Chinese importer seeks delay in Zespri case

Shanghai Neuhof first filed a claim against Zespri in May 2014 alleging breach of contract after they were both convicted of under-declaring customs duties in China

The Chinese importer suing Zespri for $25 million wants a trial held off until 2021 because its lead witness remains in a Chinese jail.

Shanghai Neuhof first filed a claim against Zespri in May 2014 alleging breach of contract after they were both convicted of under-declaring customs duties in China between 2008 and 2010.

For his part, Shanghai Neuhof's general manager Xiongjie Liu was sentenced to 13 years jail time. The importer wants $25m in compensation, claiming Zespri was supposed to reimburse it for customs duties, and that it built the kiwifruit marketer a coolstore.

Shanghai Neuhof says much of the alleged contract was created orally with Liu representing it, so his evidence is central to the case.

Zespri's counterclaim alleges deceit and fraud and calculates damages totalling $57m.

Somewhat ironically Shanghai Neuhof had until this year been pushing for an early fixture but Zespri had raised many discovery issues causing delays. A March decision in the case suggested Zespri's legal costs up until then had exceeded $1m.

In May this year, Justice Ed Wylie said the proceeding should start in April 2020 and "pencilled in" time with the registrar.

However Shanghai Neuhof's lawyer Bruce Gray QC asked Justice Wylie for more time because Liu was still detained, and wasn't expected to get out of jail until February 2021.

The High Court at Auckland heard Liu was in Milan prison in the country's north-western XinJiang province. Liu was 500km away from the nearest town in an area "remote and isolated," the court heard. That made it difficult to get a brief of evidence, let alone make it possible for Liu to give evidence.

Gray said while delays were not ideal, it was a reality that cases get stale. For example he was part of the Feltex claim which was about events that occurred in 2005, and was still running.

Zespri's lawyer, Marc Corlett QC, told the court there was reason to be skeptical that Liu would even be released in 2021 and called the application an "indulgence." He pointed out that Liu's family continues to visit him in prison.

Corlett, giving submissions from Toyko via an audio/visual link, said the case was brought unethically because the kiwifruit marketing company had the burden of fraud allegations hanging over it. He played down the strength of Shanghai Neuhof's case, claiming it was over "alleged oral agreements with a convicted fraudster."

Gray responded by saying his client did not allege fraud but breach of contract. He also reminded the court that Zespri's Chinese subsidiary was also convicted of the import claims.

"It is typical of the posture taken by the defendant - 80 per cent of the allegations are noise and bangs and there has been little engagement with the real issues," Gray said.

Corlett told the court that if the adjournment was declined and the case discontinued, Zespri would not proceed with its counterclaim,

"That is not a reflection on the merits of the counterclaim but about the practicality of enforcing such a judgment in China," he added.

Justice Wylie said he hoped to deliver a decision this week.