Bi v Zhang - [2024] NZCA 655

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA646/2023
[2024] NZCA 655

BETWEEN	JIANTAO BI Appellant
AND	CHAO ZHANG Respondent

Hearing:	4 November 2024
Court:	Cooke, Fitzgerald and Jagose JJ
Counsel:	R A Hearn and V A Nichols for Appellant J V Ormsby and M J McKay for Respondent
Judgment:	12 December 2024 at 10.30 am

JUDGMENT OF THE COURT

AThe application for leave to file and serve an amended statement of claim is declined.
B The appeal is dismissed.
CThe respondent is entitled to costs for a standard appeal on a band A basis with an allowance for two counsel, together with disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Cooke J)

Table of Contents

Para No
Relevant background  [2]
The High Court judgment  [13]
Arguments on appeal  [17]
Assessment  [22]
      Were the companies profitable?  [29]
      Was an offer to buy Freddy’s shares required?  [42]
Conclusion  [52]
Result  [55]

The appellant appeals against the decision of the High Court dismissing his claims for relief under s 174 of the Companies Act 1993 (the Act) for minority shareholder oppression.[1] He contends that he was, and continues to be, unfairly treated as a minority shareholder. He seeks orders requiring the respondent to purchase his shares at fair market value as at the date that he was excluded from the operation of the relevant companies, without deduction for minority shareholding, and that the proceedings be remitted to the High Court to determine the fair market value.

Relevant background

[1]Bi v Westcoast Mining Ltd [2023] NZHC 2736 [Judgment under appeal].

Although the appellant’s appeal involves some challenges to the High Court factual findings, the key facts are not in dispute.
The three primary participants have been referred to throughout this judgment by the names they used in the submissions to this Court and in evidence in the High Court: Freddy (the appellant), Jimmy (the respondent), and Michael (the respondent’s uncle). Michael is an important figure in the dispute notwithstanding that he is not a party to this appeal, although he was a party to the High Court proceedings.
The two relevant companies, Westcoast Mining Ltd (Westcoast) and Golden Coast Holding Ltd (Golden Coast) were incorporated on 30 November 2016 for the purposes of furthering the venture that is in issue in this proceeding. The relevant business activities of the companies involved gold mining on the West Coast of the South Island. Westcoast was the operating company, and Golden Coast the holding company.[2]
[2]Golden Coast owned 100 per cent of the shareholdings in several other companies, but not Westcoast, which had shares held by Jimmy (80 per cent) and Freddy (20 per cent).
Freddy had lived in New Zealand for some time, and he moved to Greymouth in 2013 to work in the gold mining industry. In November 2016, an oral agreement was reached between Freddy and Michael to engage in the gold mining venture through the companies. In the High Court, Freddy alleged that the arrangement…

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 Zhang

Details

AGLC: Bi v Zhang [2024] NZCA 655
Case: [2024] NZCA 655
Decision Date: 12 December 2024 at 10.30 am

CaseChat Overview and Summary

The appellant, Jiantao Bi, appeals against the decision of the High Court dismissing his claims for relief under s 174 of the Companies Act 1993 for minority shareholder oppression. The Court of Appeal assesses the legal issues surrounding the alleged unfair treatment of Bi as a minority shareholder and the required remedies. Key legal issues include whether the companies were profitable at the time of ceasing operations and whether an offer to buy Bi's shares was necessary. The Court finds that the companies were not profitable and that Bi's exclusion from the companies was justified due to their lack of success. Furthermore, the Court holds that Bi retains the ability to extract the fair value of his equity through his loan, which negates the need for an offer to buy his shares. Consequently, the appeal is dismissed, and the respondent is awarded costs for a standard appeal on a band A basis with an allowance for two counsel, together with disbursements.

Orders