Bi v Westcoast Mining Ltd - [2019] NZHC 860

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2019-418-003

[2019] NZHC 860

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

JIANTAO BI

Plaintiff

AND

WESTCOAST MINING LIMITED

First Defendant

GOLDEN COAST HOLDING LIMITED

Second Defendant

CHAO ZHANG

Third Defendant

MINGHOU ZHANG

Fourth Defendant

Hearing: 16 April 2019

Appearances:

R A Hearn for Plaintiff

J V Ormsby for Third Defendant

Judgment:

17 April 2019

JUDGMENT OF COOKE J

[Interim relief]

[1] In these proceedings the plaintiff, Jiantao Bi alleges that the fourth defendant, Minghou Zhang and his nephew, Chao Zhang (the third defendant) have engaged in oppressive or unfairly discriminatory/prejudicial conduct in the manner contemplated by s 174 of the Companies Act 1993 (the Act) in relation to the first and second

BI v WESTCOAST MINING LIMITED [2019] NZHC 860 [17 April 2019]

defendants, in which the plaintiff and third defendant hold shares. The present application is an application for interim orders pending the substantive fixture.

Background

[2] The business venture that the parties were engaged in involves gold mining on the West Coast. The plaintiff owned gold mining permits, and he and the third/fourth defendants decided that they should work together to try and build a gold mining enterprise. There is no written agreement between them, but the plaintiff says that he was to have a 20 percent stake with the third/fourth defendant having an 80 percent stake, and that he would be a director and employee. The plaintiff and fourth defendant first met in April 2016 with initial arrangements being established in November 2016 with mining commencing in May 2017.

[3] The venture has not been successful. The position between the parties has deteriorated. The plaintiff alleges that the defendants decided to close the mine in late September 2018, and that he was removed as a director in October 2018. It is then alleged that the defendants decided to issue further shares. The defendants say this is being done to raise new capital for the business, and the plaintiff says this has the effect of diluting his shareholding, or placing him under financial pressure.

[4] On 11 February 2019 the plaintiff filed an interlocutory application without notice for interim relief. It was granted in the following terms:

(a)The first and second defendants are restrained from proceeding further with the share issue dated 21 January 2019, or taking steps to commence any other share issue, until further order of this Court.

(b)The first and second defendants, and their subsidiary companies Gold Mining Services Limited, Greid Minning Limited, Arahura Resources Limited and King Solomon Gold Limited, are each restrained from commencing or resuming any mining activities until further order of this Court.

(c)The first and second defendants, and their subsidiary companies Gold Mining Services Limited, Greid Minning Limited, Arahura Resources Limited and King Solomon Gold Limited, are each restrained…

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.

Continue reading Bi v Westcoast Mining Ltd

Details

AGLC: Bi v Westcoast Mining Ltd [2019] NZHC 860
Case: [2019] NZHC 860
Decision Date: 17 April 2019

CaseChat Overview and Summary

In the High Court of New Zealand, the plaintiff, Jiantao Bi, filed a case against Westcoast Mining Limited, Golden Coast Holding Limited, and Chao Zhang and Minghou Zhang, alleging oppressive and unfairly discriminatory conduct under section 174 of the Companies Act 1993. The plaintiff claimed that the defendants had acted in a manner that was unfairly prejudicial towards him, including removing him as a director, closing the mine without consultation, and issuing new share capital without considering his interests. The court was required to decide whether the plaintiff had established a serious issue to be tried and whether the balance of convenience favoured granting the interim relief sought.

The court found that there was an arguable case that the plaintiff was entitled to relief under section 174, as the nature of the original joint venture between the parties was unclear, and the venture had not been successful. The court also noted that the remedy available under section 174 was flexible enough to deal with the various eventualities in the case. However, the court held that the plaintiff's ultimate remedy was financial, and it was not appropriate to grant interim orders simply to give the plaintiff some negotiation leverage. The court discharged the interim orders presently in place and dismissed the plaintiff's further application for such orders. The court also adjourned the question of costs of the interim relief applications to be determined by the trial judge when considering the overall merits of the case.

Orders