Shanghai Neuhof dropped a $25 million compensation claim and Zespri its $57m counterclaim last February. The importer had sued in 2014 after its general manager Xiongjie Liu was jailed for breaching customs duties in China. It claimed breach of contract and said Zespri was supposed to reimburse it for the duties paid.
While the main case is over, Justice Ed Wylie is currently overseeing two applications in the High Court. The first is over how much Zespri should get in costs, and the second is whether a third party can be made to pay it.
A May 2020 judgment in the case said Zespri’s legal fees were in excess of $2m and its other expenses more than $550,000.
It had engaged top Queen’s Counsel Marc Corlett for much of the case, along with big-six law firm Buddle Findlay.
The kiwifruit marketer is now arguing Shanghai Neuhof acted so improperly when it brought the claim that the company should pay its actual costs and not just the standard contribution.
It is also trying to recoup those costs using a third party order against the sister of Liu.
Weixin Li, a retired woman who has been living in New Zealand for 30 years, was cross-examined in the High Court at Auckland over her involvement in the case.
During her cross examination through a translator, she said she was simply a messenger for her other brothers who were still in China, known as HB and Little Liu.
Zespri questioned Li over an inheritance it believed was left by the patriarch of the family, Dongcai Liu.
At this point, Li said she was not actually entitled to the money because while she was related to the family by blood, she was adopted out of the family as a child.
Li’s son, Jhun Li Si, had represented his uncle in the NZ media, but Li — who repeatedly told the court she doesn’t understand English — claimed her son was instructed by his uncles back in China what to do.
Zespri had previously tried to prove Si was the real funder of the claim, but Justice Wylie rejected this in a May 2020 judgment.
When asked who was expected to get the proceeds of the claim if Shanghai Neuhof won, Li claimed she didn’t know.
“I didn’t ask how much it was, I wasn’t involved in it,” she said.
“I was feeling very disturbed and distraught when I heard these figures.”
The proceeding began on Tuesday and has been allocated three days.
Separately, Zespri continues legal proceedings against a grower and his company which it won a $15 million judgment against last February.
The kiwifruit marketer launched civil action against Haoyu Gao and Smiling Face Limited after discovering two of its protected varieties were being propagated by Gao and his associates in China.
“In terms of our case against Mr Gao, the matter is still before the courts but we’re committed to the process and to holding Mr Gao accountable,” Zespri said in a statement.
Zespri’s legal bills relating to its Chinese operations have made media headlines in recent years. The marketer said in 2017 it spent more than $7 million defending a Serious Fraud Office probe into its operations.
The SFO investigated whether Zespri had facilitated tax evasion when it provided invoices for Shanghai Neuhof to use when making tax declarations to Chinese officials.
“Dual invoicing is not necessarily illegal, however, the SFO advises that NZ exporters should approach the practice with extreme caution as it is a warning flag for duty evasion being committed in a foreign jurisdiction,” the office said at the time.
–BusinessDesk
