Arjang v NF Global Limited - [2021] NZHC 395

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-778

[2021] NZHC 395

UNDER the Companies Act 1993

IN THE MATTER OF

an application to put a company into liquidation

BETWEEN

MICHAEL MOSHE ARJANG

Plaintiff

AND

NF GLOBAL LIMITED

Defendant

STARBOARD CAPITAL SA
Shareholder

SKY CAPITAL MANAGEMENT LIMITED
Creditor

LD DRAGO MET SRL
Creditor

ELEONORA SPORT LIMITED

Creditor

Hearing: 15 and 16 February 2021

Appearances:

W Porter and S Campbell for the Plaintiff

W Fotherby/W Potter/J Phillips for the Defendant

and for Starboard Capital SA (shareholder) H L Quinlan for Sky Capital Management (creditor) G Bogiatto for LD Drago Met SRL (creditor)

L Sizer for Eleonora Sport Ltd (creditor)

Judgment:

5 March 2021

Reissued:

9 March 2021

INTERIM JUDGMENT OF ASSOCIATE JUDGE R M BELL

ARJANG v NF GLOBAL LIMITED [2021] NZHC 395 [5 March 2021]

This judgment was delivered by me on 5 March 2021 at 4:00pm
pursuant to Rule 11.5 of the High Court Rules
………………………….
Registrar/Deputy Registrar

Introduction

[1] NF Global Ltd runs an online payment platform. Its customers lodge funds with it and use the platform to transfer funds internationally. It is not however a bank. One of its customers, Mr Arjang, the plaintiff, paid funds to it, but when he directed it to pay money out, it did not do so. He asked for his money back, but it did not pay. He served a statutory demand and brought this proceeding to have NF Global put into liquidation on the ground that it is not able to pay its debts.

[2] Other customers of NF Global with similar experiences have supported Mr Arjang. The claims in this proceeding are:

Mr Arjang €1,261,671.45

Sky Capital Management Ltd €2,059,730.86

Eleonora Sport Ltd €770.712.21 and £4,926,955.70

LD Drago Met srl €318,383.11

€4,410,497.63 and £4,926,955.70

That is about NZ$16,800,000. Starboard Capital SA, NF Global’s shareholder, opposes the liquidation application.

[3] While it accepts that Mr Arjang is a customer and it holds funds lodged by him, NF Global denies that he is a creditor. He is instead a suspect money launderer. It also denies that it is insolvent and says that in any event the court should exercise its discretion not to make a liquidation order.

[4] As for the other customers, it says that LD Drago is also a suspect money launderer. It denies liability to Sky Capital Management. It complains that because Eleonora Sport came into the proceeding late it has not had enough time to give a response.

[5] NF Global’s money laundering suspicions do not give it reason not to pay Mr Arjang and LD Drago. Under the anti-money laundering legislation, it must terminate its business relationship with customers it suspects of money laundering and that means that it must return the funds paid to it. Sky Capital Management has the benefit of an order under s 291 of the…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2021] NZHC 395
Decision Date: 5 March 2021

CaseChat Overview and Summary

This case concerns the application by Michael Moshe Arjang, a customer of NF Global Limited, for the company to be put into liquidation. NF Global, a registered financial service provider operating an online payment platform, accepts funds from its customers and transfers them internationally. The proceedings also involve other customers of NF Global, creditors who have statutory demands against the company, and Starboard Capital SA, the shareholder of NF Global. The legal issues addressed include whether the customers are creditors, whether NF Global is insolvent, and whether the court should exercise its discretion not to make a liquidation order. The court found that the customers were creditors, that NF Global was unable to pay its debts, and that the court should exercise its discretion to order liquidation, but with a reprieve to allow for potential financial support from NF Global's shareholder and associated companies. The court ordered that NF Global provide funds to clear the liabilities recognised in the decision, with a deadline set for the companies liquidation list on Friday, 23 April 2021, at 11.45 am.

Orders