MAO v INDUSTRIAL AND COMMERCIAL BANK OF CHINA (NEW ZEALAND) LIMITED [2023] NZHC 673

MAO v INDUSTRIAL AND COMMERCIAL BANK OF CHINA (NEW ZEALAND) LIMITED [2023] NZHC673 [30 March 2023]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2022-404-1536[2023] NZHC 673BETWEEN LIANSEN MAOFirst PlaintiffQIUFEN LUSecond PlaintiffAND INDUSTRIAL AND COMMERCIALBANK OF CHINA (NEW ZEALAND)LIMITEDDefendantHearing: On the papersJudgment: 30 March 2023JUDGMENT OF WYLIE J(Leave to continue proceeding)This judgment was delivered by Justice WylieOn 30 March 2023 at 10.30 amPursuant to r 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Solicitors/counsel:Buddle Findlay, AucklandCopy to:L MaoQ LuIntroduction[1] I refer to my minute of 15 March 2023. I there recorded my decision that itwas not necessary to hold a hearing to consider Mr Mao's and Ms Lu's application forleave to continue these proceedings.[2] I have now had the opportunity to fully consider all of the papers available andthe affidavit which was not on the Court file but which Mr Edginton, on behalf of thedefendant Bank (the Bank), has made available.[3] I have determined that Mr Mao's and Ms Lu's (informal) application for leaveto continue this proceeding should be declined. I set out my reasons for that decision.Background[4] In August 2015, the second plaintiff, Ms Lu, purchased a property in Albanyfor $6 million. She borrowed $2.94 million from the Bank to complete the purchase.[5] Ms Lu quickly defaulted under the loan agreement. Some defaults wereultimately remedied but, from January 2018, Ms Lu stopped making any repaymentsto the Bank.[6] The Bank issued a notice under s 119 of the Property Law Act 2007. The noticewas served on Ms Lu in June 2018, pursuant to orders for substituted service made bythis Court. The Property Law Act notice expired unremedied. The Bank thereaftercommenced steps to sell the property through a mortgagee's sale. Ms Lu endeavouredto sell the property herself to avoid this consequence but her efforts were unsuccessful.The Bank sold the property in October 2019 for $2.2 million.[7] Prior to the sale, the Bank had taken steps to recover the monies due under theloan agreement. Ms Lu is a Chinese citizen and she normally resides in China. TheBank commenced proceedings against Ms Lu in China. As part of its claim it alsobrought a proceeding against her husband, Mr Mao. This is because, under Chineselaw, certain debts of one spouse are deemed to be owed jointly by the other spouse. Inthe course of the Chinese proceeding, the Bank obtained the equivalent of freezingorders over Mr Mao's and Ms Lu's bank accounts and other securities owned by them.Later these orders were, in part, discharged on compassionate grounds. The freezingorder remains only over Ms Lu's securities.[8] Ms Lu and Mr Mao then brought a proceeding in New Zealand against theBank and one of its officers—Ms Hou. The Bank and Ms Hou applied to strike outthe proceeding as disclosing no reasonably arguable cause of action. Their applicationwas granted by Fitzgerald J on 5 March 2020. Ms Lu's and Mr Mao's claims againstthe Bank and Ms Hou were struck out in their entirety.1[9] Following this, Mr Mao and Ms Lu filed six further claims against the Bankand/or Ms Hou. In each of those claims, the allegations made were the same or similarto those that had been struck out by Fitzgerald J. In each case, Mr Mao's and Ms Lu'sclaims were either struck out as being an abuse of the Court's processes or they werenot accepted for filing. Ms Lu and Mr Mao have attempted to appeal some of thesejudgments. Their attempts to do so have been unsuccessful.[10] A further proceeding was filed against Buddle Findlay, the Bank, Ms Hou andanother bank employee, Ms Liang. The defendants applied to strike out the proceedingand their application came before Associate Judge Andrew in February 2022. In ajudgment issued on 22 March 2022, he struck out the proceeding.2 The defendantswere also seeking a prevention order under s 166 of the Senior Courts Act 2016 againstboth Mr Mao and Ms Lu, to restrict them from bringing or continuing further civilproceedings. The Associate Judge did not have jurisdiction to deal with thisapplication and he adjourned it to the Duty Judge List before a High Court Judge.[11] The prevention order application came before Moore J. In a reserved judgmentissued on 4 November 2022, he declined Mr Mao and Ms Lu's application to set asideand stay Associate Judge Andrew's judgment and granted the defendants' applicationfor a prevention order. He made an order in the following terms:The defendants' application for a Prevention Order is granted. I order that theplaintiffs are restrained from commencing or continuing proceedings in thismatter (and any related matter) against the first, second and third defendants1 Lu v Industrial and Commercial Bank of China (New Zealand) Ltd [2020] NZHC 402.2 Mao v Buddle Findlay [2022] NZHC 521.as specified below, in any Court or Tribunal for a period of three years."Proceedings in this matter (and any related matter)" includes:(a) the Bank's former lending relationship with the plaintiffs; and(b) the steps taken by the Bank to recover the amounts outstanding andowing to the Bank by the second plaintiff, including the claim and thefreezing order obtained by the Bank against the plaintiffs in China andthe sale by the Bank as mortgagee of the property located at 41AClaudia Road, Swanson, Auckland (NA299874).The present proceeding[12] The statement of claim in the present proceeding is dated 1 September 2022.It pre-dates Moore J's judgment and accordingly, leave was not required to file thesame. It was accepted for filing. The Bank has filed a statement of defence. TheBank has also applied to strike out the proceeding.[13] The proceeding takes issue with the steps taken by the Bank in China. Mr Maoand Ms Lu allege that because of the freezing order obtained by the Bank in thatcountry, they were unable to either sell the property in New Zealand or to refinancetheir loan. They claim that the Bank is liable for all damages they say they havesuffered and they seek judgment in the sum of $7,800,000.Analysis[14] Section 166 of the Senior Courts Act provides as follows:166 Judge may make order restricting commencement orcontinuation of proceeding(1) A Judge of the High Court may make an order restricting a personfrom commencing or continuing a civil proceeding.(2) The order may have—(a) a limited effect (a limited order); or(b) an extended effect (an extended order); or(c) a general effect (a general order).(3) A limited order restrains a party from commencing or continuing civilproceedings on a particular matter in a senior court, another court, ora tribunal.(4) An extended order restrains a party from commencing or continuingcivil proceedings on a particular or related matter in a senior court,another court, or a tribunal.(5) A general order restrains a party from commencing or continuing civilproceedings in a senior court, another court, or a tribunal.(6) Nothing in this section limits the court's inherent power to control itsown proceedings.[15] Moore J's order is an extended order. It applies to a particular matter, and anyrelated matter, against named defendants.[16] Once Moore J's judgment was issued, Mr Mao and Ms Lu required leave tocontinue the proceeding. As a result, they filed a memorandum on 6 December 2022seeking leave to continue the proceeding. They also sought an order that the Bank pay30 million RMB into a bank account in China so that they can start a furtherproceeding in a Chinese court in an attempt to get a preservation order in China againstthe Bank.[17] In my judgment, the claims and issues advanced in the proceeding fall directlywithin the scope of the s 166 order made by Moore J. The proceeding in issue is basedon the Bank's lending relationship with Mr Mao and Ms Lu and it concerns steps takenby the Bank in China to recover the amounts outstanding and owing to it by Ms Lu.The claim refers to the freezing orders obtained by the Bank against Mr Mao andMs Lu in China and the sale by the Bank of the property in Albany.[18] I do not consider that leave should be granted to allow Mr Mao and Ms Lu tocontinue with the proceeding. The proceeding is without merit. Were it to continue itwould be amenable to a strike out. It is not obvious to me that the freezing orderequivalents made in China extended to the property in Albany owned by Ms Lu. TheReciprocal Enforcement of Judgments Act 1934 does not extend to judgments givenby Chinese Courts and this Court has no jurisdiction to order a New Zealand Bank topay money into an account in China so that debtors of the Bank can sue the Bank inChina. More generally, the proceeding is Mr Mao's and Ms Lu's ninth attempt tolitigate what are essentially the same issues. All previous claims have either beenstruck out or were so defective that they were not accepted for filing. In my judgment,the proceeding is an abuse of process. Accordingly, Mr Mao's and Ms Lu's applicationfor leave to continue the proceeding is declined. The proceeding is at an end and thereis nothing now to strike out.Costs[19] The Bank is entitled to its reasonable costs and disbursements. It is mypreliminary view that costs should be fixed on a 2B basis. If there is any dispute as tothis or as to quantum, I direct as follows:(a) the Bank is to file and serve a memorandum seeking costs within fiveworking days of the date of this judgment;(b) Mr Mao and Ms Lu are to file a memorandum in response within afurther five working days; and(c) memoranda are not to exceed three pages.I will then deal with the issue of costs and disbursements on the papers unless I requirethe assistance of the counsel and/or Mr Mao and Ms Lu.___________________________Wylie J