X & J TRADING NZ LIMITED v WAYNE AND NANCY LIMITED [2020] NZHC 251

X & J TRADING NZ LIMITED v WAYNE AND NANCY LIMITED [2020] NZHC 251

Because company business is conducted by the board under s138(1) and a shareholder lacks authority to sue in the company's name absent leave under s165, proceedings filed in the name of the companies without prior leave were procedurally and legally invalid and must be struck out.

Source-derived case information.

Citation
[2020] NZHC 251
Parties
First Plaintiff: X & J Trading NZ Limited; Second Plaintiff: Pairua Village Holding Limited; First Defendant: Wayne and Nancy Limited; Second Defendant: Weibin Jiang; Third Defendant: Ling Xie; Fourth Defendant: Bereborn Trading Limited; Fifth Defendant: Dahua Group Limited; Sixth Defendant: Triple 6 Trading Limited; Seventh Defendant: Victorxie Trading Limited
Court
High Court
Jurisdiction
New Zealand
Judgment Date
24 February 2020
Procedural Posture
Derivative Action Under Companies Act 1993 / Proceeding Struck Out on Procedural Grounds (leave Under S165 Not Obtained)
Outcome
Proceeding struck out
Legal Topics
Derivative Proceedings, Section 165 Companies Act 1993, Leave to Sue, Freezing Orders, Striking Out for Procedural Non Compliance
Company Law Civil Procedure Equity Injunctions Derivative Proceedings Section 165 Companies Act 1993 Leave to Sue Freezing Orders +1 more

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Parties

X & J Trading NZ Limited

First Plaintiff

Pairua Village Holding Limited

Second Plaintiff

Wayne and Nancy Limited

First Defendant

Weibin Jiang

Second Defendant

Ling Xie

Third Defendant

Bereborn Trading Limited

Fourth Defendant

Dahua Group Limited

Fifth Defendant

Triple 6 Trading Limited

Sixth Defendant

Victorxie Trading Limited

Seventh Defendant

Procedural Posture

Derivative Action Under Companies Act 1993 / Proceeding Struck Out on Procedural Grounds (leave Under S165 Not Obtained)

Legal Issues

  1. 1 Whether a shareholder may commence proceedings in the name of a company without leave under s165 Companies Act 1993
  2. 2 Whether freezing orders could be granted prior to leave being obtained and on the evidence presented
  3. 3 Whether the proceeding was procedurally compliant with the High Court Rules

Ratio Decidendi

Because company business is conducted by the board under s138(1) and a shareholder lacks authority to sue in the company's name absent leave under s165, proceedings filed in the name of the companies without prior leave were procedurally and legally invalid and must be struck out.

Court Disposition

Proceeding struck out

Orders

  • Proceeding struck out for being brought in the names of the two companies without leave under s165 Companies Act 1993
  • Costs certified and awarded to the fifth defendant in the sum of 2390 NZD