Lifeline for ‘illegal investment’ couple

Two Chinese nationals who lost $500,000 after investing in a New Zealand company, Honest Deal, with the hope of gaining visas, have received a glimmer of hope from the Court of Appeal.

Yihua Zhang and her husband, Wei Hu, claimed they were lied to by a financial broker, Chunglin Yu, during an attempt to move the equivalent of $500,000 from China into New Zealand.

Their plan was to invest the money in Chinese finance company Finawin Finance Management Jiansu Ltd, which would move the cash to a New Zealand subsidiary, Honest Deal Holding Company, before the money would be returned to the pair.

Finawin and Honest Deal collapsed in 2015. The couple sued Yu in an attempt to recover their money, but the High Court ruled that New Zealand courts had no jurisdiction to decide on the Chinese-based failed investment.

The main thrust of Zhang and Hu’s case was that they were lied to about the investment scheme while visiting Yu in New Zealand.

Zhang and Hu had visited with Yu in New Zealand multiple times. During the initial case, evidence came to light to show that one of the key visits with Yu could not have happened as she was not in New Zealand at the time.

In his decision on the case last year, Judge Gerard van Bohemen said it was unlikely the New Zealand justice system had the jurisdiction to try the case.

He also said the fact that Zhang and Hu were asking the court to help them recoup cash they had lost during an illegal investment would have counted against them.

However, the Court of Appeal has overturned Van Bohemen’s decision relating to the issue of jurisdiction and sent the case back to the High Court.

In their decision released this month, three appeals court judges found that while the key meeting between the couple and Yu might not have happened, it was a sufficiently plausible, based on the evidence, that Yu made the relevant representations while with them at other times.

‘‘Conversely, it seems quite implausible Ms Yu would have avoided altogether any discussion about the return of the investment in New Zealand while on a trip to view Honest Deal’s operations in New Zealand,’’ the judges said.

The judges said Van Bohemen had set the bar too high when assessing the question of jurisdiction. Yu was ordered to cover Zhang and Hu’s costs for the appeal.

The main thrust of Zhang and Hu’s case was that they were lied to.