30/06/2022·3 mins to read

Chinese cultural concepts acknowledged by the Supreme Court in a partnership dispute

Not long after the important decision of Ngāti Whātua Ōrākei v Attorney-General - which set out how the Court should approach questions of tikanga - the Supreme Court has taken another step towards incorporating cultural and social circumstances and perspectives in New Zealand law in the decision of Deng v Zheng.[1]

This case is the first of its kind to expressly reference Chinese characters in its judgments and to consider Chinese cultural circumstances in interpreting and applying the law at the Supreme Court level. Here, in the context of commercial relationships and an alleged partnership.

Key take-aways

  • Chinese and other cultural issues may be relevant to New Zealand commercial arrangements, including in the interpretation and application of law.

  • Key considerations and guidance have been given for how to competently consider cultural factors in a commercial setting, but the guidance likely has implications beyond strictly commercial cases.

A partnership?

Donglin Deng and Lu Zheng had a working relationship from the late 1990s to 2015. This relationship involved projects such as developing land in Whangaparāoa.

  • Zheng claimed that from 2010 to 2015, he and Deng were business partners under the Partnership Law Act. If they were, then Deng would owe Zheng a substantial amount of money. Zheng relied on Chinese cultural and social concepts to support this.

  • Deng denied this, arguing there was no overarching partnership. There were no formal agreements recording a partnership.

A ‘partnership’ requires a relationship which "subsists between persons carrying on a business in common with a view to profit." A court may treat the receipt by a person of a share of the profits of a business as evidence that there was a partnership.

At each stage of the litigation, the courts were invited to place some importance on the use of certain terms used in documents describing Deng and Zheng’s relationship, including the term 关系 (guānxi). Guānxi can be understood as "interpersonal connections", "social capital" or "personal connections" that can secure resources or advantages in business or social life.

The Supreme Court emphasised that any assessment of cultural considerations must be in light of the specific facts of each case, and the parties involved. While concepts such as guānxi may govern the way some Chinese people do business - such as relying on personal relationships, mutual trust and honour over written contracts - it should not be presumed that all Chinese people subscribe to it.

In this case, the Court determined that guānxi described a relationship of kinship and co-working because of Zheng and Deng's familial and pre-existing relationships which explained the lack of formal agreements. Ultimately, the Court concluded there was a partnership.

Guidance on cultural arguments

The Court made a number of general observations about cases where evidence about the cultural and social framework of the parties may be of significance.

  • Judges should be cautious in applying general 'rules of thumb' to parties who do not share the same cultural background.

  • The usual rules of assessing credibility are available to a judge if there is a consistency of narrative over time that is supported by other evidence and is supported by common sense.

  • Parties and witnesses may explain their conduct by reference to their own social and cultural conduct.

  • There cannot be objection to cultural evidence that is supported by a expert witness or sections 128 and 129 of the Evidence Act. These sections allow judges to have regard to resources of unquestionable accuracy and reliably published information in relation to public history, literature, science or art without being referred to these materials by a party.

  • Where litigants produce cultural evidence to explain another party's actions, the courts should rely on expert evidence or ss 128 and 129 of the Evidence Act.

However, in resolving disputes involving cultural circumstances, judges must avoid stereotyping by:

  • utilising general cultural frameworks to assist - not replace - careful assessment of case specific evidence, as a court cannot presume characteristics of a certain ethnicity or Western norms of behaviour will always apply;

  • acknowledging that people who share a particular ethnic or cultural background should not be treated as a homogenous group, where some principles may be a common but not controlling influence on a party's conduct; and

  • acknowledging that conclusions cannot be drawn just because litigants subscribe to certain cultural principles, but those principles may be a factor in a court’s decision-making.

In evolving our common law, it is the role of both judges and counsel to better consider the role of culture in an increasingly multicultural Aotearoa, New Zealand.

This case underscores the need for practitioners to be culturally aware and competent in ensuring all relevant information and materials (factual, legal and cultural) are before the courts, so that judicial decision-making is properly informed by all of these factors.

Special thanks to Amarind Eng for his assistance in writing this article.


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