Bi v WestCoast Mining Limited

[2021] NZHC 802

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-418-000003

[2021] NZHC 802

UNDER

The Companies Act 1993 and Part 18 of the High Court Rules 2016

IN THE MATTER OF

an application for relief under section 174 of the Companies Act 1993

BETWEEN

JIANTO BI

Plaintiff

AND

WESTCOAST MINING LIMITED

First Defendant

AND

GOLDEN COAST HOLDING LIMITED

Second Defendant

AND

CHAO ZHANG

Third Defendant

AND

MINGHOU ZHANG

Fourth Defendant

Hearing:

Determined on the papers

Counsel:

R A Hearn for Plaintiff

J V Ormsby for Defendants

Judgment:

14 April 2021

JUDGMENT OF ASSOCIATE JUDGE LESTER

BI v WESTCOAST MINING LTD [2021] NZHC 802

This judgment was delivered by me on 14 April 2021 at 4.00 pm pursuant to Rule 11.54 of the High Court Rules.

Registrar/Deputy Registrar Date:

[1]                 The first and second defendants have applied for leave to file a counterclaim as the intended the intended counterclaim was not commenced within the time provided for in r 5.57(1). The plaintiff abides the Court’s decision in relation to the application.

[2]                 Given the proposed claim raises issues directly relevant to the statement of claim, it is appropriate that the matters with which the counter claim is concerned are dealt with at the same time.

[3]                 I accept the submission of Mr Ormsby for the applicant that the bringing of the counterclaim will not change the scope of discovery, nor increase the hearing time given the issues raised in the counterclaim are effectively matters already part of affirmative defences raised the third and fourth defendants.

[4]                 Given the efficiencies in all matters being dealt with at one time such would be sufficient for the application to be granted. Mr Hearn, counsel for the plaintiff, has drawn the Court’s attention to r 18.4(A)(2). That rule applies as the plaintiff’s claim is brought under s 174 of the Companies Act 1993.

[5]Rule 18.14A provides:

18.14A Procedure under section 174 of Companies Act 1993

(1)In a proceeding under section 174 of the Companies Act 1993,—

(a)the statement of claim must be in form C 2; and

(b)the notice of proceeding must be in form C 3; and

(c)an appearance in support or in opposition must be in form C 9.

(2)Subpart 2 of Part 7, which relates to interlocutory applications, applies to applications to the court that relate to a company in respect of which an application under section 174 of the Companies Act 1993 is pending.

[6]                 I do not see r 18.14A(2) as being a barrier to a counterclaim being brought in a minority oppression proceeding. As McGechan at HR 18.14A.01 says, minority oppression proceedings are now treated like any other proceedings under the

Companies Act, although special forms are provided for the statement of claim and notice of proceedings.

[7]                 Sub-part 2 of part 7 of the High Court Rules sets out the rules relating to the bringing and determination of interlocutory application. All r 18.14A.(2) does is clarify that interlocutory applications are available in the course of a minority oppression proceedings.

[8]                 As Mr Ormsby notes, there is nothing in pt 18 preventing the filing of counterclaims.

[9]                 As a general proposition I do not see any reason why proceedings arising from disputes within companies, whether they be related to shareholder disputes or directors’ duties issues, should mean a counterclaim cannot be brought. Such a blanket rule would mean a defendant wishing to bring a counterclaim in such a proceeding would have to commence a separate proceeding and apply for the proceedings to be case managed and heard together, or that the proceedings be consolidated. Such a conclusion would not be consistent with r 1.2 of the High Court Rules.

[10]             Accordingly, in the absence of opposition and given the matters I have referred to above I am satisfied that it is appropriate that there be leave to file the statement of counterclaim annexed to the application dated 19 March 2021.

[11]             There is no order as to costs, as costs were only sought against a party who opposed.

Associate Judge Lester

Solicitors:

Corcoran French, Christchurch

Barrister:
J A Ormsby, Christchurch