Skip to Content, Skip to Navigation

Safeguard OSH Solutions - Thomson Reuters

Safeguard OSH Solutions - Thomson Reuters

Accident Compensation Cases

Peng v Li (HC, 24/09/15)

Judgment Text

Fogarty J
The plaintiffs seek in these proceedings to recover from the defendants the sum of $507,500, together with simple interest, or compound interest, and exemplary damages. This claim is martialled in seven causes of action: 
Breach of a joint venture contract over two properties having the postal addresses of 1/18 and 2/18 Inverary Avenue, Epsom. 
A cause of action under the Fair Trading Act alleging false and misleading misrepresentations by the first defendant. 
An action in deceit against the first defendant. 
An action for unjust enrichment/money had and received. 
Constructive trust. 
Resulting trust. 
Breach of fiduciary duty. 
In respect of the first three causes of action, the remedy of interest sought is pursuant to s 87 of the Judicature Act. In respect of the remaining causes, except the seventh cause of action, the plaintiff seeks compound interest, to be awarded exercising the Court's equitable jurisdiction. 
In respect of the seventh cause of action, the plaintiff seeks a declaration that the first defendant holds on trust a 35 per cent interest in 1/18 Inverary Avenue (property one). It also seeks tracing orders. 
The two properties, property one and 2/18 Inverary Avenue (property two) are cross-leased on one section. The defendants are husband and wife and own property one. Property two was, at the time, owned by an elderly widow. 
The subject matter of the dispute is whether in fact the parties ever entered into an agreement to purchase property two, the defendants' contributing property one and contributing to part of the purchase price in property two, with a view to then developing the whole section for profit. 
In support of that claim the plaintiffs seek a declaration that they have a 35 per cent interest in property one. The logic is that would be the plaintiff's share of the total development. 
The plaintiffs are husband and wife, as are the first and second defendants. The two men met first in early 2009. Since they met they played soccer together socially and then became involved in various business dealings, including at least two joint ventures involving the purchase and development of properties for resale, one in 2010 in Avondale and another from 2011-2012 in Henderson. The first defendant (Mr Li) was the project manager for both of these developments and charged fees for acting in that capacity. 
The plaintiffs' case is that in early April 2012, Mr Li approached the first-named plaintiff (Mr Peng) with the proposal for another joint venture, being for the redevelopment of both properties one and two. The proposal was that Mr Li contributed property one to the joint venture and the plaintiffs and Mr Li contributed to the purchase of property two. The entire section would then be divided and two new townhouses developed on freehold titles for resale. 
Mr Peng gave evidence of two discussions on the matter. He had been told by Mr Li that his elderly neighbour had died, leaving only the elderly lady living in the property two, next door to him (property one). That Mr Li had spoken with her and she agreed that property two could be purchased from her for $725,000. That he considered his own adjoining property one was worth the same amount, thus valuing the two properties jointly for a total sum of $1,450,000. The proposal was that if Mr Peng and his wife, Ms Chao, agreed to invest in the project, the initial funds advanced would be utilised for the purchase of the neighbouring property two. Once property two was acquired, it was proposed Mr Li would hold effectively 65 per cent in the total venture and Mr Peng and his wife 35 per cent. Thus the contribution to the purchase of the neighbouring property would be $507,500, being 35 per cent of $1,450,000. He gave evidence as to other detail of the arrangement, including expected subdivision costs, building costs and project management fees. 
On 15 April 2012, an application was made on behalf of Mr Peng to the Kookmin Bank seeking a loan of $500,000 for Mr Peng for “purchase of a section joint with his friend for investment”. Mr Peng said he told Mr Li he had obtained funding from the Kookmin Bank and in return Mr Li told him an agreement to purchase the neighbouring property was to be settled on 4 May. 
On 29/30 April Mr Peng and his wife paid $507,500 into the joint account of the defendants in two components, $500,000 and $7,500. On 4 May Mr Peng sent Mr Li a text message (translated), “Has the property been sorted out?” Mr Li replied, “Done”
Mr Li's evidence is that it is a complete invention on the part of Mr Peng that he, Mr Li, proposed the joint venture described above over properties one and two. Rather, that the payment being made by Mr Peng and his wife was to settle a debt arising principally from the purchase of shares in a company called Clay made on 17 August 2011. This purchase was to buy-out Mr Li's investment of $400,000 in a business known as Harbour Fitness. 
This “Harbour Fitness” defence is first in time before the alleged contract to develop 18 Inverary Avenue. This defence, if it succeeds, proves a debt of $507,500 owed by Mr Peng and Ms Chao to Mr Li, prior to April 2012. If this defence fails then the defendants have no further defence. For these reasons the Harbour Fitness defence occupied almost all of the trial time, and its analysis largely comprises the whole of this judgment. 
The Harbour Fitness venture 
Harbour Fitness was a chain of gymnasiums set up by Mr Bing Xu. Mr Peng advanced USD500,000 on 30 November 2010 and USD170,000 on 22 November 2010 to Mr Xu. The parties treated this as equivalent of NZD900,000. About the time of the advance, Mr Xu and Mr Peng agreed the advance would be treated as a purchase of the Queen Street gym business by Ms Chao, Mr Xu would manage it. Ms Chao and Mr Peng would receive interest on their advance at 24 per cent (2 per cent per month), payable via wages, and a cash sum of $10,000. Upon repayment of the advance, the business would revert back to Mr Xu. 
It is Mr Li's evidence that Mr Peng was enthusiastic about his investment in Harbour Fitness and persuaded Mr Li to invest NZD400,000. The sequence of events he said was that Mr Peng introduced him to Mr Xu in late January 2011. Over the next few weeks, he and Mr Peng had several meetings with Mr Xu to discuss them both investing in the Queen Street branch of Harbour Fitness. After some period of time and several meetings, he was persuaded by Mr Peng to get involved and on 11 February 2011, Mr Li advanced $400,000. 
There is a substantial dispute between the plaintiffs and the defendants as to whether or not this was a unilateral decision by Mr Li to follow Mr Peng in making a loan to Harbour Fitness (the plaintiffs' case) at the same rate of return or whether, on the other hand, this act of investment on 11 February 2011 was as a consequence of an agreement between Mr Li and Mr Peng to have a joint interest in Harbour Fitness. Mr Li says it was the latter and that Mr Peng agreed to guarantee Mr Bing Xu's performance of the loan. 
Essentially, Mr Li says that he and Mr Peng had agreed in February 2011, at the time of Mr Li's $400,000 advance, that they would incorporate and register a joint company to invest in the Queen Street fitness business (one of the chain of Harbour Fitness in Auckland). Mr Peng would guarantee Mr Li two per cent per month return on his investment. Mr Peng was to run the company and its business and develop and implement investment strategies. They reached this agreement and then jointly approached Mr Xu. He says that then, Mr Xu prepared two documents written in Mandarin, being a lending agreement pending completion of the purchase of the Queen Street business and an agreement for sale and purchase of the Queen Street branch to Mr Peng's wife, Ms Chao and Mr Li. Mr Xu handed these agreements to Mr Li in exchange for his $400,000 bank cheque. 
Mr Xu was a witness, his evidence corroborates Mr Peng and his wife Ms Chao's evidence. Mr Xu said that Mr Li's investment was separate from Mr Peng's. That on 11 February, he received from Mr Li a bank cheque for $400,000 made out to his company, BNJ Albany Limited and that was at that time a loan. He agreed it would be on the same terms as those he had previously agreed with Mr Peng and his wife, namely a 24 per cent annual return, with the interest to be paid monthly in the form of wages and cash payments. The form of security for the loan from Mr Peng was that Mr Peng would purchase Queen Street branch of the business from Mr Xu, and when the loan was repaid, title to the business would revert to Mr Xu. Mr Xu's evidence was that at this time Mr Li was undecided what form of security he would take for his loan, but that one possibility is that he would also purchase a share of the Queen Street business. 
However, Mr Xu allowed for a joint investment by the two men in the business. After receiving the bank cheque, he provided Mr Li with a Business Cooperation Memorandum and a lending agreement. The translation of the lending agreement says that: 
“Mr Xu has borrowed NZD400,000 from Mr Xiaoxi Li, the interest on the borrowing is $2,000 a month”. This lending agreement should correspond with the attached agreement for sale and purchase of a business (cooperation) memorandum. After completion of the purchase of the Harbour Fitness Queen Street Branch business, this lending agreement will be treated invalid. ”
On 10 February 2011, Ms Chao incorporated Clay New Zealand Limited (Clay). All the shares were registered in her name. She was the sole shareholder of the company. 
Mr Xu's Business Cooperation Memorandum records as purchasers both Mr Li and Ms Chao. It says that the purchasers purchased the Harbour Fitness Queen Street branch, including all its fixed and intangible assets. The purchase price is $250,000 but that is an error. Mr Xu says he meant $2,500,000. He says that that document was prepared at the request of Mr Li. It is not executed by either Mr Li or Ms Chao. 
Mr Xu's memorandum demonstrates that about 11 February 2011, Mr Li and Mr Peng at least were contemplating a joint acquisition of the business, the Queen Street branch of Harbour Fitness. It is not evidence that an agreement was reached, as they are not executed. It is not evidence that Mr Peng guaranteed Mr Xu's obligation to Mr Li. There is no reason why he should have. 
Mr Li's case is, however, that there was an oral agreement about 11 February, in which Mr Peng guaranteed the performance of Mr Li's loan. 
On 22 February, Mr Bing Xu sent a text to Mr Li and to Mr Peng saying: 
“Uncle Li, Uncle Peng, just to let you two know that my negotiation process with the landlord went smoothly, all is well. The lease agreement transfer could be done by Friday, formally notifying you. ”
On 21 March 2011, a deed of lease was executed between the landlord of the Queen Street premises and Clay, signed on the company's behalf by Ms Chao as tenant with Mr Li being her witness and being guaranteed by Mr Bing Xu. On the probabilities, this lease is consistent with Mr Li sharing the benefits of co-ownership of the Queen Street business. But, again, it is not evidence that or any reason why Mr Peng would guarantee the performance of the loan obligations due to Mr Li. 
The lease covered the first floor, the second floor, and the second floor fit-out of 203 Queen Street. There were separate rents for each floor. 
Come August 2011, there were signs of financial troubles in the Harbour Fitness business across Auckland. In particular, the Queen Street business defaulted on payment of its rent and received on 4 August a notice of default in the rent, and of the power to the landlord to repossess the premises on 18 August. 
Between 4 and 18 August 2011, there was a flurry of activity. The sequence of events between 4 August and 17 August is not clear and as will become apparent, I do not think it is necessary, or possible, to unravel the sequence of responses to this crisis. 
In brief, Mr Peng and Mr Li first thought that the notice of default was of only one of the three floors of the lease. At least Mr Li, if not Mr Peng, looked at getting out of the Queen Street business and acquiring in its place the Glenfield branch of Harbour Fitness. That did not come to pass, and on 17 August, the eve of the default Clay sold the worthless Queen Street branch to Mr Xu's company, BNJ Queen Street Limited for $1.3m. 
There are a number of draft agreements. There is conflicting evidence about when they were prepared. They include: 
Several drafts of a sale and purchase agreement of the business of Harbour Fitness Queen Street by BNJ Queen Street Limited (Mr Xu) to Catherine Chao or Clay (Mr Peng and Ms Chao) with the possession date in February or March 2011. 
An unexecuted sale and purchase agreement of the business, Harbour Fitness Queen Street, by Clay to BNJ Queen Street Limited (Mr Xu), with the possession dated 23 August 2011. 
An unexecuted sale and purchase agreement for the sale of the business, Harbour Fitness Glenfield Branch from BNJ Sports Co Limited (Mr Xu) to A & R New Zealand Limited (a company formed by Mr Li), stated to be interdependent with the sale of the Queen Street Branch business to BNJ Queen Street Limited ((b) above). 
Then, the last few days before 18 August, on the 15th, the register of shares in Clay was amended to show 308 shares transferred to Mr Li. This is reversed on 17 August when there is an executed agreement for sale of Mr Li's shares in Clay to Ms Chao for $400,000. On the same day there is an executed agreement for the purchase of the shares of Clay between Mr Bing Xu and Ms Chao, with the purchase price $1,300,000, and a term loan agreement of $1,300,000 from Ms Chao to Mr Xu, executed only by Mr Xu. This loan document suggests the idea was that Mr Xu purchased the shares with the loan, leaving him in debt to Clay — so that if he ever recovered his wealth, Clay could enforce his debt. 
On 18 August 2011, Harbour Fitness lost possession of the Queen Street branch. Thereabouts the whole Harbour Fitness business collapsed and the parties to these proceedings lost their respective investments of $900,000 and $400,000. 
The plaintiffs' case of deceit 
It was the plaintiffs' principal argument that after the Harbour Fitness disaster in 2012, Mr Li had invented the proposed redevelopment of properties one and two as a way of defrauding Mr Peng of over $500,000 in order to recoup his lost $400,000 and loss of income. 
It was the defendants' case that on 17 August, the day prior to the collapse of the Queen Street business for non-payment of rent, Mr Peng was still confident in its value and had agreed to purchase Mr Li's shares in the company, Clay, for $400,000 and had signed the contract providing just that. The payment of $507,000 odd was settlement of that debt, together with Mr Peng meeting his liabilities as a guarantor of Mr Xu's promised 24 per cent interest rate return on that investment, running from the date of advance in February 2011 and other costs; there being a slight counter-adjustment for a small gambling debt that Mr Li owed Mr Peng. 
The written and executed sale and purchase agreement, dated 17 August 2011, is between Mr Peng and his wife (the plaintiffs) as purchaser and Mr Li as vendor, in the sum of $400,000 for 308 of 1,000 shares in Clay. The solicitor who prepared that document, Mr Wang, was acting for both parties. Mr Wang's evidence was, however, that that document was not intended to be real. Mr Wang said that if it was a real transaction, he would not have acted for both parties, because of their different interests. 
Trial issues 
The plaintiffs have the onus of proof that Mr Li defrauded them. The onus of proof is on the balance of probabilities, having regard though to the seriousness of the accusation. 
Mr Karam, counsel for the plaintiff, set out the issues that he considered had to be decided chronologically as follows: 
Was the proposal which the plaintiffs allege Mr Li made consistent with the terms of earlier development proposals? 
Harbour Fitness: 
Did Mr Peng agree in February 2011 to personally guarantee Mr Li's 24% p.a. returns on his advance to Bing Xu? 
Was it intended that Mr Li was to be a shareholder in Clay NZ Ltd on its incorporation? 
Did Messrs Peng and Li attend Winston Wang's office to get the draft agreement for sale and purchase (ABD 1/173) formally completed? 
Did the parties reach an agreement on 10 August 2011 on the terms alleged by Mr Li in paragraph 79 of his brief of evidence? 
What discussions and agreements occurred between Messrs Li and Peng in April 2012 which led to the payment by the plaintiffs to the defendants of $507,500 late that month? 
Is there anything exceptional arising from the altercation between Messrs Peng and Li on 13 December 2012 which would warrant an award of exemplary damages in addition to the criminal penalties already imposed on Mr Peng. ”
Mr Andrews, counsel for Mr Li, formulated the issues in this way. He says the primary issue for determination is this case is the reason that two payments were made, totalling $507,500, by the plaintiffs to the joint account of the defendants on 29 and 30 April 2012. It is the defendants' position that these payments were made in fulfilment of a single oral agreement, concluded on or about 10 August 2011, and in part evidenced in writing by the aforementioned share transfer whereby he sold his shares in Clay for $400,000, dated 17 August. 
There is a counterclaim. On 13 December 2012, Mr Peng attacked Mr Li with an axe. He entered a guilty plea in the Auckland District Court in relation to that matter. Mr Li counterclaims against Mr Peng for exemplary damages for assault and battery. 
Mr Andrews correctly submits that if this Court is left unable to determine which of the competing explanations advanced for the payments made by the plaintiffs to the defendants is more probable than the other, then the plaintiffs' claim must be dismissed. 
Resolution of these issues 
To resolve these issues, it is necessary to re-traverse these events in some detail. It is also necessary to understand more thoroughly the nature of the relationship between the two men. Further, the relationship between Mr Li and the source of the $400,000, his brother in China, needs to be addressed. The ultimate issue is whether Mr Peng and his wife, Ms Chao, paid the $507,500 in repayment of the purchase of Mr Peng's shares in Clay, and associated guarantor obligations, or paid the money believing it was their contribution to a joint venture for the redevelopment of properties one and two at Inverary Avenue. 
Earlier and one concurrent joint ventures 
It is important to appreciate that Mr Peng and Mr Li were not only friends but were also successful joint venturers in business. One joint venture was in progress at the same time as the Harbour Fitness investment. 
Between 2010 and 2012, Mr Peng and his wife, along with Mr Li and other associates agreed to invest in three different developments - one in Albany, one in Avondale and one in Henderson. Largely these ventures were characterised by oral understandings, in the nature of handshake deals. The two ventures that proceeded were successful. Mr Li agreed that he was paid the contributions from Mr Peng as he required them. It was common ground that there were no agreements in writing. 
Mt Peng's wife, Ms Chao, gave more detail. In respect of the Albany investment, she said the contributions to this project were 40 per cent by her and her husband, 20 per cent by Mr Li and 40 per cent by another investor, Mr Brian Xu (not to be confused with Mr Bing Xu). Mr Li and Mr Brian Xu disagreed on the house design and this project did not proceed, the shares being transferred to the next project at Avondale. 
The Avondale project was carried out in 2010. The property was a subdivided section ready for the building of a new house. In the end, Mr Brian Xu dropped out and the parties to the investment were Mr Peng and Ms Chao at 40 per cent, Mr Richard Li at 40 per cent and a Mr Michael Miao at 20 per cent. Ms Chao said she transferred money on behalf of her husband and herself to Mr Li's bank at Mr Li's request on several occasions, the total amount being invested being around $220,000. Mr Li was the project manager. He initially advised his project management fee was going to be $15,000 but it was reduced to $10,000 due to his neglect in not noticing the land development contribution was not paid by the previous owner which caused extra building costs to be incurred. 
When the project was completed, the property was sold for approximately $650,000 and Mr Peng and Ms Chao's share of the profit was approximately $35,000. Mr Li paid them their share. Everybody in the project was happy with the result and the participants in the project had a celebration dinner. 
The third project was at Henderson. It also involved a sub-divided section ready for the building of a new house. The total investment was around $470,000. The parties to the investment were Ms Chao and her husband at 20 per cent; Richard Li, on project management, at 20 per cent; a carpenter, Mr Shumin Tian, at 20 per cent; and an electrician, Mr Fangliang Meng, at 40 per cent. 
Again, there was no written contract. It was all done by oral agreement. Mr Li's project management fees were approximately $15,000. The property was sold for around $570,000, producing a net profit to Ms Chao and her husband. There was never any written documentation executed by any of the investors relating to the project. Ms Chao's evidence was corroborated by Mr Miao. 
It may be noted that the Henderson project was carried out in 2011 and 2012, overlapping the Harbour Fitness events. The Henderson property was purchased in early 2011, the transfer being entered on 8 February. The proceeds of the sale of the property were distributed through Mr Winston Wang's firm on 28 August 2012. 
Harbour Fitness 
As noted above, Mr Peng and his wife lent Mr Xu $900,000 in two payments on 22/30 November 2010. 
On 11 February 2011, Mr Li handed a bank cheque to Mr Xu for $400,000. It was Mr Xu's evidence that on that day he and Mr Li agreed that Mr Li's loan would be on the same terms as those relating to the advances by Mr Peng and Ms Chao, namely at 24 per cent return with interest to be paid monthly in the form of wages and cash payments, as follows: 
Mr Li was to receive two per cent monthly interest return on his money, $8,000 per month, a total of $96,000 per year; 
That would be split $48,000 payable to him as salary after PAYE and the other $48,000 would be payable in cash via monthly cash payments of $4,000 at the beginning of each month. 
Those terms were not recorded in writing on that day. 
As already noted, on an unknown date but a short time after 11 February, Mr Xu gave Mr Li a business cooperation memorandum written in Mandarin and undated. And as we have seen, Clay became the lessee of the Queen Street premises on 21 March. At that time Mr Li was not a shareholder of Clay. But he knew about the lease as he was the witness to Ms Chao's signature. 
There are various handwritten dates, February and March, on the unexecuted draft agreements for sale and purchases between BNJ Queen Street Limited and Clay or Ms Chao. There is a conflict in the evidence as to when exactly these drafts were prepared, a topic I return to later. 
The first has the vendor as BNJ Queen Street Limited (Mr Xu's company) and the purchaser, Catherine Chao and/or nominee. The address of the business premises is Level 1/2, 203 Queen Street and the description of the business as “fitness centre”. It contemplates an assignment of the lease. It is envisaging possession on 31 March with the landlord's consent on 25 March. There then appear to be different versions of that document showing the purchaser as Clay. There is evidence that these subsequent drafts were actually prepared in August. However, regardless of when all of the drafts were created, on the probabilities, I consider these were draft agreements which were not pursued but, rather, there was a direct deed of lease executed between the landlord of the Queen Street premises and Clay, as noted above, on 21 March 2011, with the guarantor being Mr Xu. The significance of these drafts is that they provide for a purchase price to Mr Xu's company in various numbers but ultimately reflecting the two loans. So that they can be understood as acquiring the assignment of the lease of Queen Street for the same amount of money as to the two parties had lent to Mr Xu's company. In the next paragraph I set out the details. But it is important to keep in mind that these drafts came to nothing and, I find on the probabilities, were overtaken by the deed of lease executed on 21 March 2011. Second, there is no evidence that Mr Peng guaranteed or otherwise purchased Mr Li's loan. 
The tangible assets and intangible assets in the first draft are respectively $150,000 and $100,000 (keep in mind the numerical error).1
| X |Footnote: 1
See [21] above. 
In the second overwritten draft, the purchaser of Catherine Chao or nominee is deleted and substituted with Clay New Zealand Limited and the tangible assets are split $97,000 and $33,000, for a total purchase price of $130,000 (again the same error in printing but probably intended to be reflecting the ratio between Mr Peng's loan of $900,000 and Mr Li's loan of $400,000 which together total $1,300,000. The possession date deletes 31 March and substitutes 21 February 2011. The landlord's consent substitutes 21 March for the date 18 February 2011 and there are proposed changes to the conditions, including recognising: 
“All purchase money has been paid; and 
Vendor discharge all debts and liability of this business before settlement. ”
On 1 June 2011 Mr Li flew to China for a visit. He left his wife a handwritten note, apparently recording four current business commitments, the first of which reads as follows in translation: 
“Clay New Zealand Limited Li $400,000 Peng $900,000 ( … ) 
Bought the fitness centre business of Harbour Fitness, Queen Street. N now managed by the vendor Bing Xu … Accountant Xiao Chang … Cash payment before 10th of each month. ”
The rental default notice was received by Clay New Zealand Limited as lessee from the landlord on 4 August 2011. It advised that the rent due was $47,379.45. Then calls for immediate remedy of the breach. It said unless the breaches were remedied within ten working days, the lessor would be entitled to determine and cancel the lease and re-enter the premises. That date was 18 August. Plainly, if that rental was not paid by that date, that would be the end of the business in the Queen Street premises. As already noted, initially Messrs Peng and Li did not appreciate all three floors were in default, the fact which explains why they entertained some hope of salvage. 
The next document in time was the incorporation of a company, A & R New Zealand Limited. This has one director, Mr Li. All 1,000 shares are held by him. It was incorporated on 8 August 2011. 
Then there are a series of unexecuted documents, the vendor this time being Clay New Zealand Limited and the purchaser being BNJ Queen Street. The consideration was $1.3m. Essentially, these documents envisaged reversing the acquisition by Clay of the Queen Street business for extinguishment of the indebtedness of the plaintiffs and the defendants. But the documents are confusing, as is another undated agreement in reverse. There is another agreement bringing in Mr Li's company, A & R New Zealand Limited. It is not clear and was not made clear from the evidence, just what the sequence was of the options that were being considered. Details of these agreements appear in the next four paragraphs. 
There is an unexecuted document, being agreement for sale and purchase of a business with the date August 2011, the vendor being Clay New Zealand Limited and the purchaser being BNJ Queen Street Limited. Tangible assets are, respectively, $970,000, intangibles $330,000, a total purchase price of $1,300,000. 
There is an undated agreement for sale and purchase in essentially the same terms as the one just described except that the vendor is BNJ Queen Street Limited and the purchaser is Clay New Zealand Limited, however, the possession date is 21 February 2011. Mr Wang's evidence, which I return to later, was that he prepared this document in August. 
That undated document has the signature of the vendor to be Mr Bing Xu and the signature for the purchasers to be Ms Chao. It is a document all typewritten which would indicate it is likely to have been prepared professionally. It is in contra-distinction to the earlier unexecuted documents where the particulars of entry are entered in pen or pencil. 
There is another agreement for sale and purchase also dated August 2011 where the vendor is BNJ Sports Co Limited and the purchaser is A & R New Zealand Limited. The tangible assets and intangible assets and total purchase price of $1,300,000 are the same, but the business is the Harbour Fitness Glenfield branch, not the Queen Street branch, but it is stated to be interdependent with the sale of the Queen Street branch by Clay to BNJ Queen Street Limited. 
On 10 August 2011, there is a transfer executed of a life insurance policy, the transferor being Mr Bing Xu, the transferee being Ms Catherine Chao and the date of registration is expressed as 16 August 2011. 
The next document is dated 15 August 2011 and it is a company registry document in respect of Clay New Zealand Limited recording a new shareholder, Mr Li, having 308 shares transferred from Ms Chao's previous shareholding of 1,000, which reduces to 692 shares. This share transfer was transacted by Ms Chao. That share split follows the ratio derived from the respective advances of $900,000 and $400,000. 
On 15 August a bank cheque was paid to Winston Wang Associates in the sum of $200,000 and an acknowledgement of debt in Chinese executed by Ms Chao. The translation reads: 
“This is to prove that Catherine Chao borrowed NZD200,000 from Xiaoxi Li. (She) will repay all the money before 15 November 2011. 
Signature of Catherine Chao 
15/8/2011. ”
There is a share transfer dated 17 August 2011 from Mr Li, as transferor, to Ms Chao of 308 fully paid ordinary shares. The consideration is expressed to be $400,000 (FOUR HUNDRED THOUSAND DOLLARS). That document is fully executed and witnessed by Mr Winston Wang. Ms Chao said that if she had done it electronically, as per the transaction of 15 August,2
| X |Footnote: 2
See above at [65]. 
which is reversed here, she would not have entered $400,000. Note, this is two days after Mr Li first appears on the company register. 

From Accident Compensation Cases

Table of Contents