Bian v Elim Properties Limited
[2021] NZHC 3302
•3 December 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-2085
[2021] NZHC 3302
UNDER Part 18 of the High Court Rules 2016 IN THE MATTER
of section 174 of the Companies Act 1993
BETWEEN
QIANGZHONG BIAN
Plaintiff/Applicant
AND
ELIM PROPERTIES LIMITED
First Respondent/First Defendant
YANG ZHANG
Second Respondent/Second DefendantZUOMING JIANG
Third Defendant
Hearing: 25 November 2021 Appearances:
J Langston for the Plaintiff/Applicant
D Broadmore and M Smol for the Respondents/Defendants
Judgment:
3 December 2021
JUDGMENT OF GORDON J
This judgment was delivered by me on 3 December 2021 at 3 pm, pursuant to
r 11.5 of the High Court Rules
Registrar/Deputy Registrar Date:
Solicitors: Shieff Angland, Auckland
Buddle Findlay, Auckland
BIAN v ELIM PROPERTIES LTD [2021] NZHC 3302 [3 December 2021]
[1] The applicant, Quiangzhong Bian, the second respondent, Yang Zhang, and the third respondent, Zuoming Jiang, are the shareholders of the first respondent, Elim Properties Ltd (Elim). Mr Zhang is the sole director of Elim.
[2] Mr Bian seeks an interim injunction restraining the respondents from diluting his shareholding in Elim until his substantive claim under s 174 of the Companies Act 1993 (the Act) is heard. In his substantive claim, Mr Bian pleads that the affairs of Elim have been, are being and are likely to be, conducted in a manner that is oppressive, unfairly discriminatory and unfairly prejudicial to him in his capacity as a shareholder of Elim.
[3] Mr Bian holds a 33 per cent shareholding in Elim but he says the respondents have embarked on a scheme designed to dilute his shareholding, to alter the balance of power and reduce his voting and profit entitlements with his shareholding being reduced to seven per cent. Mr Bian says this dilution cannot be compensated by way of damages.
[4] The respondents say that in circumstances where Mr Bian was demanding repayment of advances he made to Elim, the steps taken by the respondents were not prejudicial and were in the best interests of Elim.
Background
[5] Elim was incorporated on 8 September 2017. The shareholders and their shareholdings are:
(a)Mr Zhang: the Companies Office records Mr Zhang’s shareholding at 43 shares (43 per cent);
(b)Mr Bian: the Companies Office records Mr Bian’s shareholding at 33 shares (33 per cent); and
(c)Ms Jiang: the Companies Office records Ms Jiang’s shareholding at 24 shares (24 per cent);
(together referred to as: the shareholders).
[6] Out of Mr Zhang’s shareholding of 43 shares, he holds nine shares on trust for Ms Jiang, which brings her legal and beneficial interest in the shares to 33 per cent.
[7] Mr Bian says that Elim was incorporated as a vehicle consequent upon the shareholders’ prior oral agreement to purchase and develop a property together. Mr Bian says the shareholders each brought different skills to the development. Ms Jiang would be mainly responsible for the initial funding, Mr Bian was responsible for providing the professional and technical advice, and Mr Zhang was responsible for the company’s daily operations.
[8] As far as the initial funding was concerned, Mr Bian says that in August 2017 the shareholders agreed that each would share equally in the deposit and that Ms Jiang would lend both Mr Zhang and Mr Bian funds to meet the balance of the purchase price. Mr Bian says that the loan from Ms Jiang was to be repaid after the project was completed. Mr Zhang denies there was an agreement relating to a future property development at the meeting in August 2017. He says the three of them did not discuss any particular development projects or the loan that Ms Jiang subsequently advanced. But Mr Zhang does accept that by September 2017 the shareholders had agreed to form Elim to purchase and develop a property and that Elim was incorporated on 8 September 2017 for that purpose.
[9] In October 2017, Mr Zhang signed a sale and purchase agreement for Elim for 45 Burns Lane, Kumeū (the property). On or about 2 March 2018 (the respondents say 3 March 2018) Ms Jiang (as lender), Mr Bian (as borrower) and Mr Zhang (as borrower and guarantor) entered into a loan agreement (loan agreement). Under the loan agreement, Ms Jiang agreed to lend $1,125,000 to Mr Bian (Jiang/Bian loan) which was guaranteed by Mr Zhang, and to lend the same amount to Mr Zhang. The purpose of the Jiang/Bian loan was so that Mr Bian could advance $1,125,000 to Elim (Bian advance) to complete the purchase of the property. The loan to Mr Zhang was for the same purpose.
[10] The loan agreement records the due date for repayment as 7 March 2019. But Mr Bian says prior to execution and after execution of the loan agreement it was orally confirmed that repayment would not be required until the development was completed. Mr Zhang and Ms Jiang deny there was such an oral agreement.
[11] On 8 March 2018, in accordance with the loan agreement, $3,375,000 was paid to Elim ($1,125,000 from each of Mr Bian, Mr Zhang and Ms Jiang), which Elim used to settle the purchase of the property on 9 March 2018.
[12] As noted, under the loan agreement, the due date for repayment was 7 March 2019. The respondents’ position is that Ms Jiang elected not to seek repayment on that date (but not because of any oral agreement as alleged by Mr Bian that repayment would not be required until the development was complete).
[13] In February 2020, the shareholders agreed that when Elim required further funds to develop the property, the funds would be paid by Mr Bian and Mr Zhang and they would also pay Ms Jiang’s equivalent portion. The payments by Mr Bian and Mr Zhang, on behalf of Ms Jiang, would reduce the amount owing by Mr Bian and Mr Zhang under the loan agreement. Between February 2020 and May 2021, Mr Bian advanced further amounts to Elim and repaid a total of $240,000 owing under the Jiang/Bian loan.
[14] In June 2021, the relationship between Mr Bian and Mr Zhang broke down. The respondents say at that time Elim anticipated that it would need $1.8 million to undertake civil works on the property. Mr Zhang says that in a meeting on 12 June 2021 he proposed that each shareholder should advance $600,000 for these costs. Mr Zhang says Mr Bian was unable or refused to advance further funds to Elim and sought to sell his shares in Elim.
[15] Mr Bian describes the 12 June 2021 meeting in a different way. He says Mr Zhang told him that he (that is, Mr Bian) needed to invest $600,000 in the development and that Mr Zhang would invest $180,000 as that was all he could afford. Mr Bian says Mr Zhang also said he should pay less because he had guaranteed the Jiang/Bian loan. Mr Bian says he told Mr Zhang that he did not have those funds and
that Mr Zhang responded saying that Mr Bian needed to reduce his shareholding. Mr Bian says Mr Zhang threatened him, saying he would make him lose all his money. Mr Zhang denies saying those things.
[16] On 19 June 2021, Mr Zhang’s wife, who is a mortgage broker, sent Mr Bian a proposal for a loan for Elim from PGS Capital. Mr Bian responded the following day expressing his concern about how the business had been conducted and referring to the discontent between the shareholders, and that no mortgages should be granted over Elim’s assets until the shareholding matters had been resolved.
[17] On 27 June 2021, Ms Jiang made demand on Mr Bian for repayment of the Jiang/Bian loan.
[18] Mr Zhang says that in July 2021 he approached various lenders to explore obtaining a loan facility for Elim. The respondents say Mr Bian has frustrated Elim’s attempts to obtain third party funding. In particular, they say Mr Bian has refused to provide personal information for lenders to conduct anti-money laundering assessments and has refused to provide a personal guarantee (which Mr Zhang says he understands the lenders require from any shareholder holding more than 25 per cent of the shares in Elim).
[19] On 17 August 2021, Mr Zhang issued a notice for a shareholders’ meeting on 1 September 2021. The notice records:
(a)Mr Bian intends to sell his shares (33 per cent);
(b)Mr Zhang would report on the civil construction funding gap of
$1.8 million;
(c)Mr Zhang’s submission that each shareholder contribute $600,000 to complete the capital increase of $1.8 million;
(d)A proposal by Mr Zhang to borrow from third parties;
(e)To vote for the proposal by Mr Zhang that all shareholders provide required identification and proof of address for the purpose of a loan and personal guarantee; and
(f)To discuss the proposal by Mr Zhang regarding Mr Bian’s “dereliction of duty in the Project”.
[20] By letter dated 25 August 2021, Mr Bian wrote to Mr Zhang raising a number of queries and asserting that the notice of shareholders’ meeting was defective for want of sufficient detail and saying that the meeting could not legitimately proceed. Mr Zhang responded to the queries and issues raised in Mr Bian’s letter in a letter dated 28 August 2021. The shareholders’ meeting was held on 1 September 2021 but Mr Bian did not attend. Mr Bian says the meeting minutes and resolutions show a clear intention to punish him.
[21] On a date in August 2021, Mr Zhang (on behalf of Elim) entered into a contract for civil works (civil works contract). Mr Zhang estimates the cost to Elim of those civil works is expected to be $1,452,283 (plus GST). Mr Zhang says that amount is expected to become payable in instalments between November 2021 and February 2022 as the work is completed. Mr Zhang says that Elim will also continue to have other development and operational costs throughout the remainder of 2021 and 2022.
[22] On 8 September 2021, Mr Zhang and Ms Jiang entered into a Deed of Assignment, pursuant to which Mr Zhang took an assignment of Ms Jiang’s rights under the Jiang/Bian loan. On the same day, Mr Zhang sent Mr Bian a notice of assignment of the Jiang/Bian loan. Between 13 September 2021 and 18 October 2021, offers were exchanged for the sale and purchase of Mr Bian’s shares but the price was not agreed.
[23] On 1 October 2021, Mr Zhang, by solicitor’s email, advised Mr Bian that he intended to issue proceedings against Mr Bian to recover the Jiang/Bian loan. Later that same day, Mr Bian, by solicitor’s letter, made demand on Elim, demanding repayment of his advances to Elim, amounting to $1,640,000 (that sum included the Bian advance of $1,125,000).
[24] In a later solicitor’s letter of 5 November 2021 on behalf of Mr Bian, it is stated that the only reason Mr Bian demanded payment of his advances to Elim was to put himself in an immediate position to repay the Jiang/Bian loan (now assigned to Mr Zhang), which had been called up by Mr Zhang. The letter states that but for Mr Bian’s immediate need for cash to respond to the demand for the repayment of the Jiang/Bian loan and the threat of imminent proceedings, he would not then have needed to make demand on his shareholder advances.
[25] Elim says as a consequence of Mr Bian’s demands on 1 October 2021, it needed to raise funds to repay the Bian advance. On 14 October 2021, PWC (having been instructed by Mr Zhang) provided advice which included a process for repaying the Bian advances (PWC report). That process included:
(a)Elim taking an assignment of Mr Zhang’s rights in the Jiang/Bian loan; and
(b)Elim making offers to the shareholders for shares that were proposed to be issued by Elim.
[26] On 18 October 2021, Mr Zhang wrote to Mr Bian offering to purchase Mr Bian’s shares. The letter stated that if the offer was not accepted:
(a)that Mr Zhang would assign the Jiang/Bian loan to Elim in consideration for the sum owed;
(b)Elim would set off the loan amount from the amount it owed to Mr Bian by way of shareholder advances; and
(c)that Elim would follow the recommendation set out as option A in the PWC report.
[27] Option A in the PWC report provided for the steps referred to in (a) and (b) above. The PWC report then suggested a process of converting shareholding loans to shares with the net result that Mr Bian’s shareholding would reduce to seven per cent.
[28] On 22 October 2021, Elim took an assignment of Mr Zhang’s rights in the Jiang/Bian loan. On the same day, Mr Zhang provided Mr Bian with a notice of assignment recording that he had assigned his interest in the Jiang/Bian loan to Elim.
[29] Further, on the same day, Elim made offers to shareholders for shares that were proposed to be issued by Elim (share offer). The share offer was open until 3 pm on 29 October 2021. On 27 and 28 October 2021, Mr Bian requested further information from Elim in order to consider the share offer and also requested an extension of time to 5 November 2021 to consider the share offer. Elim provided the information requested by Mr Bian on 29 October 2021 (apart from documents that it considered were not relevant) and extended the time for acceptance of the share offer to 5 November 2021 as Mr Bian had requested. On 3 November 2021, Mr Bian requested further information in relation to the share offer. That information was provided on 4 November 2021, apart from information which Elim considered was not relevant.
[30] Elim says that in order to continue operating and developing the property, it needs further funding. If Elim is unable to obtain funding, it will not be able to pay its debts as they fall due. Elim says it is not confident that it will be able to obtain funding from third parties, given Mr Bian’s unwillingness to provide a guarantee, and does not consider it appropriate for shareholders to provide disproportionate shareholder loans. Accordingly, Elim needs to obtain further funding urgently through a capital raise and share issue.
Legal principles
Interim injunctions
[31] The principles relating to the grant of interim injunctions are well settled. The Court needs to consider:1
(a)whether there is a serious question to be tried; and
1 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142.
(b)where the balance of convenience lies (with a focus on the adequacy of damages as a remedy available to the applicant).
[32] The final step is to consider where the overall justice lies.2 If damages would be an adequate remedy and the respondent is in a financial position to pay them, an application for an interim injunction should not normally be granted.3
Prejudice to shareholders
[33]Section 174 of the Act provides:
174 Prejudiced shareholders
(1)A shareholder or former shareholder of a company, or any other entitled person, who considers that the affairs of a company have been, or are being, or are likely to be, conducted in a manner that is, or any act or acts of the company have been, or are, or are likely to be, oppressive, unfairly discriminatory, or unfairly prejudicial to him or her in that capacity or in any other capacity, may apply to the court for an order under this section.
(2)If, on an application under this section, the court considers that it is just and equitable to do so, it may make such order as it thinks fit including, without limiting the generality of this subsection, an order—
(a)requiring the company or any other person to acquire the shareholder’s shares; or
(b)requiring the company or any other person to pay compensation to a person; or
(c)regulating the future conduct of the company’s affairs; or
(d)altering or adding to the company’s constitution; or
(e)appointing a receiver of the company; or
(f)directing the rectification of the records of the company; or
(g)putting the company into liquidation; or
(h)setting aside action taken by the company or the board in breach of this Act or the constitution of the company.
2 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, above n 1, at 142.
3 American Cyanimid Co v Ethicon Ltd (1975) AC 396 at 408.
(3)No order may be made against the company or any other person under subsection (2) unless the company or that person is a party to the proceedings in which the application is made.
[34] In Latimer Holdings Ltd v SEA Holdings Ltd,4 the Court of Appeal, in considering s 174, said:5
[65] In New Zealand, in Thomas v H W Thomas Ltd [1984] 1 NZLR 686 (CA), Richardson J made the following observations on the interpretation of s209 of the Companies Act 1955 (as the comparable New Zealand section then was) at p 693:
“I do not read the subsection as referring to three distinct alternatives which are to be considered separately in watertight compartments. The three expressions overlap, each in a sense helps to explain the other, and read together they reflect the underlying concern of the subsection that conduct of the company which is unjustly detrimental to any member of the company whatever form it takes and whether it adversely affects all members alike or discriminates against some only is a legitimate foundation for a complaint under s209. The statutory concern is directed to instances or courses of conduct amounting to an unjust detriment to the interests of a member or members of the company. It follows that it is not necessary for a complainant to point to any actual irregularity or to an invasion of his legal rights or to a lack of probity or want of good faith towards him on the part of those in control of the company.”
[35] The test is objective. Relief can be granted even if the conduct complained of does not involve a want of good faith or lack of probity and the fact that all members are treated uniformly does not necessarily make conduct fair.6
Is there a serious question to be tried?
Mr Bian’s position
[36] Mr Bian says that the assignment of the Jiang/Bian loan to Elim and the making the share offer is conduct that is oppressive, unfairly discriminatory and unfairly prejudicial to him. He says the respondents have embarked on a scheme designed to dilute his shareholding, while increasing Mr Zhang’s shareholding with no (or limited) fresh injection of capital. He says the share offer is not designed to increase capital in
4 Latimer Holdings Ltd v SEA Holdings Ltd [2005] 2 NZLR 328 (CA).
5 At [65].
6 At [113].
Elim or allow Elim to obtain third party lending. Rather, its purpose is apparent from the PWC report, which includes the following:
… Noting that Mr Bian’s shareholding in Elim could be diluted to the extent desired. The key impact being that (as illustrated in Option B) Mr Bian’s share of Elim’s profit would be (significantly) reduced.
[37] Additionally, Mr Bian says that the scheme is designed to be used as a debt collection tool to enable Ms Jiang to collect the Jiang/Bian loan.
[38] Further, Mr Bian says there is no benefit to Elim in accepting the assignment of the Jiang/Bian loan from Mr Zhang because set-off cannot occur. This is because the Jiang/Bian loan has not (on Mr Bian’s evidence) become due. Ms Langston, for Mr Bian, submits Elim should be indifferent as to whether it owes Mr Zhang or Mr Bian the amount owed under the Jiang/Bian loan.
[39] Mr Bian also says that the PWC report states that assumptions were made and they needed to be independently verified prior to payments being made and steps taken. However, Elim and Mr Zhang did not do that. Mr Bian says had they done so, the value prescribed to Elim would have been greater, taking into account the increase in property values and the work so far completed on the property. In those circumstances, if the shares are prescribed a value less than market value and because the set-off value is fixed, Mr Bian is effectively paying more to repay the Jiang/Bian loan.
[40] Finally, Mr Bian says he has not frustrated Elim’s ability to obtain third-party lending. He says he is entitled to exercise his shareholder rights to vote as he chooses. The company is not prejudiced by receiving insufficient votes to pass a resolution put to its shareholders.
[41] For all these reasons, Ms Langston submits there is a serious question to be tried.
The respondent’s position
[42] In opposition, the respondents say, in circumstances where Mr Bian was demanding repayment of the Bian advance, the share issue, assignment and set-off were not prejudicial and were in the best interests of Elim. In relation to the assignment and set-off, they reduced the cash that Elim needed to raise to repay Mr Bian. The respondents say that by taking an assignment of the Jiang/Bian loan, Elim acquired an asset from Mr Zhang at the same price that Mr Zhang acquired the asset. Elim did not give a loan, guarantee, security or other financial assistance to Mr Zhang.
[43] The respondents also say the set-off achieved Mr Bian’s stated purpose for demanding repayment of the Bian advance, namely to repay the Jiang/Bian loan. Further, the respondents say the set-off did not prejudice Mr Bian. He would not have capitalised the Bian advance in all the circumstances because he was demanding repayment.
Discussion
[44] The test is whether there is a serious question to be tried, or put another way, that the claim is not frivolous or vexatious.7 The test has also been described as: whether there is a tenable resolution of the issues of fact and law on which the plaintiff may be able to succeed at trial.8
[45] As is apparent from the discussion above, there are many disputed factual issues, which await resolution at the substantive hearing. On one view of the evidence (as Ms Langston submits), there is a basis for Mr Bian’s submission that the respondents embarked on a scheme designed to dilute Mr Bian’s shareholding in Elim and that the affairs of Elim or acts of Elim have been conducted in a manner that is oppressive, unfairly discriminatory or unfairly prejudicial to him.
7 NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [12].
8 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, above n 2, at 133.
[46] In particular, and supporting Mr Bian’s position that there was such a scheme, there is the statement in the PWC report, which is set out at [36] above but which I repeat for ease of reference:
… Noting that Mr Bian’s shareholding in Elim could be diluted to the extent desired. The key impact being that (as illustrated in Option B) Mr Bian’s share of Elim’s profit would be (significantly) reduced.
(emphasis added)
[47] Mr Bian did not make his demand for repayment of his shareholder’s advances until 1 October 2021. PWC’s letter of engagement to Mr Zhang setting out the terms of engagement is dated 1 October 2021. It seems likely then, that Mr Zhang had sought to engage PWC prior to that date. It appears that part of Mr Zhang and Elim’s instructions to PWC was for a process that diluted Mr Bian’s shares “to the extent desired”.
[48] In addition, before acting on PWC’s report, Elim and Mr Zhang did not obtain a valuation of the property in order to obtain a valuation for Elim. I accept Ms Langston’s submission that it can be inferred that taking into account the increase in property values generally and the fact that work had been completed on the property, the value prescribed to Elim would have been greater. As Ms Langston submits, if the shares are prescribed a value less than market value and because the set-off value was fixed, Mr Bian would be effectively paying more to repay the Jiang/Bian loan, resulting in Mr Bian receiving fewer shares.
[49] For all the above reasons, and accepting the reasons advanced by Ms Langston, there is a serious question to be tried. Or in other words, Mr Bian has demonstrated an arguable case. However, that does not necessarily mean that an interim order should be made. It is necessary to next consider the balance of convenience.
Does the balance of convenience favour granting an interim injunction?
[50] Mr Bian says damages would not be an adequate remedy. He says once his shareholding is reduced he is unable to prevent the value of the company being further depleted by Mr Zhang or assets being sold and transferred to China.
[51] I do not accept the submission that damages would not be an adequate remedy. As Cooke J said in Bi v Westcoast Mining Ltd, the flexibility involved in the application of s 174 is relevant to the remedial orders that could be granted.9 In Sturgess v Dunphy, the Court of Appeal said:10
[148] Wrong and remedy are closely linked. As Richardson J put it in Thomas, it is the unfairly detrimental effect of the conduct on the complaining member that brings the remedy into play. The remedy responds to that detriment, and the court acts for remedial, not punitive, purposes. The most common remedy is a buyout order, presumably because the cases usually involve tightly held companies or quasi-partnerships in which the members can no longer do business together. When fixing the price the court will adopt a valuation methodology designed to achieve fair market value, which is normally defined as the price that an informed buyer would pay. It assumes no discount for minority status.
(citations omitted)
[52] In this case, in his substantive claim, while seeking a permanent injunction restraining the respondents from taking steps to reduce or dilute his shares in Elim as his primary remedy, Mr Bian’s alternative remedy is an order requiring Elim to acquire his shares at a price fixed by the Court.
[53]As Cooke J further said in Bi v Westcoast Mining Ltd:11
[30] Even if the issuing of shares is held to be a further step in conduct that may be regarded as unfairly prejudicial in accordance with s 174, the Court would still be in a position to fashion the remedy to address this. Proceeding with the share issue neither prevents the Court from granting effective relief, nor has a detrimental effect on the plaintiff that in a way cannot later be remedied.
[54] In this case, proceeding with the share issue would not prevent the Court from granting effective relief in the substantive proceeding and would not have a detrimental effect on Mr Bian in a way that cannot later be remedied if he is ultimately successful in his claim as:
(a)It would be open to the Court to make an order requiring Mr Bian’s shares to be acquired at a price fixed by the Court;
9 Bi v Westcoast Mining Ltd [2019] NZHC 860 at [23].
10 Sturgess v Dunphy [2014] NZCA 266 at [148].
11 Bi v Westcoast Mining Ltd, above n 9, at [30].
(b)The Court would be entitled to determine the fair value for Mr Bian’s original shareholding in all the circumstances;
(c)Mr Bian could be compensated through determination of the fair value of his shares, disregarding any effect on the value of his shares of any new share issue and/or dilution; and
(d)There is no evidence that Elim would not be able to provide such compensation (equivalent to damages) as Mr Bian would be receiving only a portion of the value of Elim.
[55] On the other hand, if the injunction were granted, I accept that significant damage could be caused to Elim:
(a)Elim has contractual liabilities that will fall due in November 2021 (that date has already passed), December 2021 and in 2022. Elim and its majority shareholders consider that further capital (rather than disproportionate shareholder loans) is the most appropriate means of raising further funds. If Elim is unable to raise capital from shareholders, Elim says there is a risk that it will not be able to continue to operate or will be able to obtain further funds only on less favourable terms;
(b)If Elim is unable to continue to operate there will likely be a loss caused to Elim and its shareholders. Alternatively, if Elim is able to obtain alternative funding, but on less favourable terms, Elim says its losses could still be significant; and
(c)Although Mr Bian has filed an undertaking as to damages there is no supporting evidence that Mr Bian would be able to pay damages to Elim or its shareholders.
[56]The balance of convenience, therefore, strongly favours the respondents.
[57] For completeness, I mention that Ms Langston also made submissions suggesting that any increases in Ms Jiang’s shareholding could result in breaches of the Overseas Investment Act 2005 (OIA). However, Ms Jiang’s beneficial interest in shares held by Mr Zhang predated the amendment to the OIA on 5 July 2021, which made residential land sensitive land. So her interest was not in breach of the OIA. She could increase her shareholding to up to 50 per cent of the shares without there being an overseas investment in sensitive land within the meaning of s 12 of the OIA. Therefore, I put this issue to one side.
Overall justice
[58] If the balance of convenience strongly favours one party, then the overall justice will be with that party. However, if it lies equally between the parties, the Court will have regard to the strengths of the parties’ cases.12
[59] I have found the balance of convenience strongly favours the respondents. The overall justice accordingly lies with the respondents.
Result
[60]The application for an interim injunction is refused.
Costs
[61] Costs on an opposed interlocutory application would ordinarily be fixed when the application is determined and they become payable when they are fixed.13 I have found that, depending upon the outcome of the factual disputes, Mr Bian has an arguable case under s 174. Because much may depend on the outcome of the factual disputes apparent from the affidavit evidence, in this particular case I adjourn the question of costs so that it is determined by the trial Judge.
Gordon J
12 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd, above n 2, at 142.
13 High Court Rules 2016, r 14.8.
0
3
0