ACE EDUCATION NZ LTD v PAN [2018] NZHC 3074

ACE EDUCATION NZ LTD v PAN [2018] NZHC 3074 [26 November 2018]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2017-404-000360[2018] NZHC 3074UNDER Part 18 of the High Court RulesIN THE MATTER OF the Companies Act 1993BETWEEN ACE EDUCATION NEW ZEALANDLIMITEDPlaintiffAND QIFEI PANDefendantLANHUA ZHANGThird PartyHearing: 21–25 May, 1 June and 25 September 2018Counsel: B P Rooney for the Plaintiff and the Third PartyD B Hickson and G J Ussher for the DefendantJudgment: 26 November 2018JUDGMENT OF EDWARDS JThis judgment was delivered by Justice Edwardson 26 November 2018 at 2.00 pm, pursuant tor 11.5 of the High Court RulesRegistrar/Deputy RegistrarDate:Counsel: B P Rooney, AucklandSolicitors: Fortune Manning, AucklandD B Hickson, AucklandG J Ussher, AucklandIntroduction[1] ACE Education New Zealand (ACE) is a provider of early childhoodeducation services. It sues its former director, Mr Pan, for breach of duties under theCompanies Act 1993. ACE says Mr Pan used company funds to pay for personalexpenses and converted some of ACE's assets to his personal use. ACE seeksreimbursement of approximately $140,000 from Mr Pan.Events leading to the dispute[2] The genesis of the dispute lies in the breakdown of a friendship betweenMr Pan and Ms Zhang. They first got to know each other around 2013. Ms Zhangwas growing an early childhood education business, which included home-based earlychildhood education services. Mr Pan was working for LSG Sky Chef New Zealandand did not have any experience with early childhood education.[3] In 2015, Mr Pan and Ms Zhang agreed to go into business together, and ACEwas incorporated on 22 April 2015. Ms Zhang held 70 per cent of the shares andprovided the initial capital for the business. Mr Pan held the remaining 30 per centand was the sole director of the company until 29 June 2016.[4] ACE's childhood education business model involved care for up to fourchildren under the age of six in the home. The Ministry of Education licenced andfunded the business on a per-child basis. The ACE caregiver in the home responsiblefor the day-to-day care of the children was called an "educator". Qualified teacherswere employed to supervise and oversee the educators, to deliver resources andprogrammes to the educators, and to supervise the standard of care provided in thehome. Generally the teachers would visit home educators once per month and be incontact with them on a more regular basis.[5] There is a dispute between the parties about the basis upon which Mr Pan andMs Zhang agreed to go into business together. Ms Zhang said that the agreement wasthat she would fund the business until it had established an income stream from theMinistry of Education. She also said that she agreed to Mr Pan holding on to his sharesfor three years, after which he would sell them to her (or one of her companies) forfour times the company's annual profit. Mr Pan says the agreement was that theywould both fund the business before the licence was granted, and it appears that thisis what happened, at least in the initial stages of the business and prior to the licencebeing granted.[6] ACE opened bank accounts in April 2015 just after it was incorporated. Therewere initially two debit cards issued on the account – one used by Ms Zhang, and theother by Mr Pan. There was also a credit card in the name of Mr Pan "ACE Homecare Ltd". Ms Zhang disputes that this was a company credit card.[7] In order to apply for a licence from the Ministry of Education, ACE had to havea qualified teacher and two homes in place to be visited by Ministry of Educationofficials. ACE used Mr Pan's home, and that of another person, to meet thisrequirement. A teacher was employed in June 2015 and an application for a licencewas submitted in June 2015.[8] ACE's initial application for a licence was declined on 19 August 2015 due tothe Ministry's concerns about Ms Zhang's involvement with the business. Thoseconcerns arose out of the way in which Ms Zhang had been operating her otherchildcare businesses. Mr Pan and Ms Zhang agreed that she should distance herselffrom ACE, and she agreed to transfer her 70 per cent shareholding to her friend,Mr Cao. The change in shareholding was registered with the Companies Office on21 August 2015.[9] The Ministry of Education granted ACE an Auckland licence on 26 November2015, and the funding came on stream in December that year. ACE was authorised toaccept up to 40 children initially, but there were no records produced at trial of thenumber of children registered at this time. Mr Pan's evidence was that there were 40children on the waiting list, and services began as soon as the licence was granted.[10] In February or March 2016, ACE leased an office in Mt Wellington. By thistime, Mr Pan was working full-time in the business having left his previousemployment. He arranged the lease for the business, bought the office equipment, andwas responsible for managing the business on a day-to-day basis. The Ministry ofEducation licence was amended to authorise ACE to take up to 80 children.[11] At around this time, ACE took on two new staff members. Ms Chen wasemployed as an administrator, responsible for the company invoicing and managingthe paper work. Ms Pouli was also employed as an administrator, with a multi-facetedrole. She was the office receptionist. She arranged teacher visits to the educators andorganised monthly events for the children. It was also Ms Pouli's responsibility to fillup the company's cars with petrol, to purchase office supplies and other teachingresources, and to undertake some marketing in an effort to attract new clients.Ms Pouli had control over one of the company's debit cards in order to meet theseexpenses.[12] A Napier licence was issued in April 2016, but a failed audit led to it beingcancelled in June 2016. By this time, Mr Pan's relationship with Ms Zhang had begunto deteriorate and frustrations between the two compounded over the followingmonths. On 21 June 2016, Mr Pan and Ms Zhang entered into an agreement wherebyhe agreed to sell his shareholding in the company for $100,000 and be refunded$75,000. However, that agreement was not acted upon and tensions continued toescalate.[13] Around this time, the Ministry of Education indicated that an audit of theAuckland homes would be undertaken, and a payment due on 1 July 2016 wassuspended pending the outcome of the final audit. By this time, Ms Zhang wasrefusing to advance any further funds, and was demanding repayment of monies shesaid she was owed. Mr Cao, who had been appointed co-director on 29 June 2016 atMs Zhang's insistence, was also refusing to make any shareholder contributions. Thatappears to have incensed Mr Pan, who decided to effectively remove Mr Cao as adirector and shareholder by unilaterally changing the Companies Office records(although he was later reinstated). Mr Pan also changed the company's bank accountaccess codes, preventing Mr Cao and Ms Zhang from accessing the company'saccounts.[14] The deferred payment from the Ministry of Education was received in July.Mr Pan immediately transferred the sum of $100,000 to his personal account. Thisfanned the flames of dispute even further, but Mr Pan alleged that he was simplyrepaying himself for contributions he had made to the company by that date.[15] In August 2016, Ms Zhang and her associated entities served a statutorydemand on ACE demanding payment of $193,521. ACE applied to have the statutorydemand set aside. However, by the time the application came to a hearing on 8 March2017, Ms Zhang and Mr Cao were in control of ACE, and the application to set asidethe statutory demand was not pursued and was subsequently dismissed.[16] In the meantime, Mr Pan had arranged for ACE to take out a loan of $20,000from Roquefort James on 18 October 2016. That loan was repaid from another loan,taken from Early Childcare Holdings Ltd in the same sum, and ACE granted a securityinterest over its assets to secure that loan.[17] On 5 December 2016, Mr Pan resigned as director and left the premises.Ms Zhang says that when she and Mr Cao obtained access to the company's office,there were no accounting records or documentation left behind. Draft accounts hadbeen prepared but not signed. Mr Pan disputes that and points to some photographsshowing the presence of records and documents left in the office on his departure.[18] In March 2017, Early Childhood Holdings Ltd appointed receivers to ACE asthe $20,000 loan had not been repaid. Ms Zhang and Mr Cao were in control of thecompany by this stage, and repaid the loan and receivers' fees in order to dischargethe receivership. The interest and receivers' costs associated with this loan form partof ACE's claim.An evolving claim[19] ACE's claim has evolved significantly over time. When the claim wasoriginally filed on 7 March 2017, it comprised 10 causes of action with a total sumclaimed of approximately $420,000. Mr Pan defended this claim and counterclaimedfor sums he claimed he was owed on his current account. He also joined Ms Zhangas a third party.[20] On the first day of trial, counsel for ACE informed the Court that the quantumnow sought by ACE had reduced to approximately $115,000. This followed serviceof the brief of evidence of the expert engaged by ACE to quantify its claim.[21] During the course of the trial the claim and counterclaim shifted again. Thisresulted from a meeting between the expert accounting witnesses in which theyreached agreement on a number of the disputed transactions. By the time of closingsubmissions, the claim as it had evolved at trial bore little resemblance to the pleadedclaim. I directed ACE to file an amended statement of claim which identified thematters that remained in dispute and required determination.[22] A second amended statement of claim was filed on 1 June 2018. Eight causesof action are pleaded. The total sum claimed is $139,703.45. This figure includes asum of $21,000 which was not claimed in the prior statements of claim. Whether leaveshould be granted to file the amended pleading incorporating this new claim isaddressed at [120] of this judgment.[23] Mr Pan subsequently discontinued his counterclaim and discontinued his third-party claim against Ms Zhang. The parties agreed that Mr Pan had paid a total of$252,812 into the company. They further agreed that a total of $261,629 should betreated as drawings on Mr Pan's current account. That leaves a balance of $8,817which the parties agree Mr Pan owes ACE. That amount has been paid into the trustaccount of the solicitor for the plaintiff pending determination of this proceeding andany claim for costs.The current claim[24] ACE claims that Mr Pan breached his duties under ss 131, 133, 135 and 137of the Companies Act. The pertinent parts of the those sections are as follows:131 Duty of directors to act in good faith and in best interests ofcompany(1) Subject to this section, a director of a company, when exercisingpowers or performing duties, must act in good faith and in what thedirector believes to be the best interests of the company.133 Powers to be exercised for proper purposeA director must exercise a power for a proper purpose.135 Reckless tradingA director of a company must not—(a) agree to the business of the company being carried on in amanner likely to create a substantial risk of serious loss to thecompany's creditors; or(b) cause or allow the business of the company to be carried onin a manner likely to create a substantial risk of serious lossto the company's creditors.137 Director's duty of careA director of a company, when exercising powers or performing dutiesas a director, must exercise the care, diligence, and skill that areasonable director would exercise in the same circumstances takinginto account, but without limitation,—(a) the nature of the company; and(b) the nature of the decision; and(c) the position of the director and the nature of theresponsibilities undertaken by him or her..[25] ACE also pleaded breach of s 194 of the Act. That section requires the boardof directors to keep appropriate accounting records and to establish and maintain asatisfactory system of control of those records. Breach of s 194 was not pursued as aseparate head of liability. ACE's contention that Mr Pan had misappropriatedcompany funds was not connected to an alleged failure to maintain adequateaccounting records. The allegation that Mr Pan failed to keep appropriate accountingrecords has evidential relevance, but it is not considered as a standalone cause ofaction.[26] As to the other sections of the Act, ACE claims that Mr Pan breached hisdirectors' duties by taking funds from ACE, or by allowing payments to be made fromcompany funds which were either for Mr Pan's direct personal benefit, were unrelatedto ACE's business, or were not authorised by ACE. Seven of the eight causes of actionpleaded relate to separate categories of transactions, namely:(a) deduction of sums as "wages";(b) expenditure on the company eftpos card;(c) expenditure on credit cards;(d) payments made to, on behalf of, or for the benefit of Ms Wei, Mr Pan'swife;(e) payments made in relation to Raizem Ltd and Ms Boaza;(f) the principal, interest and receivers' fees incurred in relation to twoloans; and(g) the acquisition of 10 tablets and five iPhones, and the data plansarranged in relation to those devices.[27] The eighth cause of action is in conversion. ACE pleads that Mr Pan convertedthe sums pleaded in (a)–(e) and (g) above to his own use. I have treated this cause ofaction as an alternative to the first to fifth, and seventh, causes of action.[28] Unlike many claims of this nature, ACE is not in liquidation and the solvencyof the company does not form part of the background narrative. Accordingly, there isno claim for relief under ss 300 or 301 of the Act. The Act contains few other remediesfor breach of directors' duties. But that does not mean there is no compensatoryremedy available. The authors of Company Law in New Zealand opine that thestatutory duties are supported by the same remedies as existed at common law to theextent that they are compatible with the Act. In their opinion, that approach isanalogous to the remedies provided for the tort of breach of statutory duty. Similarly,the authors consider that equitable relief would be available for breach of s 131 on thesame basis as a breach of the duty of loyalty owed by a director to the company.1 Irespectfully agree with, and adopt, that approach.1 Peter Watts, Neil Campbell and Christopher Hare Company Law in New Zealand (2nd ed,LexisNexis, Wellington, 2016) at [13.6].[29] The relief ACE seeks in this case is the reimbursement for expenses that werefor Mr Pan's personal benefit (or for the personal benefit of third parties) and weretherefore made in breach of Mr Pan's duties as a director. The expert accountingwitnesses engaged by both sides to this case treated personal expenditure as drawingsagainst Mr Pan's current account and repayable on demand, irrespective of whetherthe payments were for Mr Pan's personal benefit or that of another. That approach iscommonly used in cases of this nature – at least where relief is sought under ss 300and 301.2 But it is worth keeping in mind that ACE's claim is not for recovery of adebt, but for breach of directors' duties. Accordingly, any sum awarded is tocompensate the company for the loss it has suffered as a result of the breach ofdirectors' duties. ACE must therefore prove a causal link between the breach and theloss claimed.Approach to the evidence[30] The expert accountant witnesses engaged by each party were able to reachagreement on many of the transactions in dispute. The remaining transactions formthe basis of ACE's claim. The disagreement between the experts reflects a differentapproach to the evidence where there is little or no documentary evidence tosubstantiate the transactions. In this case, the narration in the bank statements andMYOB accounts do not provide much assistance, and the company's financialaccounts do not appear to reflect the actual financial position.[31] This gives rise to an issue about who bears the onus of proof. It is an issuewhich has been traversed in previous cases, and the principles are well settled. Inessence, ACE bears the onus of proving its claim, on the balance of probabilities,against Mr Pan. However, if a transaction appears to be personal in nature on its face,then the defendant bears an evidentiary onus of raising some commercial explanation2 This was the approach adopted by Lang J in Madsen-Ries v Petera [2015] NZHC 538 at [19];citing Thom Contractors (in liq) v Thom HC Auckland CIV-2008-404-6829, 28 April 2009; andNew Zealand Game Meats Export Ltd (in liq) v Yat Fan Lau HC Whangarei CP34/98, 19 March1999. But compare Ellis J's comment in Sparta13 Contractors Ltd (in liq) v Moeke [2015] NZHC1222 at [18]: "If there was an intention to repay (which seems most unlikely) they owe a debt tothe company. If they did not intend to repay then they have converted the company's funds.Accordingly it seems to me to matter not whether there is a "current account" debt strictly so-called "for it.3 That is the approach I have adopted in considering each of the disputedcategories of transactions the subject of the causes of action below.First cause of action: The wage claim – $17,579[32] As originally pleaded, this first cause of action had two components. The firstwas the difference between what Mr Pan had withdrawn from the company asdrawings and what he had advanced to the company, being the sum of $8,817. Thatis now agreed, and judgment for that sum is entered accordingly. That aspect of theclaim is not considered further.[33] The second component of this cause of action is a claim for payments made byACE to Mr Pan between 10 August 2016 and 2 November 2016. All but one of thosepayments are described in the relevant bank statements as wage payments. The otherpayment was made to the Inland Revenue Department. The payments in issue total$8,762.10.[34] ACE claims that these payments cannot have been wage payments. It pointsto the absence of any employment agreement between Mr Pan and the company, andthe absence of any resolutions authorising the payment of wages to Mr Pan. Inaddition, ACE says the payments were irregular and of varying amounts and onlycommenced after Mr Cao had been excluded from the company. Mr Rooney submitsthat it is plausible that Mr Pan would agree to be paid no wages at all for his work, asthe arrangement with Ms Zhang was that she was to purchase Mr Pan's shares afterthree years, providing a significant capital gain for Mr Pan. He submits further thatthe payments characterised as "wages" were the result of Mr Pan "cynically andrandomly dishing out money to himself without reasonable or responsible regard tothe business's circumstances".3 This is consistent with the approach taken by Lang J in Madsen-Ries v Petera [2015] NZHC 538.See also Centaur Flooring Systems Ltd (in liq) v Dolbear HC Auckland CIV-2010-404-6677, 31August 2011 at [37]–[39]; Crowe-Maxwell v Frost [2016] NSWCA 46, (2016) 91 NSWLR 414 at[89]–[90]; Kiwibilt Engineering Ltd (in liq) v Pavlovich DC Auckland NP1985/02, 10 December2003 at [12]–[13]; Accident Compensation Corp v Ambros [2007] NZCA 304, [2008] 1 NZLR340 at [55]–[64]. See also Lord Mansfield's comment in Blatch v Archer (1774) 98 ER 969 (HL)at 970 that "[i]t is certainly a maxim that all evidence is to be weighed according to the proofwhich it was in the power of one side to have produced, and in the power of the other to havecontradicted."[35] There is considerable merit in Mr Rooney's submissions. But, on balance, Iconsider it more likely than not that the payments were wages for Mr Pan. They aredescribed as such in the bank statements, and the withdrawals are supported by wageslips which were produced in evidence. There is insufficient evidence of anyagreement that Mr Pan would forego wages in favour of a capital gain on the sale ofthe business. Mr Pan had given up his job in February 2016 and was working full-time in ACE's business. It is reasonable to expect that he might be paid a wage inthose circumstances.[36] Having found that the withdrawals were wages for Mr Pan, the next step is toconsider s 161 of the Companies Act. That section governs the provision ofremuneration and other benefits to company directors. Under that section, the boardof directors may approve their own remuneration provided they certify that theremuneration is fair to the company. A director who receives remuneration that hasnot been approved in accordance with s 161, or which has been approved but incircumstances where reasonable grounds did not exist for the fairness certificate, ispersonally liable to repay that remuneration save to the extent that he or she establishesthat it was fair to the company.4[37] There can be no dispute that s 161 was not complied with in this case. Thealleged remuneration was not approved by "the board" as required by s 161(1),because Mr Cao was still a member of the board at that time having not been validlyremoved. Furthermore, the additional formalities of s 161, such as the certification offairness to the company, were not complied with. The effect of this failure is thatMr Pan is liable to repay the amounts paid to him save to the extent he is able toestablish that the payments were fair to the company at the time they were made.[38] I consider Mr Pan can establish that the payments were fair to the company.He resigned from his full-time job in February 2016 and worked full-time as themanager of ACE from this time onwards. The company had a roll of 80 children andthere were efforts to secure a further licence in Napier. It is clear that he was puttingtime and effort into the company.4 This simplified explanation of the operation of s 161 was adopted by the Court of Appeal inMadsen-Ries v Petera [2016] NZCA 103, [2018] 2 NZLR 500 at [9]–[10].[39] Furthermore, there was no real dispute that the level of remuneration was fair.Mr McCullagh's evidence on this point was as follows:He's – I mean, the payslips show 24.73, so basically 25 hours a week whichis consistent with what he's been saying. I've got absolutely no idea howmany hours he would've worked in the business a week. Just have to basicallygo by what he's saying and accept that. That seems reasonable. It's a half-time role more or less. And he's been paid $35 an hour for that GM role. Ipersonally think that that's reasonable.I don't take exception with the pay rate that he's charging for the role.[40] There is no evidence to suggest that the company's financial circumstances atthe time the wages were deducted were such that the payments were "unfair". This isnot a case where the company was insolvent, and there is no allegation that it wasunable to pay its debts as they fell due at the time the wage payments were made.There is no evidence reconstructing the company accounts to show the company'sfinancial position at the relevant times. In the absence of such evidence, I am unableto conclude that the deduction of wage payments was unfair to the company in all thecircumstances.[41] As to the $323.53 payment to the Inland Revenue Department on 14 October2016, I understand Mr McCullagh's evidence is that if the wage payments are acceptedas reasonable business expenditure, then the Inland Revenue payment should also betreated as such. This makes sense. There is no apparent reason why the taxation ofparticular expenditure should itself be characterised differently from the principalexpenditure.[42] In summary, I find that the sum of $8,762.10 is remuneration that was fair tothe company in all the circumstances, and is not a personal debt to be paid by Mr Pan.Judgment for the sum of $8,817 on the first cause of action is entered by consent. Theremaining part of the cause of action is dismissed.Second cause of action: The debit card – $17,968.12[43] The second cause of action relates to ACE's claims that between 17 May 2015and 23 November 2016, Mr Pan either used or allowed to be used two company debitcards for non-business related expenditure. The payments fall into one of 13 agreedcategories all of which are addressed below.Anna Zhang – $200[44] Mr Pan's wife, Ms Wei, gave evidence that she had used the company's debitcard to pay for radiology treatment for Ms Zhang's mother. I accept that evidence.Ms Zhang had a dominant personality and appeared to exercise some authority overMs Wei. There are a number of other transactions on the company account on herbehalf, which suggest that she had little respect for the boundaries between companyand personal expenditure.[45] Mr Hickson submits that the payments should be debited against Ms Zhang'scurrent account rather than Mr Pan's. Two difficulties arise from that submission.First, Ms Zhang was not a shareholder at the time of the relevant transaction(16 February 2016). Secondly, as already noted, ACE's claim is pleaded againstMr Pan in his capacity as a director. ACE's claim is not simply a claim for repaymentof a shareholder advance.[46] The short point is that Mr Pan could not genuinely have believed that allowinghis wife to use company funds to make personal purchases on behalf of Ms Zhang wasin the best interests of the company. Nor is doing so a proper exercise of a director'spowers or the act of a reasonable and prudent director. Breaches of ss 131, 133 and137 are established in relation to this transaction. ACE has suffered loss in the sum of$200 as a result of these breaches, and Mr Pan must reimburse that sum to thecompany. I find for the plaintiff in relation to this transaction.Books – $102[47] This payment was made on 6 October 2015, approximately one month prior toACE acquiring its licence from the Ministry. Although the MYOB narration for thistransaction records it as library books, the transaction appears to be at a jewellery shopin Te Kauwhata. In the absence of any particular evidence regarding this transaction,I am not satisfied it was a company expense. I find for the plaintiff in relation to thistransaction.Cafés and restaurants – $3,014.83[48] There are approximately 56 transactions between 30 September 2015 and15 October 2016 which have been categorised as café and restaurant expenditure. Ihave considered these transactions in light of the others which have been agreedbetween the experts as being business transactions, and in light of the credit cardtransactions the subject of the third cause of action.[49] Ms Pouli gave evidence that the largest of these transactions, being $690incurred at Grand Park Chinese Restaurant, $254.80 at Baduzzi, and $156 incurred atBea Jing Duck Restaurant, were for staff dinners. I accept Ms Pouli's evidenceregarding this expenditure. The three transactions (being $690, $254.80 and $156) arecategorised as business expenditure.[50] Some of the other expenditure was incurred at restaurants, takeaway places andcafés in Napier, Hastings and Matamata. Ms Pouli said she gave the eftpos card toanother staff member (Ms Tairau) to use whilst on this trip. But Ms Tairau did notgive evidence at trial and there is no other evidence to substantiate the claim that thesewere incurred in the course of business. In the absence of evidence regarding thisexpenditure, I am unable to accept it as business-related.[51] Ms Pouli's evidence regarding travel expenses she and Ms Wei incurred duringa marketing trip to Napier in March 2016 has been accepted for many of thetransactions in that month already. Ms Wei also gave evidence about a marketingdinner they hosted at the time. Consistent with the position agreed on some of thesetransactions, I consider the other transactions incurred in Napier during March 2016for a total sum of $281.235 should be accepted as being business-related.[52] The remaining transactions falling within this category are for sums which aremore consistent with personal expenditure. The places at which the company cardwas used (KFC, McDonalds and The Coffee Club) also support this conclusion. Manyof these transactions contain the notation "staff lunch". But there is no evidence thatpart of the remuneration for staff included purchasing their lunch for them. I do not5 This sum comprises expenditures of $19.45, $70, $52, $70, $50 and $19.78.accept that these transactions were business transactions, nor that Mr Pan held agenuine belief that expenditure of this nature was a proper use of company funds.[53] Mr Pan is responsible for the use of company funds for non-company relatedpurchases and is liable for the loss sustained by the company as a result. I find thatthe total sum of $1,382.03 (being $690, $254.80, $156 and $281.23) is businessexpenditure. Mr Pan is liable for the remaining sums.Cash withdrawals – $1,790[54] Eleven cash withdrawals were made between 4 August 2015 and 15 August2016, totalling $1,790. The largest withdrawal was $300 on 2 March 2016. All otherwithdrawals were between $80 and $200.[55] Ms Pouli gave evidence that these withdrawals were made to allow ACE topay educators who had not received allowances due and payable to them by thecompany. There is no documentary evidence to substantiate Ms Pouli's claim. Inaddition, there was no evidence explaining how educators would normally be paid orwhy the payments had been missed in this particular case. The sums were of differingamounts and there was no correlation between payments that would be made toeducators and the sums withdrawn.[56] Overall, I do not consider there to be sufficient evidence to establish thesewithdrawals were business-related. Mr Pan is responsible for these payments, whetherthey were made directly by him, or by others who had access to the company eftposcard. I cannot accept that he had a genuine belief that withdrawing these cash amountswas in the company's best interests. Nor is it consistent with the care, diligence andskill that a reasonable director would have exercised in the same circumstances.Mr Pan is liable for this category of expenditure and I find for the plaintiff in thisrespect.Children's clothing – $283.37[57] This category relates to four transactions made between 2 July 2015 and18 December 2015.[58] Mr Pan's position was that it was necessary to purchase clothing and shoes forchildren as part of ACE's business because many of the children enrolled in theprogramme came from families residing in areas of low socio-economic status.Ms Pouli also gave evidence that ACE gave clothes and shoes to children and that shewas responsible for distributing these items to the children.[59] The difficulty with that evidence is that three of the four transactions wereincurred prior to the licence being granted and the business becoming fullyoperational. In those circumstances, I am not persuaded that this was a businessexpense. I find for the plaintiff in relation to this category of transactions.Department stores – $2,197.12[60] A total of $2,197.12 was spent between 13 December 2015 and20 November 2016 at department stores such as The Warehouse, Kmart andHarvey Norman. The largest transaction, $449, was incurred in the purchase offurniture and fittings at Yijei Ltd on 13 December 2015.[61] Mr Hickson submits that most of the purchases were for office supplies or forequipment required for the educators. But these transactions must be considered inthe context of all transactions on the account, many of which include transactionswhich the experts have already agreed relate to office supplies or equipment for thebusiness. In relation to the remaining disputed transactions, there is nothing on theface of the transactions to suggest they were business-related rather than personal. Ifind for the plaintiff on these transactions.Electronics – $4,745.08[62] This category comprises 10 transactions made between 11 August 2015 and11 November 2016, totalling $4,745.08. The largest transaction, $1,029.25, wasincurred at PB Technologies in Penrose on 28 April 2016. Mr Pan gave evidence thatthis purchase was for a computer to be used by Ms Zhang.[63] I accept Mr Pan's evidence regarding this transaction. As I have alreadyobserved, my clear impression is that Ms Zhang regarded company funds as her ownand directed that personal items be purchased for her using the company card.However, as with other transactions made on behalf of Ms Zhang, Mr Pan must acceptresponsibility for non-business-related expenditure on the company account. Hecannot have genuinely believed that this was in the best interests of the company.Instead he preferred the interests of Ms Zhang to those of the company. As such hemust be held liable for the loss suffered by the company as a result of this transaction.[64] In relation to the other expenditure, I accept Mr Pan's evidence that this relatedto two computers and a burglar alarm purchased for the company. Mr McCullaghreferred to the fact that no equipment of this nature was found on the premises whenMs Zhang re-entered. However, Ms Pouli's evidence was that the office looked justas it always had on her last day, 6 December 2016, and it was only when she returnedto the office on 12 December 2016 that the equipment was no longer there. I accepther evidence on this point.[65] In summary, I find for the plaintiff in the sum of $1,029.25 and find for thedefendant in respect of the remainder.Groceries – $2,522.64[66] There were 64 purchases of groceries made between 22 July 2015 and9 November 2016, totalling $2,522.64. The largest of these was incurred at Pak'nSavein Botany on 21 January 2016 for the sum of $144.11. Forty-six of the purchases wereless than $60 and 32 of them were less than $25.[67] Mr Pan's evidence is that 18 of the transactions, comprising $1,136.74, wereincurred in relation to children's events. The remaining purchases were for the office.Ms Pouli also gave evidence that she was regularly buying groceries for the office andalso for children's events on days out which were attended by as many 80 childrenalong with teachers and educators.[68] I accept Ms Pouli's evidence regarding the purchases made on 21 May 2016($109.04, $14.72, $5.28) as they appear to be related to a children's event atChipmunks on that day which has been accepted as business expenditure. But thereis no supporting evidence to suggest the other purchases were related to children'sevents. Whilst I accept that some of the other expenditure may have been office-related, that does not adequately explain the vast number of transactions for arelatively small office.[69] I find for the plaintiff in the sum of $2,393.60 (being $2,522.64 minus the sumslisted in [68] above) in respect of this category.Hardware stores – $1,179.15[70] This category comprises seven transactions entered into between 28 June 2016and 30 September 2016, totalling $1,179.15. Ms Pouli gave evidence that thesetransactions related to purchases of child safety gates for the educators. Mr Pan gaveevidence that the expenditure was also incurred in connection with an audit undertakenby the Ministry of the six educators' homes in Napier after the Napier licence wassuspended in June 2016.[71] I accept Mr Pan's and Ms Pouli's evidence in relation to this category. I findthat this category of expenditure was business-related.Miscellaneous – $114.66[72] This undefined category comprises four transactions totalling $114.66. Thereis no evidence to suggest the expenditure was business-related. I find for the plaintiffin relation to this category of expenditureMotor vehicle expenses – $570.70[73] This category comprises six transactions that were incurred between14 November 2015 and 30 June 2016, totalling $570.70. The largest of thesetransactions was $155, incurred at Smales Automotive on 14 November 2015.[74] Ms Wei gave evidence that she undertook marketing work for the companyduring the first five or six months of its existence and then restarted in March 2016.Ms Wei said that her marketing efforts involved a considerable amount of associatedtravel using her own car, and accordingly the three transactions involving automotiverepairs were likely for work done on her car which was at the time being used forbusiness purposes.[75] I am not satisfied that the repairs to Ms Wei's car can be justified as a businessexpense. Similarly, there is insufficient evidence regarding the remaining transactionswhich appear to be petrol purchases. The date that these were incurred suggest thatthey are more likely to be personal expenditure and I find for the plaintiff in relationto this category.Phone – $647.82[76] These transactions total $647.82 for expenditure at Post Shops. Mr Pan saidthe largest of these was for payment of a phone and power bill. There is insufficientevidence to show that these transactions were business-related. I find for the plaintiffin respect of this category.Travel and accommodation – $600.75[77] A transaction of $600.75 was incurred at a hotel in Napier on 25 June 2016.Ms Pouli gave evidence that she provided Ms Tairau with a company debit cardwhenever she had to travel to Napier on company business. However, Ms Tairau didnot give evidence with respect to this transaction. In the absence of such evidence, Icannot be satisfied that this was business expenditure. I find for the plaintiff in relationto this category.Summary[78] I find that Mr Pan is to compensate ACE for $11,562.07 on the second causeof action.Third cause of action: Credit card claim – $29,715.33[79] The third cause of action relates to expenses billed to credit cards held byMr Pan. The expert witnesses have agreed on 18 categories of expenditure which areaddressed below. As with the previous cause of action, these transactions must beconsidered in light of all expenditure from the company accounts at this time.Books – $412.60[80] I accept that this category relates to purchases of books for the educators. Thetransactions at issue were incurred after the licence had been granted, and the natureof ACE's business required education resources. I find for the defendant in relation tothe sum of $412.60.Cafés and restaurants – $1,676.58[81] Mr Hickson submits that the bulk of these transactions relate to staff dinners.He relies on the MYOB records, the dates of the transactions, and the fact that someof them occurred at restaurants which Ms Pouli identified as being the location of otherstaff dinners.[82] I do not consider the MYOB narration to be a reliable indicator of whether theexpenditure was personal or business-related. And, unlike the same category ofexpenditure on the second cause of action, there is no particular evidence regardingstaff dinners being paid for by credit card. Overall, I do not accept that there issufficient evidence to rebut the presumption that this category consists of personal,rather than business-related expenditure. I find for the plaintiff in the sum of$1,676.58.Cash withdrawals – $20[83] There is no evidence that the withdrawal of $20 on the company credit cardwas business-related. I find for the plaintiff in relation to this expenditure.Company documents – $350.22[84] This category comprises four transactions incurred in August 2016. Thelargest, in the sum of $150, was incurred at the Ministry of Business Innovation andEmployment (MBIE) on 9 August 2016. The other transactions were incurred atNet Lawman Norwich, which is a provider of company forms on the internet.[85] Whilst these transactions would appear to have been business-related, it is notat all clear that they were related to ACE's business. There is no evidence as to whyACE was dealing with MBIE or Net Lawman Norwich in August 2016. I find for theplaintiff in relation to this expenditure.Credit card fees and interest – $705.99[86] These transactions for credit card fees and interest were incurred between1 August 2015 and 23 November 2016. Mr Hickson submits that because the creditcard was clearly a company credit card, the amounts paid by way of interest and feesmust also be business expenses.[87] Given the quantum of personal expenditure on the credit card, I consider thesefees and charges should also be attributed to Mr Pan personally. I am not persuadedthat they are a legitimate business expense. I find for the plaintiff in respect of thiscategory.Department stores – $4,648.31[88] This category comprises 44 transactions between 4 July 2015 and20 November 2016. The largest transaction was for $499 at Harvey Norman inBotany on 15 November 2016. Most of the remaining transactions relate to sums ofless than $100. Many purchases were made at The Warehouse.[89] This is another category where there is no specific evidence to suggest that thepurchases were business-related. Mr Hickson points to Ms Pouli's evidence regardingthis same category of expenditure in the second cause of action, and submits that thereis no reason to think that the same was not the case in respect of purchases at the samestores using the company credit card. I do not agree. Ms Pouli's evidence providesan explanation for those particular transactions. But, in the absence of evidence inrelation to the credit card transactions, I am not persuaded that there is sufficientevidence to rebut the presumption that they were personal expenditure. I find for theplaintiff in respect of this category.Electronics – $4,497.08[90] The largest single transaction in this category is the sum of $766.07 spent atPB Technologies Ltd. Mr Pan's evidence was that anything purchased from this storewas a computer, and the computers were left in the office when he left. I accept thatevidence, and find for the defendant in relation to that transaction.[91] However, there is no evidence with respect to the other transactions. Given theother electronic purchases made on the eftpos card that I have accepted as beingbusiness-related, I am not persuaded that there is sufficient evidence to suggest thatthe balance of these transactions is also related to ACE's business.[92] Accordingly, I find for the defendant in the sum of $766.07, but find for theplaintiff in relation to the balance of the transactions.Entertainment – $1,266.73[93] This category comprises 15 transactions incurred between 11 August 2015 and23 November 2016, with the largest being of $195 incurred at Auckland Zoo on12 January 2016.[94] Many of the transactions are for sums less than $60 and include expenditureincurred prior to the licence being granted. The nature of the transactions is moreconsistent with personal expenditure rather than outings for the children. I find for theplaintiff in relation to this expenditure.Fines – $735.77[95] This relates to payments made to the New Zealand Police for traffic fines. Ido not accept this is a business expense. There is no evidence suggesting that the carsbeing used at this time were being used for a business purpose, nor any agreement thatthe company would pay for fines incurred by a driver in the course of theiremployment. I find for the plaintiff in respect of this category.Groceries – $1,755.64[96] For the reasons set out in relation to this category of expenditure in the secondcause of action, I do not accept there is sufficient evidence to establish that thisexpenditure was business-related. I find for the plaintiff in relation to this category ofexpenditure.Hardware – $151.83[97] There is no evidence rebutting the presumption that this expenditure is personalin nature. I find for the plaintiff in relation to this category.Miscellaneous – $203.82[98] This category comprises 20 transactions incurred between 28 August 2015 and24 November 2016, totalling $203.82. Sixteen payments were internet paymentsmade to Global Collect Apple. Mr Hickson submits that these payments were mostlikely made for iCloud storage and the fact that they were made with the companycard supports the inference that they were business expenses. I do not agree. Thesums transacted (e.g. $1.49) and the dates on which the transactions occurred make itmore likely that these were personal transactions using the company credit card. I findfor the plaintiff in relation to this category.Motor vehicle expenses – $912.98[99] For the same reasons as set out in the second cause of action, I find that thereis insufficient evidence to establish that motor vehicle repair expenses paid for usingthe company credit card were business-related. I find for the plaintiff in relation tothis category.Resources – $441.46[100] This expenditure includes transactions at the Baby Factory and Toy World.Some of it predates the grant of the licence but I accept that some purchases prior tothe business becoming fully operational would have been necessary. I consider that,given the nature of the business, these are likely to have been business-related. I findfor the defendant in respect of this category.Stationery – $388.14[101] This category comprises six transactions incurred between 5 July 2015 and16 April 2016, totalling $388.14. I accept Mr Pan's and Ms Pouli's evidence that thisexpenditure relates to purchases of stationery for business purposes. I find for thedefendant in relation to this category.Trade Me – $3,564.52[102] This category comprises 47 transactions incurred between 21 June 2015 and23 November 2016. There is no evidence as to what these transactions relate to.Mr Hickson relies on the categorisation of that expenditure in the MYOB records as"advertising". On that basis, he argues that it is a legitimate business expense. I donot agree. The expenditure is of variable amounts and at irregular periods whichwould suggest the transactions relate to matters other than advertising. As I havepreviously noted, the narration in MYOB is unreliable. I find for the plaintiff inrelation to this category of expenditure.Travel and accommodation – $7,110.26[103] This category comprises 49 transactions incurred between 11 January 2016 and27 November 2016, totalling $7,110.26. Mr Hickson accepts that it is difficult toascertain from the face of the transaction where all of the hotels were, and whether thetravel was business-related. Whilst some of the transactions appear to be related toNapier travel, and therefore ostensibly in relation to the licence in that city, the othersrelate to Queenstown, Dunedin and Rotorua.[104] I consider further detailed evidence regarding this expenditure and how itrelated to ACE's business at the time it was incurred was required to rebut thepresumption that it was personal expenditure. On balance, I am not satisfied that thereis sufficient evidence that these costs were business-related. I find for the plaintiff inrelation to this category.Vouchers – $873.40[105] This category comprises 23 transactions incurred between 29 June 2016 and28 November 2016. Many of them relate to "Grab One" purchases. There is noevidence to support the contention that these purchases were business-related. I findfor the plaintiff in relation to this category of expenditure.Summary[106] I find that Mr Pan is to compensate ACE for $27,707.06 on the third cause ofaction.Fourth cause of action: Payments to Ms Wei – $17,839[107] The sum claimed in this cause of action comprises eight transactions incurredbetween 28 May 2015 and 4 November 2016, totalling $17,839.[108] The largest single transaction is $4,515 on 8 March 2016. The transaction iscoded in MYOB as "Weilan Exp". Mr Pan's evidence was that this was a compositeof two names: Wei and Lanhua (Anna) Zhang. He said that this was a travel expensefor Ms Zhang. Ms Wei gave evidence that Ms Zhang had asked her to buy airlinetickets for a trip back to China and that Ms Zhang always travelled either businessclass or first class.[109] Ms Zhang denied this was her expense. She said that airfares to China did notcost this much money, and the account to which the money had been transferred wasnot her account, nor any account she recognised.[110] It is entirely plausible that this expense was for Ms Zhang. As previouslymentioned, Ms Zhang had a dominant personality and would demand Ms Wei dothings for her. It was also evident that she was quite prepared to use the companyfunds for her personal expenditure. However, there is no corroborative evidence tosuggest that this was in fact a purchase of air tickets made on behalf of Ms Zhang. Onbalance, I consider the evidence to be insufficient to establish that this was a purchasemade on behalf of Ms Zhang.[111] Even if it was a purchase made on behalf of Ms Zhang, Mr Pan would be liablefor it – at least in the first instance. As director of ACE at the time, Mr Pan owedduties to the company to act in what he genuinely believed to be the best interests ofthe company. Allowing the company funds to be used to make personal purchases forMs Zhang was not in the best interests of the company – no matter how persuasive ordominant Ms Zhang may have been. Mr Pan breached his duties to the company, andas a result, ACE suffered loss in the sum of $4,515. Mr Pan must recompense ACEfor that sum.[112] The other transactions falling within this category are said to be paymentsmade to Ms Wei for her work for ACE, either in cash or by way of travel expenses.Ms Wei gave evidence that she undertook marketing work for the company, andcompensation in the total sum of $11,633 (whether in cash or payment for travelexpenses) is reasonable for that work.[113] It is clear that Ms Wei undertook work on behalf of the company from time totime. Her role with the company was explicitly referred to in the June 2016 agreemententered into between Mr Pan and Ms Zhang. However, the extent of the workundertaken on behalf of the company is unclear. The lack of formality aroundremuneration, and the fact that other similar transactions of this type were treated asdrawings on Mr Pan's account, leaves me unpersuaded that this expenditure should betreated as compensation for Ms Wei.[114] Accordingly, I find for the plaintiff in relation to this cause of action.Fifth cause of action: Raizem Ltd – $12,187[115] The Raizem Ltd claim comprises 17 transactions between 23 August 2016 and30 November 2016 totalling $12,187. The largest single transaction was $1,852, beingtravel expenses paid on 4 October 2016.[116] Mr Hickson submits that all but two of these transactions were either travelallowances or wages paid to Ms Tairau, who was a member of staff who did a lot oftravel to Napier. The other two payments were made to Raizem Ltd. They accountfor $1,422.44 of the disputed transactions.[117] I am not persuaded that these payments were for staff travel on behalf of ACE.Mr Pan was a shareholder of Raizem Ltd. Whilst he said that he was attempting toestablish a joint venture between Raizem Ltd and ACE in the Bay of Plenty, there isno other evidence to corroborate or substantiate that claim. Notably, Ms Tairau didnot give evidence. In addition, the transactions were all undertaken at a time when theparties were locked in bitter dispute and Mr Pan was looking to exit the company.[118] In the overall context of expenditure on the company account, I consider thesesums are personal in nature, rather than related to ACE's business. I find for theplaintiff in relation to this cause of action.Sixth cause of action: Loans, interest and receivers' costs[119] The sixth cause of action relates to the loan from Roquefort James on18 October 2016 and the loan from Early Childhood Holdings Ltd on 11 November2016, each for $20,000. ACE seeks repayment of $30,000, comprising the following:(a) Interest paid on the Roquefort James loan – $1,000;(b) Interest on the Early Childhood Holdings Ltd loan – $3,000;(c) The principal of the Early Childhood Holdings Ltd loan – $20,000;(d) The costs of the receivers – $6,000.[120] The claims in (a) and (c) were only included in the amended pleading filedafter the conclusion of trial. The direction to file an amended pleading was becausethere had been significant shifts in the amounts claimed throughout the trial. Thepurpose of such a direction was to ensure the amended claim reflected the jointposition reached at trial between the experts as to what was in issue and what remainedin dispute. It was not an opportunity to introduce additional sums which had not beenpleaded. Accordingly, I decline leave to amend the statement of claim to include thosesums.[121] As to the balance of the pleaded claim, Mr Rooney submits that the loans weretaken out to facilitate Mr Pan's personal expenditure. He refers to the fact that it is notin dispute that Mr Pan withdrew approximately $200,000 from ACE which, hesubmits, left it depleted of funds.[122] The expert engaged on behalf of ACE, Mr McCullagh, referred to the MYOBrecords as recording net transfers of approximately $61,000 between ACE's accountsand Mr Pan's personal accounts between 3 October 2016 and 1 December 2016. Allof those transfers were coded to Mr Pan's current account. In Mr McCullagh's expertopinion, if Mr Pan had not withdrawn excessive funds from the company at the time,there would not have been any need for either loan.[123] The expert retained on behalf of Mr Pan, Mr Jhinku, considered the interestand receivers' fees to have been incurred in the ordinary course of business. WhilstMr Pan had made withdrawals from the company account, those were to repay hiscontributions. Mr Jhinku also stressed that the MYOB records appeared to indicatethat Mr Pan's current account remained in credit at the time. In his opinion, Mr Pan'swithdrawals were not the cause of the company needing to obtain a loan.[124] Mr Pan's use of company funds as his own undoubtedly had an adverse effecton the company's bottom line. This may well have contributed to a need to securethird-party funding. But there is a lack of detailed analysis to show the necessarycausal link. Reliance on the total amount withdrawn whether in total, or over the lastfew months of 2016, is only one part of the evidential picture. The contributionsMr Pan made to the company over time must also be taken into account. Othercontributing factors to the company's bottom line must also be factored into theequation. Ms Zhang's use of company funds to pay for her personal expenses wouldalso have had an impact, as would the service of a statutory demand. The delays inreceiving the Ministry of Education payment as a result of the interim audit may alsohave had an effect. On balance, I am not persuaded that there is sufficient evidence toshow a causal link between Mr Pan's withdrawals and the need to obtain a loan suchthat he should be made liable for the interest on that loan.[125] ACE has pleaded that the loan was obtained without Mr Cao's consent as co-director. That would appear to be correct. However, ACE has not particularised howthat amounts to a breach of the pleaded director's duties, nor how it might haveresulted in any associated loss to the company. I consider this point no further.[126] There is also insufficient evidence that Mr Pan breached his director's dutiesin relation to repayment of the loans such that he should be held personally liable forthe receivers' costs. The loan was taken out in November 2016. Mr Pan left thecompany in December 2016, and Ms Zhang and Mr Cao regained control at this time.Although Ms Zhang says she did not know anything about the loan, the evidenceadduced on behalf of Mr Pan (including photographs of the accounts left at thepremises) suggests that all accounting records were left at ACE when he left. It is farfrom clear that Mr Pan was responsible for the failure to ensure the loan was repaid inthose circumstances.[127] I am therefore not satisfied that there is sufficient evidence to establish breachof Mr Pan's duties in relation to these loans. The sixth cause of action is accordinglydismissed.Seventh cause of action: Tablets and iPhones – $14,415[128] In around March or April 2016, ACE acquired 10 Samsung Galaxy tables andfive iPhones. Data plans in ACE's name were arranged in respect of these devices.ACE alleges that Mr Pan retained possession of the devices for purposes unrelated toACE's business. In the alternative, ACE claims that Mr Pan converted these devicesas none of them were left at ACE's offices following Mr Pan's departure. ACE claimsthe sum of $8,990 paid for the devices, and the sum of $5,425 for cancellation of thedata plans, being a total of $14,415.[129] I am satisfied that the purchase of these devices was for business purposes.Ms Pouli's evidence was that the Samsung tablets were purchased at Ms Zhang'ssuggestion as giveaways to new clients and the iPhones were purchased for staff andeducators. Ms Zhang did not dispute the fact that the provision of tablets to educatorswas appropriate. Instead, she disputed the amounts spent on the tablets to be givenaway. She suggested that a tablet worth $200 or $300 would be given away and thereward to be paid to the educator would be reduced accordingly.66 Notes of Evidence at 9.[130] I consider the value of rewards or incentives to be provided to staff orcustomers is a matter of business judgment to be exercised by Mr Pan as director. Thenumber of devices purchased, and the fact that they were purchased prior to the disputebetween Mr Pan and Ms Zhang erupting, suggests that the purchases of both the tabletsand iPhones were business-related.[131] ACE's real complaint in relation to this cause of action concerns whathappened to the tablets and iPhones. ACE pleads conversion of these devices as analternative to the breach of directors' duties claims. The evidence regarding what hadhappened to both the tablets and devices was vague. Mr Pan said one tablet had beenreturned while others were given to teachers and customers. But he was unable toaccount for all of the tablets. Similarly, the evidence regarding the iPhones was alsounsatisfactory. Ms Pouli said that the iPhone she had been given for staff use broke,and she was unable to explain what had happened to the other four iPhones.[132] Despite the unsatisfactory nature of the explanations offered, I am notpersuaded that ACE has proved its claim of conversion against Mr Pan. Conversionis an intentional wrong. A defendant must deliberately deny the possessory interest ortitle of the plaintiff in the goods.7 There is no evidence that this is what Mr Panintended in relation to the tablets and iPhones. Accordingly, there is no basis uponwhich to find him liable for conversion.[133] Finally, I am not persuaded that giving away the tablets and iPhones, or failingto ensure their return to ACE, constitutes a breach of Mr Pan's duties as a director. Itis not at all clear that the tablets and iPhones were distributed on the basis that theyshould be returned to the company at the end of the staff member's employment. Ifthat was the condition on which they were distributed, then ACE should pursue returnof the property from the relevant staff members and customers. However, for thereasons already explained above, if the devices were distributed without anyconditions, then whether that was prudent in the circumstances is a matter for Mr Pan'sbusiness judgment and not for this Court to question in the absence of an indicationthat the purchases and distributions were not intended to benefit the company.7 See Stephen Todd (ed) The Law of Torts in New Zealand (7th ed, Thomas Reuters, Wellington,2016) at [12.3.01] and the cases cited therein.[134] I am not satisfied that there is sufficient evidence to prove either breach ofdirectors' duties or conversion in relation to the tablets and the iPhones. I dismiss theseventh cause of action.Result[135] I decline to grant leave to amend the statement of claim in relation to the claimfor $21,000 on the sixth cause of action, but otherwise grant leave to ACE to file thesecond amended statement of claim dated 8 June 2018.[136] I enter judgment in favour of the plaintiff for the total sum of $78,112.13 being:(a) $8,817 on the first cause of action;(b) $11,562.07 on the second cause of action(c) $27,707.06 on the third cause of action(d) $17,839 on the fourth cause of action(e) $12,187 on the fifth cause of action[137] I dismiss all remaining causes of action.[138] I award interest on the judgment sum at the rate of five per cent from6 December 2016.8 I also award interest from the date of this judgment to the date thejudgment debt is satisfied, at the rate of five per cent.[139] As to costs, both parties have had a measure of success. In thosecircumstances, I am inclined to let costs lie where they fall. However, if there arematters affecting costs of which I am not aware, and the parties are not able to agree,then memoranda in support of costs may be filed within 15 working days of receipt of8 Because this claim was commenced prior to the commencement of the Interest on Money ClaimsAct 2016, the prior regime in the Judicature Act 1908 and the High Court Rules applies. Interestmay be awarded from the date the cause of action accrued – effectively the date of each impugnedtransaction in this case. The choice of 6 December 2016 is a pragmatic one in the circumstanceswhich is favourable to Mr Pan, and it is adopted for that reason.this judgment, and memoranda in opposition may be filed 10 working days thereafter.Memoranda shall be no longer than five pages in length. I encourage the parties totake a pragmatic and cost-effective approach to costs given the quantum of thejudgment sum awarded. Costs shall be determined on the papers unless the courtorders otherwise.___________________Edwards J