpose. What then happened was Mr Wang’s appropriation of Mr Li’s shareholding.
• [134] The situation falls comfortably within the delineation of the circumstances in which an institutional constructive trust will be recognised as a consequence of an unconscientious assertion of ownership in respect of property to which another has contributed.^[85] New Zealand cases where institutional constructive trusts have been recognised in this situation have most often arisen in the context of disputes about relationship property. Lankow v Rose is the leading case.^[86] In that case, Tipping J described what a claimant must show in order to be awarded a beneficial interest in property owned in law by the defendant. He referred to the need to show a contribution to the property at issue, that the contribution was made in expectation of an interest in the property, that the expectation was reasonable and that the defendant could reasonably expect to yield an interest to the claimant.^[87]
• [135] An institutional constructive trust can clearly be recognised applying these considerations to the facts of this case. Mr Li made the $4.8 million contribution in the expectation of securing an interest in the corporate vehicle that was to own and develop the Formosa property. Mr Wang defeated that expectation, by an unconscientious assertion to property which belonged to Mr Li. It is appropriate in these circumstances to hold that Mr Wang is a constructive trustee in respect of the shares in 110 Formosa representing Mr Li’s contribution of $4.8 million.
• [136] The principles discussed in Lankow v Rose in the particular context of relationship property are not to be confined to that setting. They are part of a wider concept, reflected in the description of constructive trusts given in Jacobs’ Law of Trusts in Australia:^[88]

The constructive trust differs from the resulting or implied trust in that, although a resulting or implied trust also arises by operation of law in the case of presumed resulting trusts as distinct from automatic resulting trusts, the courts presume that a trust was actually intended and in the face of evidence to the contrary, may conclude that the presumption has been rebutted. In the case of a constructive trust, the inquiry is not solely as to the actual or presumed intentions of the parties, but as to whether, according to the principles of equity, it would be a fraud for the party in question to deny the trust. As Cardozo CJ put it, ‘When property has been acquired in such circumstances that the holder of the legal title may not in good conscience retain the beneficial interest, equity converts him into a trustee’. It has been said that the trust is constructive in the sense that equity construes the circumstances by explaining or interpreting them; equity does not construct the trust, rather it attaches legal consequences to the circumstances. Moreover, the constructive trust demands the staple ingredients of express and resulting or implied trusts: subject matter, trustee, beneficiary and personal obligation attaching to the trust property.

• [137] In this case, there is no doubt that the history of the dealings between the parties is such that it would be unconscionable for Mr Wang to deny Mr Li an equitable interest in the shares.
• [138] We accept that the pleading does not specifically allege that Mr Wang became a trustee of the shares under an institutional constructive trust, but the facts on which the constructive trust must be recognised are the same as those on which the Judge relied for her conclusion that there was a resulting trust. We do not think there is any prejudice arising to Mr Wang as a result of this Court reaching a different conclusion as to the categorisation of the trust involved. In the circumstances of this case it does not result in any material difference to the nature of the appropriate remedy.
• [139] The relief granted in the High Court in respect of the third cause of action was an order that Mr Wang “holds that proportion of his shareholding in 110 Formosa which represents an original contribution of $4.8 million, on resulting trust for Mr Li”.^[89] On the view we take, the words “institutional constructive” can simply replace “resulting”. We consider that r 48(4) and (5) of the Court of Appeal (Civil) Rules 2005 enables us to make such an order. The requirement that Mr Li elect between that relief and that given in respect of the fourth cause of action, namely damages for breach of contract, will remain.
• [140] Mr Campbell argued that Mr Li should be able to trace his $4.8 million into GBHL’s equitable interest (as purchaser) in the Formosa property. He claims that would be justified, because GBHL knew (through Mr Wang) of Mr Li’s equitable interest in the $4.8 million, before assigning it to 110 Formosa in exchange for the payment of $5 million. The $5 million was in turn exchanged for shares in 110 Formosa being allocated to Mr Wang.^[90] Mr Campbell further submitted that Mr Li could either follow the equitable purchase interest into 110 Formosa’s hands (because it knew, through Mr Wang, of Mr Li’s interest) or trace it into the eventual substitute asset, Mr Wang’s shares in 110 Formosa. Mr Li would not have to elect between those alternatives until judgment.
• [141] The position that would apply if Mr Li chose to trace his money into Mr Wang’s shares in 110 Formosa would be that the shares would be held on trust by Mr Wang for Mr Li. Appropriate allowance would have to be made for Mr Wang’s expenditure on the shares, of about $200,000. That could be allowed for by a lien.
• [142] On the other hand, if Mr Li chose to follow the equitable purchase interest into 110 Formosa’s hands, that interest was in due course converted, at settlement, into a legal interest in the Formosa property. By the time that happened, 110 Formosa was aware of Mr Li’s claim and had, in Mr Campbell’s phrase, “distanced itself somewhat from Mr Wang”. Mr Campbell conceded the completion of settlement by payment of the balance of the purchase price (which was funded by Ms Wen) did not involve any equitable wrong by 110 Formosa. It would therefore be appropriate that 110 Formosa and Mr Li share proportionately in the Formosa property to the extent of their contributions to the purchase price paid by 110 Formosa. 110 Formosa would hold the property on trust for Mr Li to that extent.
• [143] In the result, Mr Campbell submitted that on the third cause of action there should be judgment for Mr Li against Mr Wang and 110 Formosa in the form of orders that:

(a) Mr Wang holds his shares in 110 Formosa on trust for Mr Li, subject to a lien in Mr Wang’s favour of $200,000; and

(b) 110 Formosa holds a proportion of the Formosa property on trust for Mr Li, equivalent to Mr Li’s $4.8 million contribution.

• [144] Mr Campbell’s argument that Mr Li should be able to elect a proprietary interest in the Formosa property itself was said to be justified on the basis that 110 Formosa was not a bona fide purchaser for value without notice. This was to attribute Mr Wang’s knowledge of the misappropriation of Mr Li’s money to the other directors of 110 Formosa. Such an attribution would have to be made in the face of Ms Wen’s clear evidence that prior to Mr Li lodging a caveat against the Formosa property in February 2015, she had been unaware of Mr Li’s claims, had never been told about or shown the Cooperation Agreement and that Mr Wang had told her that he had paid the $5 million deposit to the vendors. Mr Huang gave evidence to the same effect. Mr Campbell submitted that as Mr Wang was one of three directors of 110 Formosa when he assigned Mr Li’s shares in GBHL to himself, his knowledge relevant to the company’s affairs was to be regarded as knowledge of the company, even if the company had other directors with whom Mr Wang did not share that knowledge.
• [145] Mr Campbell relied on three authorities for that proposition, namely Belmont Finance Corp v Williams Furniture Ltd (No 2), Marr v Arabco Traders Ltd and Lebon v Aqua Salt Co Ltd.^[91] However, none of those involved facts analogous to the present case. In those cases, the relevant persons were clearly involved in the control and management of the companies concerned at the time of the impugned actions. Here, what is sought to be attributed to 110 Formosa is the knowledge of one out of three directors who was a minority shareholder and did not have effective management of the company. Further, the knowing assistance said to have been given by the company has its origins in actions taken by Mr Wang which were not only unknown to Ms Wen and Mr Huang, but which were taken before 110 Formosa was nominated as the purchaser. The deposit (consisting largely of Mr Li’s money) was paid on 1 October 2014, Mr Wang transferred Mr Li’s shares in GBHL to himself on 4 December 2014, 110 Formosa was nominated as purchaser on 9 December 2014 and the Shareholders’ Agreement was executed on 11 December 2014. Neither Ms Wen nor Mr Huang were shareholders or directors of GBHL.
• [146] It follows that Mr Wang did not acquire knowledge of Mr Li’s interest in the funds or misappropriate those funds in his capacity as director of 110 Formosa. The situation was one in which Mr Wang had private knowledge of facts affecting 110 Formosa’s interests, but did not disclose them to the other directors. While we consider that Mr Wang had a duty to communicate those facts to Ms Wen and Mr Huang, he did not do so, and there was nothing which ought to have put them on inquiry that the money Mr Wang paid was not his. In those circumstances, we do not consider that Mr Wang’s knowledge can be imputed to 110 Formosa, so as to hold the company liable as a party dishonestly assisting Mr Wang’s breach.
• [147] This situation was addressed by Hoffmann LJ in El Ajou v Dollar Land Holdings plc. After finding that the agent in that case had a duty to communicate his knowledge that monies were the proceeds of fraud to the principal, Hoffmann LJ continued:^[92]

I know of no authority for the proposition that in the absence of any duty on the part of the principal to investigate, information which was received by an agent otherwise than as agent can be imputed to the principal simply on the ground that the agent owed to his principal a duty to disclose it.

• [148] The absence of any knowledge of Mr Wang’s misappropriation of Mr Li’s money on the part of 110 Formosa necessarily means that a remedy in respect of Mr Wang should not be granted in respect of the Formosa property itself. The ability to identify Mr Li’s contribution through the transfers of an “equitable purchase interest” from GBHL to 110 Formosa is not the point, as the tracing process is necessarily defeated by 110 Formosa’s status as a bona fide purchaser for value without notice of Mr Li’s interest.^[93]
• [149] This conclusion sits comfortably with the fact that under the Cooperation Agreement Mr Li and Mr Wang agreed that they (and the other parties) would invest in a company that would purchase and develop the Formosa property. It was never intended that the parties would have a direct ownership interest in the land. It would not be appropriate to now provide for that outcome in giving relief to Mr Li against Mr Wang. An interest in the form of shares in 110 Formosa can adequately compensate Mr Li for Mr Wang’s breach of trust.
• [150] There are various possible approaches to fixing the appropriate extent to which Mr Wang’s shareholding in 110 Formosa should be held in trust for Mr Li. As noted earlier, in her Minute of 17 May 2019 the Judge, after hearing the parties, said that she was satisfied the appropriate percentage was 12 per cent, representing the proportion of the capitalisation of 110 Formosa which reflected Mr Li’s contribution of $4.8 million.
• [151] While the purchase price of the Formosa property in the September Agreement was $38 million, since Mr Li’s expectation was a shareholding in the corporate vehicle intended to purchase the land, the capitalisation amount of the company was the appropriate baseline. As we have noted earlier, the amount that was eventually paid by 110 Formosa was $40 million. The Judge added:^[94]

[7] I do not consider it appropriate for Mr Li to receive a greater share in 110 Formosa tha[n] that which reflects his contribution of $4.8 million simply because of challenges Mr Li raises as to whether Mr Wang’s additional contributions were “real”. I view any issues in that regard as being matters between Mr Wang and the other parties to the 110 Formosa Shareholders’ Agreement. That agreement recognised and agreed Mr Wang’s contributions and his commensurate shareholding in 110 Formosa.

• [152] We set out earlier the percentage shareholding in 110 Formosa as it had been adjusted to reflect the contributions made by the current owners: Ms Wen (75.25 per cent), Mr Wang (19.75 per cent) and Mr Huang (five per cent). The relief granted by the High Court would result in Mr Li owning 12 per cent of the shares, reducing Mr Wang’s shareholding to 7.75 per cent.
• [153] Mr Campbell submitted this approach would not adequately compensate Mr Li for Mr Wang’s breach of trust. He conceded that Mr Wang should be credited with the $200,000 of his own money that he contributed to the $5 million deposit paid under the September Agreement. But he submitted Mr Wang had not contributed any other expenditure in acquiring the shares. In this respect he referred to the Shareholders’ Agreement of 11 December 2014, noting that under cl 3.2 110 Formosa would have 42 million shares issued at $1 each. Of those, Mr Wang would be issued 12.6 million shares, with an initial call of $8 million on eight million of those shares being made on the date 110 Formosa was nominated to replace GBHL as purchaser. However, under cl 3.2(e) and (f), it was agreed that 110 Formosa would reimburse Mr Wang for amounts totalling the full amount of the initial $8 million call. This comprised $5 million, referable to the deposit paid by GBHL on the September Agreement and the payments totalling $3 million recorded as having been paid by Mr Wang, to which we have referred.^[95]
• [154] Mr Campbell contended that these provisions meant 110 Formosa was giving credit to Mr Wang for payments that he had allegedly made under the cancelled April Agreement and for amounts that did not represent expenditure he had incurred to obtain his shares. We do not accept that submission, at least insofar as it affects Mr Li’s claim against Mr Wang, for the following reasons.
• [155] The approach taken by the Judge had the result that Mr Li achieved a shareholding in 110 Formosa that was commensurate with the $4.8 million he paid for the purpose of investing in the company that would own and develop the Formosa property. Mr Wang’s shareholding was, correspondingly, adjusted downwards so as to deprive him of the shareholding he had secured by the use of Mr Li’s money.
• [156] Mr Campbell submitted that Mr Wang would still be rewarded for his breach of trust by an ability to participate in any increased value of the Formosa property since its acquisition by 110 Formosa. That was said to be inappropriate because Mr Wang had not invested any more than $200,000, the balance of the deposit paid to the vendors.
• [157] The Judge took the view that the extent of Mr Wang’s shareholding in 110 Formosa, once reduced to accommodate Mr Li’s shareholding, was a matter for the shareholders who had signed the Shareholders’ Agreement. As she noted in the passage from her minute which we have quoted above, the Shareholders’ Agreement recognised and agreed Mr Wang’s contributions and his “commensurate shareholding” in the company. The extent of that shareholding would define the extent to which he was entitled to any increase in the value of the Formosa property or took the risk of any reduction in value.
• [158] Although Mr Campbell at one stage seemed to suggest that there was doubt as to whether or not the payments had in fact been made by Mr Wang, his main submission appeared to be that the credits for the $2 million and $1 million payments should not have been accepted by the other shareholders. We are not convinced that this is a relevant issue in this proceeding.
• [159] Mr Li was not a party to the Shareholders’ Agreement. Any concession that was made in respect of payments that he claimed credit for was a concession made by Ms Wen and Mr Huang. It seems most unlikely that Mr Huang and Ms Wen would have agreed to reimburse Mr Wang in accordance with cl 3.2(e) and (f) of the Shareholders’ Agreement if they were not satisfied the payments had been made by him.
• [160] In the case of the $2 million “exclusivity fee”, it was described in the Shareholders’ Agreement as having been paid to “retain the right for the vendor to enter into the sale and purchase agreement with [GBHL]”. While this wording is not clear (the Shareholders’ Agreement did not define “vendor”, but it can be assumed to refer to the vendors of the Formosa property), we infer that it was the deposit forfeited under the April Agreement. Whatever its purpose, however, it does not seem to us to have any implications for the compensation now properly payable to Mr Li. The payment in respect of the agent’s commission is more straightforward and again there is no reason to assume that the payment was not made, nor any reason to conclude that it affected Mr Li.
• [161] Mr Campbell also submitted that if Mr Wang had incurred these costs, they were lost to him by the time that he arranged for GBHL to enter into the September Agreement. However, the answer to that point lies in the terms of the Shareholders’ Agreement. While the costs were incurred in respect of the period in which GBHL was the potential purchaser of the Formosa property, the Shareholders’ Agreement provided for Mr Wang to recover the money he had expended. Contrary to Mr Campbell’s submission, recognising that is not to allow Mr Wang to participate in a profit earned by his breach of fiduciary duties, thereby rewarding his unlawful conduct.
• [162] Mr Campbell accepted that Ms Wen and Mr Huang, by agreeing to the terms of the Shareholders’ Agreement, had been prepared to reward Mr Wang for sharing with them the opportunity to participate, through 110 Formosa, in the September Agreement. But he submitted that Mr Wang was only in a position to share that opportunity with them, and bargain for those credits, as a result of his misappropriation of Mr Li’s $4.8 million. Analysed in that way, he claimed the credits were, in substance, just another profit that Mr Li obtained from his breach of duty.
• [163] In our view the $2 million and $1 million amounts paid by Mr Wang were payments that enabled 110 Formosa to proceed with the purchase of the Formosa property and were not referable to Mr Li. Notwithstanding that Mr Wang has acted in breach of trust, we think it is appropriate to recognise the payments made by him on the basis that his assets have contributed to the present value of the shares in 110 Formosa. As was recognised by the Supreme Court in Chirnside v Fay, there will be cases where it may be inappropriate and inequitable to compel an errant fiduciary to account for the whole of the profit of his conduct in breach of trust.^[96] That may be the case where the fiduciary’s own contributions have contributed to the profits made in part with the use of the principal’s capital. As stated by Blanchard and Tipping JJ, the “essence of the exercise is to define fairly the profit for which the fiduciary is required to account”.^[97] Here, Mr Wang’s contributions in a real sense preserved the ability of 110 Formosa to proceed with the purchase of the property and so preserved the value of Mr Li’s contribution of $4.8 million.
• [164] For these reasons, we are satisfied the Judge did not err in calculating the percentage of shares in 110 Formosa held on trust by Mr Wang for Mr Li.

Money had and received

• [165] As earlier explained, the Judge rejected the cause of action based on the claim for money had and received, which had been advanced on the basis that Mr Li had paid $4.8 million to Mr Wang for a specific purpose which had failed. Consistent with his argument alleging a breach of fiduciary duty, Mr Campbell submitted that the Judge’s dismissal of this cause of action was based on an erroneous finding that Mr Li paid the money for a general purpose which was met. For the reasons we have earlier given, we reject that proposition.^[98]
• [166] We do not need to discuss this issue further.

Cross-appeal

• [167] The cross-appeal can be dealt with comparatively briefly. The main contention advanced by Mr Johnson is that the Judge should not have found that Mr Li proved on the balance of probabilities that he had a beneficial interest in the $4.8 million contributed to the purchase of the Formosa property. The contention is the Judge was wrong to presume that the deposited funds were Mr Li’s because they originated from his bank accounts. The competing contentions in the High Court were Mr Li’s claim that he borrowed $4.8 million from his mother to support an investment in the purchase of the Formosa property and Mr Wang’s claim that the $4.8 million belonged to or originated from his family, and was paid towards the purchase of the Formosa property using Mr Li as a “conduit”, with the beneficial ownership of the funds vesting in Mr Wang. The Judge noted that, by the end of the hearing, senior counsel acting for Mr Wang “responsibly acknowledged that Mr Wang could not establish that the $4.8 million originated from him or his family in China”.^[99] The contention was, however, that Mr Wang was entitled to put Mr Li to proof, and that Mr Li was required to establish that he had a right to the funds.
• [168] The Judge noted that there were unsatisfactory aspects of the evidence from both sides and the evidence was incomplete. In those circumstances she had to reach her conclusions by reference to the burden of proof.^[100]
• [169] She found that Mr Li had satisfied the evidential onus resting on him by demonstrating that the monies advanced came from his bank accounts. The evidence established, prima facie at least, that Mr Li was entitled to the money.^[101] She further held that Mr Wang had not provided sufficient contradictory evidence on the issue. She gave these reasons:

(a) Neither Mr Wang nor Mrs Zhao could demonstrate any link between the various payments made into Mr Li’s bank accounts by either of them, their broader family or Mr Jiang.^[102]

(b) While Mr Li had not produced evidence of who the various offshore entities and individuals who had paid monies into his accounts were, that was not fatal. The fact remained that those entities did deposit the funds into Mr Li’s bank accounts and there was no evidence to suggest he was not entitled to the money.^[103]

(c) As to the suggestion that Mr Wang and Ms Zhao were using Mr Li as a conduit, the only evidence of that was inadmissible hearsay.^[104]

(d) The Cooperation Agreement recognised Mr Li as making an “initial contribution” of $4.2 million. The Judge referred to evidence of Mrs Zhao to the effect that the Cooperation Agreement was simply to satisfy requirements under the Overseas Investment Act 2005, but there had been no pleading or submission by Mr Wang that the Cooperation Agreement was a sham, could be disregarded or was in whole or in part an illegal contract.^[105]

(e) Mr Wang had sworn an affidavit in the caveat proceeding premised on the Cooperation Agreement properly reflecting the relationship between the parties and a contribution by Mr Li of $4.8 million.^[106]

• [170] Mr Johnson again submitted on appeal that Mr Li had offered no clear evidence to prove that he was the beneficial owner of the deposited funds. He noted that Mr Li had elected not to provide evidence as to the source of the funds that had been transferred into his New Zealand bank accounts. He submitted that the Judge had wrongly proceeded on the basis of a presumption that a person who holds an account with a bank holds both the legal and beneficial interest in any resulting debt owed to them by the bank. He contended such a presumption was difficult to justify in the circumstances of this case. He also complained that the Judge’s finding that Mr Li had borrowed the money from his mother was based on flimsy and unsatisfactory evidence.
• [171] We do not accept these submissions. It was common ground in the High Court that Mr Li had provided bank cheques totalling $4.8 million to Loo & Koo. Mr Wang’s pleading however asserted a belief that Mr Li had received funds which were held on trust for Mr Wang’s benefit, and that the bank cheques delivered by Mr Li to Loo & Koo represented funds held on trust for the benefit of Mr Wang. As Mr Campbell submitted, these allegations amounted to an affirmative defence, which needed to be proved by Mr Wang. Mr Wang acknowledged in the High Court that he could not discharge the burden of proving his allegations. That meant that the only issue to be resolved was whether Mr Li had discharged the burden of proof on him as regards payment of the $4.8 million.
• [172] In Westdeutsche Landesbank Girozentrale v Islington London Borough Council, Lord Browne-Wilkinson said:^[107]

A person solely entitled to the full beneficial ownership of money or property, both at law and in equity, does not enjoy an equitable interest in that property. The legal title carries with it all rights. Unless and until there is a separation of the legal and equitable estates, there is no separate equitable title.

• [173] In this case, once it was accepted that Mr Wang could not establish his claim to an equitable interest in the money, there was no other evidence from which it could be concluded that there were separate legal and equitable interests in the money that came from Mr Li’s bank accounts for the purposes of the bank cheques used to pay the $4.8 million. Equally, there was no need for Mr Li to prove the origins of the funds of his accounts, because once Mr Wang’s claim to an equitable interest fell away, it was a matter of no significance in the case what the source of the funds in Mr Li’s accounts was.
• [174] For the same reasons, Mr Li’s “failure” to give evidence as to why offshore entities had deposited the funds could not be used to found any adverse inference against him.
• [175] As to the issue about whether Mrs Li had an equitable interest in the funds, as the Judge noted, there was no claim or dispute by Mrs Li about a beneficial ownership in the funds and no suggestion that she would hold herself out as a shareholder in the purchasing corporate vehicle.^[108]
• [176] For these reasons, we are satisfied that this aspect of the cross-appeal should be dismissed.
• [177] There were two other issues raised on the cross-appeal which can be dealt with briefly. First, Mr Johnson submitted that the Judge had been wrong to hold that Mr Wang could be liable to Mr Li in both law and equity in respect of the same act. Mr Johnson claimed that it was implicit in the case law about resulting trusts that the absence of agreed terms between the parties was material to the cause of action. That submission was based upon a statement made in this Court’s judgment in Chang v Lee that “a resulting trust serves the purpose of filling a lacuna in the parties’ legal relationship by operating on the recipient’s conscience”.^[109] Mr Johnson also referred to a statement in this Court’s judgment in Telecom New Zealand Ltd v Sintel‑‑Com Ltd that “a party seeking to resort to equity will normally look first to resort to his or her legal remedies, for equity supplements the law”.^[110]
• [178] However, as Mr Campbell submitted, there is no rule against a party being liable in both law and in equity. Legal and equitable claims arising from the same facts are commonly advanced and determined. That was recognised by Lord Wilberforce in Barclays Bank Ltd v Quistclose Investments Ltd, in which it was necessary to deal with an argument raised by the appellant that the relevant transaction was one of loan, giving rise to a legal action of debt which necessarily excluded the implication of any trust enforceable in equity. It was claimed that a transaction might attract one action or the other, but it could not admit both. Lord Wilberforce said he found the argument unattractive, observing that “[t]here is surely no difficult in recognising the co-existence in one transaction of legal and equitable rights and remedies”.^[111]
• [179] The decisions of this Court on which Mr Johnson relied do not establish the proposition he seeks to draw from them. The fact that resulting trusts have been found to exist where there was no contract, or incomplete contractual terms, does not establish that a trust may not arise in the context of a contract. We reject this ground of the cross-appeal.
• [180] The second issue raised is a pleadings point. It concerned the Judge’s conclusion as to a resulting trust which Mr Johnson alleged had not been pleaded. We accept Mr Campbell’s submission that the essential factual elements of the claim which the Judge found established were pleaded. In the circumstances, there could be no suggestion of prejudice.
• [181] For these reasons, the cross-appeal does not succeed.

Result

• [182] The appeal is dismissed.
• [183] The order at [267(a)] of the High Court judgment is quashed, and substituted with an order that Mr Wang holds that proportion of his shareholding in 110 Formosa which represents an original contribution of $4.8 million on constructive trust for Mr Li.
• [184] The cross-appeal is dismissed.
• [185] In the circumstances, we make no order as to costs between Mr Li and Mr Wang. However, 110 Formosa is entitled to costs in respect of both the appeal and the cross-appeal on a band A basis and usual disbursements. Those costs are to be paid one half by Mr Li and one half by Mr Wang.

Solicitors:
Carson Fox Bradley, Auckland for Appellant
Foy & Halse, Auckland for First Respondent
Wynn Williams, Auckland for Second Respondent

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^[1] Mrs Zhao is referred to in the High Court as Mrs Zhou.

^[2] Li v 110 Formosa (NZ) Ltd [2018] NZHC 3418 [High Court judgment] at [172].

^[3] At [247].

^[4] At [230]–[231].

^[5] At [80].

^[6] Mr He was Ms Huang’s husband.

^[7] High Court judgment, above n 2, at [90].

^[8] At [114].

^[9] The Cooperation Agreement was written in Mandarin and produced both in that form and in translation.

^[10] A’s representative was the Chairman of the Board of Directors, B’s representative was the Chief Executive and C’s representative was the Executive Director.

^[11] In evidence Mr Wang said that this was because the vendors would be unlikely to accept JEHL as the purchaser given that JEHL had already been nominated under the April Agreement which had been cancelled.

^[12] High Court judgment, above n 2, at [126].

^[13] Based on the purchase price of $38 million, Mr Li’s contribution amounted to 12.6 per cent.

^[14] High Court judgment, above n 2, at [136].

^[15] At [138].

^[16] At [139].

^[17] The $2 million “exclusivity” fee was the deposit paid on the April Agreement, forfeited when that agreement was cancelled.

^[18] The other $1 million was recorded as having been paid by Mr Huang.

^[19] Li v Formosa Auckland Country Club Ltd (in liq) [2015] NZHC 2253 at [26].

^[20] Lankow v Rose [1995] 1 NZLR 277 (CA) at 294.

^[21] High Court judgment, above n 2, at [191].

^[22] At [192].

^[23] Chirnside v Fay [2006] NZSC 68, [2007] 1 NZLR 433.

^[24] High Court judgment, above n 2, at [199].

^[25] At [200].

^[26] At [201].

^[27] Chang v Lee [2017] NZCA 308, [2017] NZAR 1223.

^[28] In accordance with the House of Lords decision in Barclays Bank Ltd v Quistclose Investments Ltd [1970] AC 567 (HL).

^[29] High Court judgment, above n 2, at [221].

^[30] At [222].

^[31] At [226].

^[32] At [227].

^[33] At [229].

^[34] At [230].

^[35] At [231].

^[36] At [236], [239]–[240] and [252].

^[37] At [247].

^[38] At [242].

^[39] At [243].

^[40] At [246]–[247].

^[41] At [27].

^[42] At [256]–[258], referring to principles discussed in this Court’s judgment in Martin v Pont [1993] 3 NZLR 25 (CA).

^[43] At [258].

^[44] At [259].

^[45] At [259]–[266].

^[46] At [267(a)].

^[47] Li v 110 Formosa (NZ) Ltd HC Auckland CIV-2016-404-1878, 17 May 2019 (Minute of Fitzgerald J).

^[48] High Court judgment, above n 2, at [267(b)].

^[49] At [268].

^[50] Chirnside v Fay, above n 23; and Paper Reclaim Ltd v Aotearoa International Ltd [2007] NZSC 26, [2007] 3 NZLR 169 at [31].

^[51] Twinsectra Ltd v Yardley [2002] UKHL 12, [2002] 2 AC 164 at [68]–[69], [74] and [76]; Potter v Potter [2003] NZCA 103; [2003] 3 NZLR 145 (CA) at [14]–[16]; and Chang v Lee, above n 27, at [22].

^[52] Relying on Royal Brunei Airlines Sdn Bhd v Tan [1995] UKPC 4; [1995] 2 AC 378 (PC) at 393.

^[53] In addition to the matters we have referred to at [86] above.

^[54] High Court judgment, above n 2, at [243].

^[55] At [194].

^[56] At [192].

^[57] Chirnside v Fay, above n 23.

^[58] Amaltal Corporation Ltd v Maruha Corporation [2007] NZSC 40, [2007] 3 NZLR 192; and Paper Reclaim Ltd v Aotearoa International Ltd, above n 50. See also the discussion of fiduciary relationships in this Court’s recent judgment in Dold v Murphy [2020] NZCA 313 at [52]–[56].

^[59] High Court judgment, above n 2, at [196]–[198].

^[60] Chirnside v Fay, above n 23, at [80] and [85].

^[61] At [80].

^[62] At [91].

^[63] At [93].

^[64] At [52].

^[65] Paper Reclaim Ltd v Aotearoa International Ltd, above n 50, at [31] (footnote omitted).

^[66] Amaltal Corporation Ltd v Maruha Corporation, above n 58, at [20].

^[67] At [21].

^[68] High Court judgment, above n 2, at [247].

^[69] High Court judgment, above n 2, at [227] (footnotes omitted, emphasis in original).

^[70] Twinsectra Ltd v Yardley, above n 51.

^[71] At [69], citing Barclays Bank Ltd v Quistclose Investments Ltd, above n 28.

^[72] Twinsectra Ltd v Yardley, above n 51, at [69].

^[73] Above at [17]–[22].

^[74] High Court judgment, above n 2, at [136].

^[75] At [140].

^[76] The Statement of Claim relevantly included a pleading that Loo & Koo had issued a receipt in respect of the $4 million payment that it was “for the credit of JEHL, to go towards JEHL’s purchase of the Formosa land under the [April Agreement].

^[77] Chang v Lee, above n 27.

^[78] Westdeutsche Landesbank Girozentrale v Islington London Borough Council [1996] UKHL 12; [1996] AC 669 (HL) at 708 (emphasis in original).

^[79] At 708.

^[80] Chang v Lee, above n 27, at [22] (footnote omitted).

^[81] High Court judgment, above n 2, at [221].

^[82] At [231].

^[83] Above at [116].

^[84] High Court judgment, above n 2, at [126].

^[85] See Jessica Palmer “Constructive Trusts” in Andrew Butler (ed) Equity and Trusts in New Zealand (2nd ed, Thomson Reuters, Wellington, 2009) at [13.2.1].

^[86] Lankow v Rose, above n 20.

^[87] At 294.

^[88] J D Heydon and M J Leeming Jacobs’ Law of Trusts in Australia (8th ed, LexisNexis, Chatswood, 2016) at [13-01] (footnotes omitted). See also Paragon Finance plc v D B Thakerar & Co (a firm) [1998] EWCA Civ 1249; [1999] 1 All ER 400 (CA) at 409.

^[89] High Court judgment, above n 2, at [267(a)].

^[90] The agreements made at the time of 110 Formosa’s nomination under the September Agreement are summarised at [45]–[47] above.

^[91] Belmont Finance Corp v Williams Furniture Ltd (No 2) [1980] 1 All ER 393 (CA) at 404; Marr v Arabco Traders Ltd (1987) 1 NZBLC 102,732 (HC) at 102,757; and Lebon v Aqua Salt Co Ltd [2009] UKPC 2 at [22]–[26].

^[92] El Ajou v Dollar Land Holdings plc [1993] EWCA Civ 4; [1994] 2 All ER 685 (CA) at 703–704. See also Re David Payne & Co Ltd [1904] UKLawRpCh 90; [1904] 2 Ch 608 (CA) at 611.

^[93] Foskett v McKeown [2000] UKHL 29; [2001] 1 AC 102 (HL) at 127.

^[94] Minute of Fitzgerald J, above n 47.

^[95] Above at [46]. These were the payments of $2 million to the vendors by way of an “exclusivity fee” and $1 million paid towards the agent’s commission.

^[96] Chirnside v Fay, above n 23, at [138]–[139]. See also Estate Realties Ltd v Wignall [1992] 2 NZLR 615 (HC); and Warman International Ltd v Dwyer [1995] HCA 18; (1995) 182 CLR 544 at 561–2.

^[97] Chirnside v Fay, above n 23, at [122].

^[98] Above at [116]–[117].

^[99] High Court judgment, above n 2, at [5].

^[100] At [164].

^[101] At [169].

^[102] At [174].

^[103] At [174].

^[104] At [175(a)].

^[105] At [177].

^[106] At [180].

^[107] Westdeutsche Landesbank Girozentrale v Islington London Borough Council, above n 78, at 706.

^[108] High Court judgment, above n 2, at [184]–[186].

^[109] Chang v Lee, above n 27, at [28].

^[110] Telecom New Zealand Ltd v Sintel‑-Com Ltd [2007] NZCA 499, [2008] 1 NZLR 780 at [46].

^[111] Barclays Bank Ltd v Quistclose Investments Ltd, above n 28, at 581.