ZHOU v LU & ORS [2016] NZHC 1865

ZHOU v LU & ORS [2016] NZHC 1865

The court granted interim interim relief to protect the company's ongoing business by ordering limited payment-authorisation and management arrangements: Ms Lu must authorise payments under specified verification safeguards; Mr Chan is restrained from management activities, accessing premises and contacting...

Source-derived case information.

Citation
[2016] NZHC 1865
Parties
Plaintiff: Jun Zhou; First Defendant: Xiaowen Lu; Second Defendant: Song Kee Fruit & Vegetable 2013 Ltd; Third Defendant: Da Sheng Chan
Court
High Court
Jurisdiction
New Zealand
Judgment Date
11 August 2016
Procedural Posture
Companies Act Interim Relief / Injunctions / Interim Interim Injunction Hearing (application for Interim Injunction Set for Hearing 23 September 2016)
Outcome
Interim interim injunction granted in part under ss 164 and 170 Companies Act 1993 until determination of the interim injunction application on 23 September 2016
Legal Topics
Interim Injunction, Directors' Duties, Alternate Director, Shareholder Dispute, Liquidation Application, Company Constitution, Oppressive Conduct
Companies Law Injunctions Corporate Governance Civil Procedure Interim Injunction Directors' Duties Alternate Director Shareholder Dispute +3 more

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Parties

Jun Zhou

Plaintiff

Xiaowen Lu

First Defendant

Song Kee Fruit & Vegetable 2013 Ltd

Second Defendant

Da Sheng Chan

Third Defendant

Procedural Posture

Companies Act Interim Relief / Injunctions / Interim Interim Injunction Hearing (application for Interim Injunction Set for Hearing 23 September 2016)

Legal Issues

  1. 1 Whether interim interim injunctions should be granted under ss 164 and 170 of the Companies Act 1993 to stabilise company operations
  2. 2 Whether an alternate director may exercise management powers in circumstances where the appointing director remains active (constitution clause 17.11)
  3. 3 Whether orders are necessary to ensure payment of suppliers, wages, GST and PAYE to preserve the business

Ratio Decidendi

The court granted interim interim relief to protect the company's ongoing business by ordering limited payment-authorisation and management arrangements: Ms Lu must authorise payments under specified verification safeguards; Mr Chan is restrained from management activities, accessing premises and contacting staff/customers/suppliers; Mr Zhao is responsible for day-to-day management; and Mr Zhao and Ms Lu must exercise board powers jointly—these orders were justified under ss164 and 170 to preserve the integrity and continuity of the company pending the interim injunction hearing.

Court Disposition

Interim interim injunction granted in part under ss 164 and 170 Companies Act 1993 until determination of the interim injunction application on 23 September 2016

Orders

  • Ms Xiaowen Lu must authorise payment of future supplier invoices within 48 hours upon written advice from or on behalf of Mr Jun Zhao that invoices are properly payable and upon receipt of invoices initialled by the manager or Mr Zhao
  • Ms Lu must authorise the company's bankers to pay wages within 48 hours on written advice from Mr Zhao or the manager accompanied by timesheets, a bank batch report of amounts and, for new employees, employment agreements