Du v Gu [2012] NZHC 3123 (22 November 2012)

Last Updated: 30 November 2012

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-5577 [2012] NZHC 3123

BETWEEN XING HUA (DAVID) DU Plaintiff

AND MING GU Defendant

Hearing: 22 November 2012

Appearances: Plaintiff in person

G Blanchard for Defendant

Judgment: 22 November 2012

_{JUDGMENT OF BREWER J}

SOLICITORS/COUNSEL

Ross Holmes Lawyers (Auckland) for Defendant

(Copy to Plaintiff in person)

COUNSEL Greg Blanchard

XING HUA (DAVID) DU V MING GU HC AK CIV-2009-404-5577 [22 November 2012]

[1] Mr Du applied for a freezing order on a without notice basis. The application came first before Venning J on 30 October 2012 as the Duty Judge. As Venning J said on that occasion, this case has a complicated procedural background. It relates to the development of a property at 7 Lakeridge Close, Albany. The plaintiff alleged there was a joint venture between him and the defendant, Madam Gu, to develop that property. The plaintiff says he made several payments to contribute to its development.

[2] In this Court, the plaintiff succeeded initially in his argument in relation to the joint venture. The Court of Appeal overturned the decision of this Court,[1] primarily on the basis that the plaintiff is a real estate agent and was at the time in breach of the Real Estate Agents Act 1976. The Court of Appeal did, however, permit the plaintiff to file an amended statement of claim to claim the repayments of amounts contributed to the property.

[3] The situation now is that this claim by the plaintiff for repayment of the amounts contributed to the property remains unresolved. It has been commented that the plaintiff has been dilatory in pursuing his claim, which to this point remains unquantified in the formal pleadings. Mr Blanchard, for the defendant this morning, has told me that in fact it is his client who is pushing for the proceeding to be heard. This is on the basis that whatever the claim turns out to be, it is likely to be disputed as to quantum.

[4] Venning J made a temporary freezing order which was due to expire on

8 November 2012. He did so because he accepted that the plaintiff has a good arguable case against the defendant in relation to whatever contributions he made to the property. The crucial point, of course, was whether the plaintiff could show a risk of dissipation. Venning J noted the settled law that affirmative proof of the

likelihood of dissipation is not necessary.[2] Venning J had regard to the fact that the

subject property is registered in the name of the defendant and it appeared to him that since the defendant is resident out of New Zealand there could be said to be a

_{thin risk of dissipation. Venning J made the freezing order temporary, with the}

direction that the plaintiff was to provide an affidavit of means to support the undertaking as to damages he had provided to the Court. He also allowed the defendant to apply to discharge or vary the order on 24-hours notice.

[5] The matter came next before Allan J on 8 November 2012. The previous day, the defendant had sworn and served an affidavit in which she denied that she is living permanently in China. She deposed that she spends part of the time each year in China and the rest in New Zealand. Members of her family are living in the subject property. The defendant deposes that she has no intention of selling the property subject to the freezing order.

[6] Allan J commented that the case for the continuation of the order has become weaker in the light of the defendant’s affidavit. But, in his view, Mr Du was entitled to time to file an affidavit in reply. Accordingly, Allan J was not prepared to discharge the freezing order then and there but gave Mr Du time to respond. Hence the matter is again before me in the Duty Judge list.

[7] Mr Du has filed an affidavit dated 15 November 2012 in which he deposes both as to his ability to meet an order for costs[3] and his continuing opposition to the discharge. Essentially, Mr Du in his affidavit repeats his concern that the defendant has no real ties to New Zealand, lives predominantly in China, and could sell the property at any time and repatriate the money to China.

[8] In support of Mr Du’s case is an affidavit from Mr Zheng, also dated

15 November 2012. Mr Zheng is a practising lawyer in New Zealand who deposes that he previously practised law in China. The gravamen of Mr Zheng’s affidavit is that if the property is sold and money sent to China, it would effectively be beyond the reach of Mr Du.

[9] Mr Du has represented himself this morning and he has repeated to me the concerns that he holds. He points in particular to the apparent desire of the defendant to clear the title to the property. He refers to proceedings taken to have a

_{caveat previously registered against the property lapse. He also refers to the}

defendant’s opposition to the charging order remaining. In Mr Du’s submission,

these active and expensive actions are suspicious.

[10] I have raised with Mr Blanchard, who represents the defendant, these matters: Firstly, that there is no doubt that Mr Du has a strong claim to recover proven contributions to the property. As I understand it, the defendant acknowledges that contributions properly proven to be made should be refunded. Secondly, the subject property is the only asset of the defendant in New Zealand. Thirdly, the defendant is not a permanent resident in New Zealand. It would seem she maintains her principal residence in China and the subject property is occupied by members of her family who she visits for extended periods each year. Finally, if the defendant were to sell the subject property and repatriate the money to China, there seems little doubt that it would then be beyond the reach of Mr Du.

[11] Mr Blanchard’s responses to these points have been succinct. He acknowledges that Mr Du does have a claim, however points out that it is unquantified in the amended statement of claim and has not been pursued with any vigour. Indeed, it is his client who has been seeking a hearing date.

[12] Mr Blanchard submits that his client’s understanding is that the amount of the claim will be put as being in the vicinity of $140,000. Against that his client has the right to legal costs against the plaintiff in the region of $75,000. Accordingly, even on the sum so far notified, the net claim is about $65,000. In any event, the

$140,000 is disputed in terms of being the quantum of the contribution.

[13] Mr Blanchard acknowledges that the property is the defendant’s only asset in New Zealand, but points out that it is an asset permanently the home of members of the defendant’s family. The defendant spends significant time each year living in the property with her family and has no intention of selling it.

[14] As to the motive of the defendant to oppose the freezing order being continued, Mr Blanchard’s instructions are that it came as a great shock to the defendant to find that her property was charged in this way. She does not like the

idea of her property being frozen at the behest of Mr Du and pursues her opposition because she sees no reason for Mr Du being able to put himself into this position.

[15] Finally, Mr Blanchard submits that I should not take any account of repatriation to China putting the funds out of Mr Du’s reach. Mr Blanchard’s submission is that the same would apply if the defendant were a citizen of the United States of America.

Decision

[16] It is clear from the materials put before me that Mr Du does have a claim against the defendant payable in money. I do not know what the quantum of that claim will prove to be. On the submission of Mr Blanchard, it is not likely to be a very large sum as these claims go. However, the principal point I have to consider is risk of dissipation. A freezing order is justified only if there is a risk of dissipation such that the order is reasonably necessary to preserve Mr Du’s rights against the defendant.

[17] In this case, I am not satisfied that there is a sufficient risk of dissipation. The evidence before me is that the subject property is a family home. It is owned by the defendant. Members of her family have been living in it for some time. The defendant has a home base in China but obviously comes to New Zealand regularly and spends significant amounts of time living in the subject property with her family.

[18] I accept that Mr Du has reason to be suspicious. I accept that if the property were sold and the monies sent to China, Mr Du’s rights in New Zealand could be set at naught. But the issue is whether there is an identified risk of dissipation that should cause this Court to take a significant step in derogation of the rights of the defendant as the owner of the property.

[19] In all these circumstances, at this time, I do not see sufficient risk. I

discharge the freezing order accordingly.

[20] That is not necessarily the end of the matter. If the defendant were to put the property on the market for sale, Mr Du would be entitled to apply again for a freezing order and, against the background which I have discussed, I have little doubt that he would obtain it.

[21] The defendant is entitled to costs on this application and I fix them on a 2B

_basis.

Brewer J

---

[1] _{Ming Gu v Xing Hua (David) Du [2011] NZCA 577.}

[2] BNZ v Hawkins [1989] NZHC 198; (1989) 1 PRNZ 451.

[3] He deposes that he owns a property that has a net equity in the vicinity of $140,000.