Du v Gu

[2013] NZHC 1307

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2009-404-005577 [2013] NZHC 1307

BETWEEN  XINGHUA (DAVID) DU Plaintiff

ANDMING GU Defendant

Hearing:                   8 February 2013

Appearances:           Plaintiff in person

G P Blanchard for Defendant

Judgment:                5 June 2013

JUDGMENT OF ELLIS J

This judgment was delivered by Justice Ellis on 5 June 2013 at 4.00 pm

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date……………………….

DU v GU [2013] NZHC 1307 [5 June 2013]

[1]      In an earlier judgment I upheld the validity of what was termed a “joint venture” agreement entered into between Mr Du and Madam Gu in relation to the development of a property owned by Madam Gu.[1]    In essence that agreement provided that in return for Mr Du contributing 50 percent of the mortgage (including arrears) and 50 percent of development costs, a 50 per cent share in the property would be transferred to Mr Du in the event that he asked for a transfer to be effected, and that the parties would have 50 per cent ownership of the land and 50 per cent of the benefits and related risks of the development on the land.   I declined to order

specific performance but said that Mr Du was entitled to damages for Madam Gu’s

breach of the agreement.

[1] Du v Gu HC Auckland CIV-2009-404-5577, 7 December 2010.

[2]      On 16 November 2011, the Court of Appeal held that I was wrong in that finding because at the time the agreement was entered Mr Du remained engaged as a real estate agent to sell the property on behalf of Madam Gu.[2]    Because he had not complied with s 62 of the Real Estate Agents Act 1976, Madam Gu was entitled to avoid the agreement under s 63 of that Act.  That issue turned on whether reasonable notice of termination of the agency agreement had been given by Mr Du.  The Court of Appeal held that 14 days notice was required whereas Mr Du had given only 11 days notice.

[2] Gu v Du [2011] NZCA 577.

[3]      Leave to appeal to the Supreme Court was sought by Mr Du, but denied.[3]

[3] Du v Gu [2012] NZSC 13.

[4]      It has always been agreed by Madam Gu that, in the event that Mr Du was not successful in his claim, he should receive back the money that he had paid pursuant to the (avoided) contract, even though there was no pleading to that effect. However, for the reasons set out in my earlier judgment it was not possible at trial to determine the amount of those payments.   For these reasons the Court of Appeal said:

Ms Gu has voided the agreement and Mr Du will need to make a new claim for repayment of the amounts he contributed to the property.  He will need to file an amended pleading to that effect or make a fresh claim.  Mr Blanchard made it clear that Ms Gu did not dispute Mr Du’s right to restitution of the amounts he paid under the joint venture agreement and interest.

[5]      Mr Du has since repleaded and it is on that basis that the matter is again before me.  The only issue that is now for determination relates to the quantum of what is owed to Mr Du for his contribution to the joint venture.

[6]      Mr Du seeks payment of $139,624.06.  The defendant says that the amount owing  is  approximately  $46,000  less  than  that.    Whether  some  or  all  of  that difference is owing to Mr Du is the subject of this judgment.

[7]      In my earlier judgment I referred to the difficulties caused by the somewhat unusual accounting and record-keeping methods adopted by Mr Du and Mr Bien (who  took  responsibility  for  this  aspect  of  the  joint  venture  project  for  the defendant).   Mr Du and Mr Bien have, of course, since fallen out.   Invoices are missing.   And because (as I understand it) a number of many of the relevant transactions  were  for  cash  it  has  not  been  possible  to  cross-check  particular payments against bank accounts in the usual way.

[8]      Although  the defendant  at  trial  had  called  an  expert  accounting witness, aspects of his analysis was dependent on the information he had received from Mr Bien about what occurred.  Both Mr Bien’s and Mr Du’s credibility was therefore at issue.

[9]      What was (I think) agreed by Mr Du and Mr Bien was that, prior to the souring of their relationship, there were meetings between them at which their respective expenditures were reviewed, invoices were produced and an attempt at reconciliation made.   At that point the idea was that these expenditures would be shared equally between the parties.

[10]     Mr Du produced in evidence handwritten (in Mandarin) notes of three such meetings,  on  9 April,  28  May and  29  June  2009.    They record,  and  total,  the payments that had been made in the preceding period by Mr Du and Mr Bien.  They are signed by both men; their signatures meaning that the claims were “settled”.

[11]     It seems that in relation to the first two notes there was a reconciliation of any difference  between  their  respective  expenditures  made  at  the  time.    This  was

achieved by whichever man had paid less, in the preceding period, paying half of the difference to the other.[4]     That approach is entirely consistent with what I earlier found to be the terms of the joint venture between them.

[4] The payment made by Mr Du is recorded on the note dated 28 May 2009 and a similar payment

[12]     Mr Bien alleged that some of the payments recorded on these notes were added by Mr Du after the event, by which I mean after Mr Bien had signed off on them.   But I do not accept that.   Strong evidence is required to establish what is essentially an allegation of dishonesty and there is no such evidence here.  To the extent it is possible to tell, the documents do not appear to be obviously “doctored”.

[13]     Accordingly, I regard these three documents as the best evidence of their respective expenditures up until the time Mr Du’s and Mr Bien’s relationship broke down.  On that basis I am satisfied that Mr Du has established that the amount paid by him up until 29 June 2009 was $97,892.53.  That sum is the total of the amounts recorded on the three notes, namely:

(a)      9 April 2009: $20,782.59 - $600 (the latter amount being half of the difference  between  their  respective  expenditures  that  was  paid  by Mr Bien to Mr Du);

(b)28 May 2009: $45,347.94 + $311 (the latter amount being half of the difference  between  their  respective  expenditures  that  was  paid  by Mr Du to Mr Bien);

(c)       29 June 2009: $32,051.

[14]     The  position  becomes  more  difficult  in  relation  to  payments  made  after

29 June 2009.   There were no more meetings and no more signed reconciliations. While Mr Du has been able to produce invoices to support some of the expenditure

he says that he made, other items are uncorroborated.

[15]     Mr Du says that he made payments totalling $32,853.64 after 29 June.  Of this amount, $24,500.12 is accepted by the defendant as owing.   The defendant’s accountant, Mr Browning, provided a helpful chart in which the reasons for rejecting the other items claimed are set out.  The reasons given are generally either to do with a lack of any clear link between the Albany property and the expenditure or the absence of invoices or receipts.

[16]     In light of the evidential burden that rests on Mr Du I consider I must accept that the defendant is not liable for the disputed claims.  Accordingly I consider that the further amount that is properly payable by the defendant for the post 29 June

2009 period is $24,500.12. The total amount owing is therefore $122,392.65.

[17]     Although Mr Du also sought compound interest on that amount I do not consider that to be appropriate here.   Rather, the interest that is payable on the judgment sum is to be calculated:

(a)       at the rates specified at the relevant times in the Judicature Act 1908 (which I understand to be 8.4% per annum up until 30 June 2011 and

5% per annum thereafter);

(b)from the approximate dates the relevant payments were made namely: (i)     as to $20,182.59, 9 April 2009;

(ii)      as to $45,658.94, 28 May 2009; (iii)     as to $32,051, 29 June 2009;

(iv)     as to $24,500.12, 27 August 2009.

[18]     Unfortunately there are, as I understand it, quite substantial previous costs awards against Mr Du in favour of the defendant that have yet to be met.  Mr Du’s own entitlement to costs in relation to the matter that is the subject of this judgment is limited by the fact that he was a litigant in person, although Mr Blanchard very

fairly accepted that he would be entitled to the costs of preparing the amended statement of claim in 2012, when he was still represented.

[19]     In light of Mr Du’s status as a lay litigant I would be grateful if Mr Blanchard could submit a further memorandum which:

(a)       sets out the amount of interest owing in accordance with the orders I

have made above;

(b)      sets out the net position as to costs.

[20]     While (in light of my earlier judgment) it perhaps goes without saying that I have considerable sympathy for the position Mr Du finds himself in, there is nothing further that this Court can do for him.   For completeness I formally record that I advised him at the hearing in February this year that I would not permit him to pursue a new claim for loss of profits, largely for the reasons already articulated by me in Du v Gu [2012] NZHC 1536.

[21]     Lastly, I also record my apologies to the parties for the delay in issuing this judgment.  I had intended to complete it shortly after the hearing earlier this year, but

personal circumstances intervened.

Rebecca Ellis J

(which  was  made  by  Mr  Bien)  was  acknowledged by  Mr  Du  through  his  accountants on  9
November 2009.