Bi v Westcoast Mining Ltd

[2023] NZHC 2736

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-418-0003

[2023] NZHC 2736

UNDER

the Companies Act 1993

IN THE MATTER

of an application for relief under s 174 of the Act

BETWEEN

JIANTAO BI

Plaintiff

AND

WESTCOAST MINING LTD

First Defendant

AND

GOLDEN COAST HOLDING LTD

Second Defendant

AND

CHAO ZHANG

Third Defendant

AND

MINGHOU ZHANG

Fourth Defendant

Hearing:

6–9, 13–16 March 2023

Counsel:

R A Hearn and P Kaur for Plaintiff

J V Ormsby and M J McKay for Defendants

Judgment:

29 September 2023

JUDGMENT OF OSBORNE J

This judgment was delivered by me on 29 September 2023 at 2.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

BI v WESTCOAST MINING LTD [2023] NZHC 2736 [29 September 2023]

Introduction

[1]                  There is a rich historical tradition of gold mining on the South Island’s West Coast.

[2]                  In 2016, two men discussed a business venture to undertake gold mining on the West Coast. Two companies (“the Companies”) — the first and second defendants

—  were then incorporated. The shares were owned 20 per cent by the plaintiff and 80 per cent by the third defendant.

[3]                  The arrangements agreed upon by the parties were not formally documented. The people involved are Chinese and the Court has heard and considered evidence regarding Chinese business culture.

[4]                  The business venture did not go well. By late-2018, the defendants took steps to close the operations, remove the plaintiff as a director of the Companies and issue further shares.

[5]                  The plaintiff commenced this proceeding for relief under s 174 Companies Act 1993 (the Act). He alleges the third and fourth defendants have conducted the Companies’ affairs in a manner that is oppressive and unfairly prejudicial to him. He seeks orders that the third or fourth defendant purchase his shares at a price determined by the Court and that they pay compensation for alleged failures.

[6]                  The Companies’ counterclaim is for damages for alleged breaches of fiduciary duty and negligence on the part of the plaintiff.

[7]                  The third and fourth defendants deny they have engaged in oppressive or unfairly prejudicial conduct. They submit the plaintiff has acted in those ways, and that his breaches of duty disentitle him to any relief under the Act.

[8]                  The third defendant wishes to acquire the plaintiff’s shares at a fair value, calculated at the time the plaintiff ceased to be involved in the Companies.

[9]                  It is common ground the individuals involved can no longer co-operate in relation to the affairs of the Companies and a solution would lie in the plaintiff’s shareholding being transferred to the third defendant.

[10]              Beyond that measure of agreement, there remain significant issues as to the precise nature of arrangements entered into between the parties, the nature of contributions that each agreed to make, how they then conducted themselves, how the price of the plaintiff’s shares should be set and, if so, to what extent,…