Cases in which one or more of the parties have a cultural background which differs from that of the judge are common in New Zealand courts and are likely to become more common in the future.
The Supreme Court has recently issued a judgment confirming that the courts can, in appropriate cases, consider evidence about the social and cultural framework of the parties involved.
Messrs Zheng and Deng had a working relationship from the late 1990s to 2015. Mr Zheng is a property developer and Mr Deng’s background was as a project manager and land developer. This relationship involved projects such as the purchase and development of 11 lots of land in Bella Vista Drive, Gulf Harbour, Whangaparāroa.
However, by 2015 Messrs Zheng and Deng’s business relationship was strained. In May 2015, the parties agreed to separate their business interests. Negotiations about the separation were recorded in a document titled “Principles in Separation”.
Primarily at issue in the dispute between the parties was the nature of Messrs Zheng and Deng’s business relationship between 2010 and 2015. Mr Zheng said that from March 2010 he and Mr Deng were partners engaged in property development and construction projects which were conducted in the names of companies. Mr Deng argued that there was no overarching partnership and contended that the projects were carried out through companies with the interests of the two men in them reflected in their shareholdings and account balances.
At each stage of the case the courts were invited to consider two issues which related to the background of Messrs Zheng and Deng. The first arises out of their use of Mandarin in their interactions and business documents and most particularly whether the meaning to be ascribed to 公司 went beyond “company” and could extend to “firm” or “enterprise”.
The second was the significance of 关系 (guānxi). 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.
The Lower Courts
In the High Court, Mr Deng was successful, with Downs J concluding (among other matters) that there was no partnership. The Court of Appeal overturned the High Court, holding that the relationship had been a partnership. The evidence established that Messrs Zheng and Deng were carrying on a property development and construction business together, with a view to a profit. In reaching this conclusion, the Court placed significant weight on a set of internal accounts and the Principles in Separation document.
The Supreme Court
The Supreme Court found that the relationship between Messrs Zheng and Deng (and those they worked with) was consistent with guānxi. In particular, the apparent significance to Messrs Zheng and Deng of family relationships and pre-existing friendships in terms of whom they did business with and the relative dearth of formal agreements. For this reason, an understanding of guānxi provided some support for Mr Zheng’s case, explained the lack of formal agreements, and supported the Court concluding that there was a partnership.
In delivering its judgment, the Supreme Court noted that in some cases the parties’ social and cultural framework may be of significance. In such case cases:
- Judges should be cautious in applying general ‘rules of thumb’ to parties who do not share the same cultural background.
- It is open to witnesses to explain their own conduct by reference to their own social and cultural background. It would thus have been open to either of Messrs Zheng or Deng to have referred to guānxi by way of explanation for their own actions.
- Where parties have been in a relationship (business or otherwise), they may explain the way in which the relationship played out by reference to the social and cultural framework in which they operated. By way of example, and coming back to this case, Mr Zheng could have referred to guānxi by way of explanation for the way in which his relationship with Mr Deng operated.
- In the circumstances just mentioned, there can be no objection to such evidence being supported by expert evidence or by resort to sections 128 and 129 of the Evidence Act. These sections allow judges to have regard to sources of information of unquestionable accuracy and admit reliable published documents in relation to matters of public history, literature, science or art.
- Rather more difficulty may arise where a litigant wishes to introduce social and cultural framework information to explain not their own or joint conduct but rather that of another party. In this situation, the information as to cultural background is likely to be best provided by an expert or under sections 128 and/or 129.
The Supreme Court emphasised that any assessment of cultural considerations will be guided by the specific facts of each case and the parties involved. By way of example, although guānxi may be important for some people of Chinese ethnicity that does not mean that it is important for everyone of Chinese ethnicity. Judges are therefore required to take care when employing general evidence about social and cultural frameworks.
The Supreme Court’s judgment provides welcome guidance as to how, and in what circumstances, a party’s social and cultural framework will be taken into account and underlines the need for lawyers and parties to be alive to the need to put all relevant information and evidence before the Court which includes factual, legal and cultural matters.
 Deng v Zheng  NZSC 76