Decision removed [2022] NZCA 142 (27 April 2022)

Last Updated: 3 May 2022

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

CA546/2021 [2022] NZCA 142

	BETWEEN	WEI HU Appellant
	AND	CHUNGLIN YU Respondent

Counsel:	Appellant in person
Judgment: (On the papers)	27 April 2022 at 10.00 am

JUDGMENT OF GODDARD J

1. A freezing order is granted restraining the respondent, Ms Chunglin Yu, from disposing of or otherwise dealing with the property at 8 Annalong Road, Dannemora, Auckland described in identifier NA97A/706 in the North Auckland Land Registration District until further order of this Court.
2. Dr Hu is directed to serve copies of his interlocutory application, his supporting affidavit, and all the other documents he has filed to date in this appeal on Ms Yu by sending them to the email address referred to in his affidavit dated 7 December 2021. Copies must also be sent to Ms Yu’s former solicitors, Righteous Law. This judgment must also be sent by Dr Hu to that email address, and to Ms Yu’s former solicitors.

100. Direction that if Ms Yu files an appearance in this appeal, and notifies the Court that she objects to the freezing order continuing in effect, the application for a freezing order must be re-argued on a with notice basis.

4. There is no order for costs

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REASONS

Background

• [1] The appellant, Dr Hu, and another claimant, Ms Zhang, brought proceedings against the respondent, Ms Yu, for deceit in connection with an investment in a foreign currency dealer operated by Ms Yu in New Zealand.
• [2] Ms Yu resides in China. The proceedings were served on her in that country. One of the reasons that Dr Hu and Ms Zhang pursued their claim against Ms Yu in New Zealand is that she owns a property in this country at 8 Annalong Road, Dannemora, Auckland (the Auckland property). A judgment obtained in New Zealand would be able to be enforced against the Auckland property. On 13 December 2017 a freezing order was granted by Lang J against Ms Yu in respect of that property, to prevent its disposal pending determination of the claim.^[1]
• [3] In August 2018 van Bohemen J entered judgment by default in favour of Dr Hu and Ms Zhang (the default judgment).^[2]
• [4] Ms Yu subsequently applied to the High Court to recall the default judgment. She claimed, among other things, that Ms Zhang and Dr Hu misled the Court about key facts. Ms Yu also filed a protest as to jurisdiction, claiming that China was the appropriate forum in which the claim should be brought because that is where she resides and that is where the agreement to invest was executed.
• [5] In January 2019 van Bohemen J issued a judgment in which he recalled the default judgment and set it aside (the first recall judgment). He upheld Ms Yu’s protest to jurisdiction. He dismissed the proceedings and set aside the freezing order over the Auckland property.^[3] Dr Hu and Ms Zhang applied to have the first recall judgment recalled. That application was dismissed by van Bohemen J.^[4]
• [6] Ms Zhang and Dr Hu then appealed to this Court. Their appeal against the first recall judgment was allowed insofar as it related to the protest to jurisdiction. The decision was set aside in relation to the protest to jurisdiction, the quashing of the freezing order, and dismissal of the proceedings. This had the effect of reviving the freezing order granted in December 2017. The protest to jurisdiction was referred back to the High Court for reconsideration.^[5]
• [7] By the time the matter came back before the High Court, Ms Zhang and Dr Hu were no longer legally represented. Ms Yu also was not represented, and did not take any further steps in the proceedings. So far as the High Court was aware, she remained detained in prison in China.^[6] At a judicial conference before the High Court on 11 June 2021, Ms Zhang and Dr Hu advised the Judge that they did not wish to adduce further evidence or make submissions on the reconsideration of Ms Yu’s protest to jurisdiction, other than their amended statement of claim, further affidavits and an additional memorandum that they had filed in advance of the conference.^[7] The Judge therefore proceeded to reconsider the protest to jurisdiction as directed by this Court on the papers, on the basis of the evidence, submissions and memoranda filed in the proceeding as at the date of the judicial conference.^[8]
• [8] On 12 August 2021 van Bohemen J delivered a judgment (the reconsideration judgment) in which, after reconsidering the protest to jurisdiction, he arrived at the same result: the protest to jurisdiction was upheld, the proceeding was dismissed, and the freezing order was quashed.^[9]

The current appeal to this Court

• [9] Dr Hu has filed an appeal to this Court from the reconsideration judgment. No appearance has been entered by Ms Yu.
• [10] Dr Hu has sworn an affidavit in relation to service of the notice of appeal. He says it was sent to an email address that he was able to use to contact Ms Yu in connection with the proceedings in 2017 and 2018. He says he believes that Ms Yu, or people associated with her, continue to have access to that email address. In circumstances where the appeal relates to a protest to jurisdiction filed by Ms Yu, and Ms Yu has not provided an address for service in New Zealand after she ceased to be legally represented in connection with that application, I am willing to proceed for now on the assumption that the appeal has been properly commenced. However if that were to be challenged by Ms Yu, the issue would need to be formally determined by the Court.

Application for freezing order

• [11] Dr Hu has filed a without‑notice interlocutory application in which he seeks two orders:

(a) Leave to adduce expert evidence about Chinese law in relation to limitation periods. He has obtained an affidavit from a Chinese lawyer who says that the Chinese government has a policy against permitting civil claims in respect of financial scams. He also says that any claim against Ms Yu became time-barred by 15 September 2018. So it is no longer possible to pursue a claim against her in China.

(b) A freezing order in relation to Ms Yu’s property at 8 Annalong Road, to ensure the property is not disposed of before the appeal is heard.

• [12] I direct that the application for leave to adduce expert evidence be considered at the hearing of the appeal.
• [13] In this judgment, I consider the application for a freezing order to preserve Dr Hu’s position pending appeal.
• [14] I am satisfied that a freezing order should be granted for reasons set out in more detail below. But I am concerned that Ms Yu should have an opportunity to be heard in relation to the grant of a freezing order, if she opposes it. The order will therefore be expressed to apply until further order of the Court. I will make directions about service of the application and the order on Ms Yu. If she files an appearance in this Court, and files a memorandum opposing the continuation of the freezing order, Dr Hu’s application will need to be reconsidered on a with notice basis.
• [15] The primary basis on which I grant the freezing order is that it is necessary to preserve the position of Dr Hu pending determination of his appeal. Rule 12(3)(b) of the Court of Appeal (Civil) Rules 2005 provides that pending the determination of an appeal, this Court may grant any interim relief.^[10] It appears that if the appeal is successful, and Dr Hu’s claim is heard before the New Zealand courts, the Auckland property is the only known asset of Ms Yu against which a judgment could be enforced. The High Court was satisfied that a freezing order should be granted to preserve the position of Dr Hu and Ms Zhang pending determination of the High Court proceedings. If this Court does not grant a freezing order, and the property is disposed of, it seems likely that any practical benefit from the proceedings — and thus, from the appeal seeking to reinstate the proceedings — would be lost.
• [16] I am also satisfied that Dr Hu’s appeal is reasonably arguable. The reconsideration judgment turned on the question of whether China, rather than New Zealand, was the appropriate forum for Ms Zhang and Dr Hu to bring their claim against Ms Yu. The Judge considered that China was the appropriate forum for three main reasons:

(a) Because Ms Yu is detained in prison in China it would not be possible for her to give evidence and be cross-examined before a New Zealand court.^[11]

(b) Although relevant representations were alleged to have been made in New Zealand, most other aspects of the dispute took place in China. The Judge considered that the dispute had “a stronger locus in China rather than in New Zealand”.^[12]

(c) The Judge considered that, if it is possible to bring a similar proceeding in China, there was a better prospect of relevant witnesses appearing before the appropriate Chinese court or tribunal.^[13]

• [17] However there was no evidence before the High Court that proceedings could be brought against Ms Yu in China. China can only be the more appropriate forum if it is in fact an available forum. As noted above, Dr Hu has applied for leave to adduce expert evidence that any claim against Ms Yu in China faced difficulties due to Government policy, and would in any event have become time-barred by 15 September 2018. If that evidence is admitted, and if it is accepted, the Judge’s assumption that China is an available forum would need to be reassessed.
• [18] Nor was there any evidence before the High Court confirming that if proceedings were brought in China, Ms Yu would be able to appear in those proceedings. In circumstances where she is detained in prison, there must be considerable doubt about whether she would be in a position to give evidence in proceedings in China. It is at least arguable that there is no basis for a finding that bringing the proceedings in China would be preferable on this dimension.
• [19] All of these matters will need to be explored at the hearing of the appeal. But I am satisfied that the appeal is sufficiently arguable that interim relief is justified, at least until an application can be heard on notice.

Result

• [20] I grant a freezing order restraining the respondent, Ms Chunglin Yu, from disposing of or otherwise dealing with the property at 8 Annalong Road, Dannemora, Auckland, described in identifier NA97A/706 in the North Auckland Land Registration District, until further order of the Court.
• [21] I direct that Dr Hu serve copies of his interlocutory application, his supporting affidavit, and all the other documents he has filed to date in this appeal on Ms Yu by sending them to the email address referred to in his affidavit dated 7 December 2021. Copies must also be sent to Ms Yu’s former solicitors, Righteous Law, as they may be able to contact her through other channels. This judgment must also be sent by Dr Hu to that email address, and to Ms Yu’s former solicitors.
• [22] I direct that if Ms Yu files an appearance in this appeal, and notifies the Court that she objects to the freezing order continuing in effect, the application for a freezing order must be re-argued on a with notice basis.
• [23] There is no order for costs.

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^[1] Zhang v Yu [2017] NZHC 3107.

^[2] Zhang v Yu [2018] NZHC 2215 [Default judgment].

^[3] Zhang v Yu [2019] NZHC 29 [First recall judgment].

^[4] Zhang v Yu [2019] NZHC 206 [Second recall judgment].

^[5] Zhang v Yu [2020] NZCA 592.

^[6] Zhang v Yu [2021] NZHC 2090 [Reconsideration judgment] at [7].

^[7] At [8]

^[8] At [9].

^[9] At [66]–[67].

^[10] Pursuant to s 49(3) of the Senior Courts Act 2016, Dr Hu’s application for interim relief may be heard and determined by a single Judge of this Court.

^[11] Reconsideration judgment, above n 6, at [40]–[42].

^[12] At [45].

^[13] At [46].