After defaulting on a $2.9 million residential loan, Chinese investor Qiufen Lu unsuccessfully asked the High Court to block legal action taken against her in China by Industrial and Commercial Bank of China (New Zealand) Ltd. ‘Anti-suit’ claims are rare.
Courts throughout the world are very wary of making orders impacting on legal proceedings in another country. One country’s courts telling another country what to do amounts to a declaration that it is subservient; declarations of war have followed on lesser grounds. In rare circumstances courts will grant an ‘anti-suit’ injunction ordering a litigant before its courts not to proceed with related litigation in another country. It requires proof the related litigation is ‘vexatious, oppressive, or otherwise unconscionable.’
The High Court was told Ms Lu borrowed $2.9 million in August 2015 from the New Zealand arm of Industrial and Commercial Bank of China to complete her six million dollar purchase of an Albany property on Auckland’s North Shore. It had potential for subdivision. It did not run smoothly. Auckland City Council objected to houses being relocated onto the property without appropriate consents. It placed charging orders against the title for legal costs incurred. A number of monthly mortgage payments were made late. From January 2018, Ms Lu stopped making any payments. In October 2019, the property was sold in a mortgagee sale for some $2.2 million. Ms Lu’s complaint that the Bank could have got a better price was dismissed by the High Court. The price recovered by the Bank exceeded offers Ms Lu received in her attempts to sell.
Before completing its mortgagee sale, the Bank took legal action in China, freezing Chinese bank accounts and company shares held by Ms Lu and her husband Liansen Mao. Ms Lu now lives in China. Under Chinese law, a spouse is liable for household debts incurred by a fellow spouse. This general rule no longer applies in New Zealand. In the New Zealand courts, Ms Lu applied for an ‘anti-suit’ injunction, blocking the Bank from taking parallel legal action in China. She said it should follow usual procedures; fighting its case in New Zealand courts, then registering any New Zealand court judgment in China for enforcement in that country. The Bank claims Ms Lu still owes more than $850,000.
The High Court was told Ms Lu has no assets in New Zealand. There is nothing untoward in a creditor pursuing a debtor in the debtor’s home jurisdiction, Justice Fitzgerald said. The Bank started its legal proceedings in China before Ms Lu countersued in New Zealand; its legal proceedings were not a cynical or tactical response to New Zealand litigation, Justice Fitzgerald said.
Lu v. Industrial and Commercial Bank of China (New Zealand) Ltd – High Court (5.03.20)
20.049