Bi v Westcoast Mining Limited

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-418-000003

[2020] NZHC 2505

BETWEEN

JIANTAO 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:

9 September 2020

Appearances:

R A Hearn for Plaintiff

J V Ormsby for Third and Fourth Defendants

Judgment:

24 September 2020

JUDGMENT OF ASSOCIATE JUDGE PAULSEN

This judgment was delivered by me on 24 September 2020 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BI v WESTCOAST MINING LTD [2020] NZHC 2505 [24 September 2020]

The applications

[1]    In this proceeding the plaintiff applies for relief under s 174 of the Companies Act 1993 claiming the affairs of the first and second defendants have been conducted in a manner that is oppressive and unfairly prejudicial to him in his capacity as a shareholder.

[2]This judgment concerns two interlocutory applications as follows:

(a)an application by the third and fourth defendants that the plaintiff provide a more explicit pleading; and

(b)an application by the plaintiff that the third and fourth defendants provide particular discovery.

[3]    Another application by the third and fourth defendants that the plaintiff provide particular discovery has been satisfied and is withdrawn subject to a ruling as to costs.

Background

[4]    The plaintiff pleads that in November 2016 he made an oral agreement with the fourth defendant concerning the establishment and operation of the defendant companies (and subsidiary companies) for a goldmining enterprise. He says he was to contribute mining and exploration permits and his goldmining knowledge. In return he would be employed as the general manager and executive director of the companies and have a 20 per cent interest in them. The fourth defendant was to contribute

$20,000,000 in equity funding and have an 80 per cent interest in the defendant companies.

[5]    The third and fourth defendants say there was no agreement between the plaintiff and the fourth defendant as alleged and the companies were established with the third defendant owning 80 per cent of the shares. They say that for cultural and family reasons it was understood the fourth defendant would not have any direct involvement in the enterprise until it was tested, and a relationship of trust had developed with the plaintiff.

[6]    The mining operations were closed in September 2018 and the plaintiff was removed as a director of the companies in October 2018. The defendants then decided to issue further shares which the plaintiff says was to dilute his shareholding, or to place him under financial pressure.

[7]    The plaintiff commenced this proceeding on 11 February 2019. He alleged three elements of prejudice, namely:

(a)his removal as a director;

(b)his exclusion from participation in the companies; and

(c)the issue of shares diluting the value of his shareholding.

[8]    The original statement of claim sought no particular relief. It was amended a few days after filing to include…