On 20 June 2022, the highly anticipated decision of the Supreme Court in Deng v Zheng matter was released. The Supreme Court was to decide whether the Court of Appeal was correct in its findings that there was a partnership between the two parties, of which they were allegedly equal partners. As part of this, the Supreme Court was faced with a raft of potential issues surrounding the interpretation of documents, specifically documents which were translated from Mandarin. Another important consideration of this hearing were the cultural elements present between the two Chinese parties, and the impact it should have on the understanding of the parties’ relationship.
The Judges recognised the increasing presence of different cultures in New Zealand which differ from our Western system, including that of Eastern culture. As such, the Supreme Court has taken the first step into recognising how different cultures may impact decisions in a Western Court system.
Background
Donglin Deng (Mr Deng) and Lu Zheng (Mr Zheng) entered into a business relationship in the late 1990s. The relationship was carried out until 2015 when the parties agreed to end their associations. By trade, Mr Deng is a project manager and land developer, whilst Mr Zheng is a property developer. In 2004, Mr Deng acquired ownership interests in some of the projects Mr Zheng was involved in.
The heart of the dispute stems from the Bella Vista Agreement, a short agreement dated 27 April 2008. Its title was variously translated into English from the original Mandarin as “partnership agreement” or “cooperation agreement”. Mr Zheng signed the Bella Vista Agreement, however, Mr Deng did not. Mr Zheng contends he signed this agreement on behalf of himself and Mr Deng.
By 2015, the strained business relationship between Mr Deng and Mr Zheng came to an end. No settlement could be reached between the parties as to the separation of their affairs and High Court proceedings were brought to resolve the issues at hand. The most relevant issue being Mr Zheng’s claims that there was a partnership between him and Mr Deng or, alternatively, a joint venture. Mr Deng argued that his relationship with Mr Zheng was based on various corporate and contractual structures but with no overarching partnership or fiduciary elements.
There was quite a contrast between the findings of fact of the High Court Judge (which were firmly in favour of Mr Deng) and those of the Court of Appeal (which were equally firmly expressed but went in favour of Mr Zheng and found the existence of a partnership between the parties).
Barriers in translation
Within their decision, the Supreme Court referred to cultural considerations. Specific reference was made to whether the meaning of specific Chinese characters goes beyond “company” and can extend to “firm” or “enterprise.”
In the Court of Appeal decision, a note of caution was intertwined into the findings. Nearly all of the documents in this case, including the parties’ correspondence and evidence given by witnesses, was provided in Mandarin. The Court had the challenging task of ascertaining what the true purpose of each piece of evidence was. As stated at paragraph [86] of the Court of Appeal judgment:We are conscious that when referring to relevant documents, it is necessary to bear in mind that Court is referring to English translations prepared by different people at different times, who may or may not have understood and taken into account the legal nuances of particular words and phrases that they have used.
The Court of Appeal noted that none of the translators gave evidence on why they had used certain terms in favour of others in specific documents. There was a lack of consistency throughout the use of terms, with no clarity on which term was correct. This poses a stark contrast between Western and Eastern cultures. Whilst the true purpose of words and documents is quite clear in a Westernised dispute, when different cultures enter the Western court system, a high degree of caution is required by Judges and lawyers before placing any significance to the specific terms that appear in the various English translations.
The Supreme Court dealt with this issue relatively quickly, stating the Court of Appeal was “entitled to have regard to a Chinese-English dictionary and [they] are not persuaded that it placed inappropriate weight on that dictionary.”
Guānxi
The second cultural element of relevance was the significance of Guānxi. Guānxi is a cultural concept in China. It has strong roots in rural society, stemming from where people have known each other for generations and there are strong family connections. The Supreme Court described Guānxi as a complex term with multi-faceted meanings:
Guānxi may be understood as “interpersonal connections”, “social capital”, or the “set of personal connections which an individual may draw upon to secure resources or advantage when doing business or in the course of social life”. Important bases of guānxi for an individual include kinship and co-working.
Guānxi is closely linked with Chinese Confucian culture. It rules the social behaviours between people and dictates how a large proportion of those engaged in Chinese business relationships work. Chinese parties will often deal with each other on the basis of trusting relationships, resulting in no or inadequate documentary evidence that could assist the courts when it comes to civil disputes.
It was clear to the Supreme Court that the relationship between Mr Zheng and Mr Deng fell within the bounds of Guānxi. Little evidence on Guānxi, if any at all, was referred to by the High Court. However, the Court found that this was not needed in this case, as the relationship of Guānxi or partnership between the parties was clear from the documents.
In situations where the relationship may not be as clear, a Judge will need to act with caution when referring to Guānxi. In its comments, the Supreme Court noted “first, people who share a particular ethnic or cultural background should not be treated as a homogeneous group,” and that merely because “guānxi is important for some people of Chinese ethnicity does not mean that it important for everyone of Chinese ethnicity.” If considerations are not taken on a case by case basis, the Western system runs the risk of stereotyping Eastern, and other cultures, into a mere checkbox. Whilst “Guānxi influences the behaviour of some Chinese people, it should not be assumed that this is so with all Chinese people.”
Effect on our legal system
The key lesson for the legal practitioners and Judges in areas of cultural difference is to approach each case with caution. As explained by Emilios Kyrou, Judges specifically should develop “a mental red-flag cultural alert system which gives them a sense of when a cultural dimension may be present so that they may actively consider what, if anything, is to be done about it.”
Legal practitioners should consider whether cultural elements would be of use in their arguments and take great care in introducing it.
Regardless of any information presented, Judges will have to take great care in these types of situations. Specifically, where the evidence comes from an expert, or in reliance on ss 128 and 129 of the Evidence Act:
Assuming, without case-specific evidence, that the parties have behaved in ways said to be characteristic of that ethnicity or culture is as inappropriate as assuming that they will behave according to Western norms of behaviour.
Sections 128 and 129 of the Evidence Act allow Judges to have all the information in front of them, information which is of unquestionable accuracy. It also allows the admission of reliable published documents in relation to matters of public history, literature, science, or art. A key skill for legal practitioners and Judges alike to learn is that of recognition. Recognising and interpreting when cultural aspects will be of use, or when will hold no credibility.
Conclusion
The Supreme Court’s decision is a step in the right direction of ensuring the New Zealand Courts meet the needs of an increasingly diverse population.
Our current legal system provides for several “tests” based on the behaviour of a hypothetical “ordinary reasonable person.” However, it is becoming more common to question who the ordinary reasonable person is. Let alone who the ordinary reasonable person in New Zealand will be in years to come.
It is easier to filter out different cultures, on the assumption that despite cultural differences that everyone operates the same way. However, trying to decide an Eastern cultural case with a Westernised system is like trying to open a door with the wrong key. At first, it may seem like it will work, but upon further inspection, it becomes clear there is a mismatch, and the door will never open.
Deng v Zheng does not provide a detailed guidance on how to interpret different cultures in our Western system. However, the Supreme Court held that the “relevant information can be brought to the attention of the court” and recognised that the Courts shall, in appropriate cases, consider evidence about the cultural framework of the parties.
The onus is on Counsel to bring forward and explain cultural considerations for their clients, and to ensure that adequate evidence (including evidence from experts) is produced to assist the Court.
Brent is the Director of Norling Law. He has a wealth of experience in the District Court, High Court, Court of Appeal and Supreme Court. Brent is passionate about negotiating favourable outcomes for his clients and able to implement this in his daily negotiations.
Lucia Krajancic
Lucia graduated from Victoria University of Wellington with a Bachelor of Laws and Bachelor of Arts majoring in Criminology and was admitted to the bar in October 2022.
Anna practices in the area of commercial litigation and has appeared as Counsel in the District Court, High Court and the Court of Appeal, having successes in all Courts. Anna has a special interest in corporate, insolvency and relationship property law.