Zhou v Armadale Nineteen Limited [2016] NZHC 2191 (15 September 2016)

Last Updated: 29 September 2016

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2015-404-2340 [2016] NZHC 2191

BETWEEN	BINGYAN ZHOU Plaintiff
AND	ARMADALE NINTEEN LIMITED First Defendant ZHAOWEI QIU (aka Zhao Wei Qiu) Second Defendant

Hearing:	15 September 2016
Appearances:	S C R Raju for Plaintiff No appearance for Defendants
Judgment:	15 September 2016

JUDGMENT OF LANG J

_{[on application for judgment by way of formal proof]}

This judgment was delivered by me on 15 September 2016 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

_{Date...............}

ZHOU v ARMADALE NINTEEN LTD [2016] NZHC 2191 [15 September 2016]

[1] In this proceeding the plaintiff, Mr Bingyan Zhou, seeks judgment against the first and second two defendants in the sum of $250,000 and $200,000 respectively.

[2] The defendants were served with the proceeding by way of substituted service, but have taken no steps to defend Mr Zhou’s claims. For that reason the hearing has proceeded by way of formal proof. The evidence consists of an affidavit sworn by Mr Zhou in which he sets out the factual basis on which he advances his claims, together with oral evidence given by Mr Zhou at the hearing.

Background

The first cause of action: claim against Armadale Ninteen Ltd for the sum of

$250,000

[3] On 18 October 2013, Mr Zhou entered into an agreement for the sale and purchase under which he agreed to buy a vacant section situated at 19 Armadale Road, Remuera (the Armadale Road property). The agreement for sale and purchase provided for the purchaser to be Mr Zhou and/or his nominee. Mr Zhou agreed to pay the sum of $3.38 million for the property and to pay a deposit of $250,000. He subsequently paid the deposit to the real estate agents acting on the vendors behalf in relation to the sale.

[4] On 30 November 2013, Mr Zhou entered into a Deed of Nomination under which he nominated the first defendant, Armadale Ninteen Limited (Armadale Ninteen), as purchaser under the agreement for sale and purchase in respect of the Armadale Road property. The second defendant, Mr Zhao Wei Qiu, is the sole director of Armadale Ninteen. Mr Qiu signed the Deed of Nomination on behalf of Armadale Ninteen in his capacity as director of the company.

[5] Clause 3 of the Deed of Nomination required Armadale Ninteen to account to Mr Zhou for the deposit and any other monies he might pay to the vendor under the agreement for sale and purchase. Mr Zhou deposes that Armadale Ninteen failed to repay the deposit that he had paid to the vendors. He arranged for a statutory demand to be served on Armadale Ninteen on 2 September 2015 but has received no

payments to date. Mr Zhou therefore seeks judgment in the sum of $250,000 against

Armadale Ninteen on that basis.

The second cause of action: claim against Mr Qiu for the sum of $200,000

[6] Mr Zhou deposes that Armadale Ninteen duly completed the purchase of the Armadale Road property and then began the process of subdividing the property. At that point it required further funding for the subdivision. Mr Zhou agreed to lend Mr Qiu the sum of $200,000 for this purpose. He and Mr Qiu entered into a handwritten loan agreement under which Mr Zhou agreed to lend the sum of $200,000 to Mr Qiu in order to assist him in subdividing the Armadale Road property. The loan was to be on an interest free basis and the agreement did not contain any provision specifying the date upon which the loan was to be repaid.

[7] Mr Zhou deposes that Mr Qiu has never repaid the loan and he seeks judgment against Mr Qiu in the sum of $200,000 as a consequence.

Decision

[8] I am satisfied that Armadale Ninteen has no defence to Mr Zhou’s claim under the first cause of action. He is therefore entitled to judgment against Armadale Ninteen in the sum of $250,000 together with interest and costs.

[9] An issue arises, however, in relation to the second cause of action. The fact that the loan agreement does not contain a date for repayment means that the loan must be treated as repayable on demand.¹ Mr Zhou’s affidavit dealt with this issue as follows:

24. To date, the second defendant has not repaid any amount under the

Loan.

25. The second defendant has been difficult to locate and I believe he is now ignoring his obligations to repay all monies borrowed by him together with the Deposit I paid under the Agreement.

¹ DFC New Zealand Ltd v McKenzie [1993] 2 NZLR 576 (HC) at 582, Lauder v Lauder HC Rotorua CIV 2003 463 107, 23 April 2004 at [29]; Aorangi Securities Ltd (In Statutory Management) v Emerald Shores Ltd [2012] NZHC 1491 at [69].

[10] This evidence would obviously be insufficient to establish that Mr Zhou had made demand on Mr Qiu for repayment of the money. In oral evidence, however, Mr Zhou said that he orally demanded repayment of the loan on at least three occasions during 2014. He said that this occurred in June, August and October 2014. He was able to pinpoint these dates because he said the demands were made at around the time Mr Qiu completed the subdivision. Mr Zhou said he had always expected Mr Qiu to repay the money at that point. Mr Zhou also produced documents from Land Information New Zealand showing that new titles in respect of the subdivided property were ordered on 25 June 2014.

[11] Mr Zhou has therefore satisfied me that he made demand for repayment of the sum of $200,000 from Mr Qiu, and that Mr Qiu failed to satisfy that demand. It follows that Mr Zhou is entitled to judgment on the second cause of action as well.

Result

[12] I enter judgment in favour of Mr Zhou against Armadale Ninteen in the sum of $250,000 together with interest on that sum in accordance with the provisions of the Judicature Act 1908 from 7 October 2015, being the date upon which Mr Zhou filed this proceeding.

[13] I enter judgment in favour of Mr Zhou against Mr Qiu in the sum of

$200,000 together with interest on that sum in accordance with the provisions of the

Judicature Act 1908 from 7 October 2015.

[14] Mr Zhou is entitled to a single award of costs against Armadale Ninteen and

Mr Qiu jointly. Costs are to be calculated on a Category 2B basis together with disbursements as fixed by the Registrar.

Lang J

Counsel:

Aaron Kashyap, Auckland