The disputed $1.2 million loan was supposedly fictitious, but the threats of blackmail were real. Justice Lang ruled the loan enforceable; both sides lacked credibility in their evidence before the court and debtor Hua Wu waited four years before challenging the loan’s existence.
The High Court heard a tangled narrative of Mr Wu’s dealings since his emigration from China, after enrolling as a student at Massey University in 2008.
Also known as Danny Wu, Mr Wu was in court attempting to recover ownership of a property in Auckland suburb of Mangere, a property transferred to Jinxing Liu as part-repayment of a supposed $1.2 million loan.
The court was told Mr Wu was confronted in 2018 by his then employer Timber King Ltd with allegations of theft in his role as general manager of the company. Timber King, trading as Three Brothers Building Centre, was part-owned by Mr Liu’s son.
Mr Wu paid $400,000 to the company.
Soon after, Mr Liu and his son stepped up the pressure threatening to report Mr Wu to the Police, Inland Revenue and immigration authorities unless he paid more.
Mr Wu took legal advice, telling his lawyers he had not stolen from his employer but needed help in what he said was an employment dispute. They were surprised to next hear from Mr Liu’s lawyers that all that was needed was Mr Wu’s acknowledgement of receiving a $1.2 million loan.
Behind their lawyers’ backs, the two hatched a deal in which Mr Wu would hand over cash plus Mangere real estate in a subdivision Mr Wu was involved in.
In court four years on, each had entirely different explanations for what had happened.
Mr Wu said he was blackmailed into promising to pay $1.2 million with threats he would be reported to the authorities for theft. Mr Wu said Mr Liu has a reputation as a loan shark with contacts in China who had threatened his parents.
Mr Liu said Mr Wu lacks credibility, pointing to allegations of his thefts from Timber King plus evidence of Mr Wu’s careless handling of money when working for another employer and his improper use of another employee’s email account when working for a third employer.
Mr Liu told the court that the disputed payments were in fact repayment of a RMB six million advance made to Mr Wu in China back in 2008.
Justice Lang dismissed as lacking any credibility Mr Liu’s claim that Mr Wu had borrowed in China the equivalent of $1.2 million back in 2008 at a time when he was a student in New Zealand, and that Mr Liu had written off this debt as unrecoverable until by chance he met up with Mr Wu again as an employee of his son’s business.
Justice Lang ruled Mr Wu’s signature in 2018 to a document evidencing a debt to Mr Liu of $1.2 million was extracted by duress, after Mr Liu blackmailed Mr Wu with threats to report him to the authorities.
The general rule is that any agreement extracted under duress is voidable; it can be set aside by the courts. This must be done promptly.
A delay of four years is too long, Justice Lang said. The loan agreement stands and is enforceable.
Mr Wu said it was only after four years that he was no longer cowed by Mr Liu’s threats and by then had sufficient money to fund a court case.
Wu v. Liu – High Court (7.10.24)
25.006