ZHAO v YANG and ANOR [2013] NZHC 1323

ZHAO v YANG and ANOR [2013] NZHC 1323

Yang's unilateral exclusion of Zhao from company management, misappropriation of company revenues, and the sale of the company's sole business without compliance with s129 constituted conduct that was oppressive, unfairly discriminatory and unfairly prejudicial under s174; accordingly the court ordered Yang to compensate the company (payable to the Official Assignee) for unrecovered sale proceeds and misappropriated revenue totaling NZD 496,750 and awarded interest from the liquidation date, with leave reserved on costs and interest particulars.

Citation
[2013] NZHC 1323
Parties
Plaintiff: JING ZHAO; First Defendant: BIN BIN YANG; Second Defendant: SUNSHINE QUALITY FOODS LIMITED
Court
High Court
Jurisdiction
New Zealand
Judgment Date
6 June 2013
Procedural Posture
Companies Act 1993 Shareholder Oppression and Restitution; Liquidation Proceeding / Hearing and Judgment (three Day Hearing Proceeded by Formal Proof Due to Defendants' Non Appearance)
Outcome
Judgment for plaintiff on first and third causes of action; second cause not determined as unnecessary; monetary relief and interest ordered; leave reserved on costs and interest particulars.
Legal Topics
Oppression Under S174, Major Transaction Requirements S129, Breach of Fiduciary Duty, Restitution and Unjust Enrichment, Freezing Orders, Interest Under Judicature Act 1908, Costs (increased and Indemnity; HR R14.6)
Company Law Equity Insolvency Civil Procedure Trusts and Fiduciary Law Oppression Under S174 Major Transaction Requirements S129 Breach of Fiduciary Duty +4 more

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Parties

JING ZHAO

Plaintiff

BIN BIN YANG

First Defendant

SUNSHINE QUALITY FOODS LIMITED

Second Defendant

Procedural Posture

Companies Act 1993 Shareholder Oppression and Restitution; Liquidation Proceeding / Hearing and Judgment (three Day Hearing Proceeded by Formal Proof Due to Defendants' Non Appearance)

Legal Issues

  1. 1 Whether Yang's conduct amounted to oppressive, unfairly discriminatory or unfairly prejudicial conduct under s174 of the Companies Act 1993
  2. 2 Whether the sale of the company's sole business was a major transaction requiring compliance with s129 and whether failure to comply justified relief
  3. 3 Whether funds withdrawn by Yang were misappropriated company property and the appropriate compensation remedy

Ratio Decidendi

Yang's unilateral exclusion of Zhao from company management, misappropriation of company revenues, and the sale of the company's sole business without compliance with s129 constituted conduct that was oppressive, unfairly discriminatory and unfairly prejudicial under s174; accordingly the court ordered Yang to compensate the company (payable to the Official Assignee) for unrecovered sale proceeds and misappropriated revenue totaling NZD 496,750 and awarded interest from the liquidation date, with leave reserved on costs and interest particulars.

Court Disposition

Judgment for plaintiff on first and third causes of action; second cause not determined as unnecessary; monetary relief and interest ordered; leave reserved on costs and interest particulars.

Orders

  • Bin Bin Yang to pay NZD 496750 to the Official Assignee (liquidator of Sunshine Quality Foods Limited).
  • The order to pay is to lie in the body of the Court until the plaintiff files an affidavit of service confirming service of her brief of evidence on Yang's address for service.