Jeffreys v Pan - [2024] NZHC 1545

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-002057

[2024] NZHC 1545

BETWEEN
STEPHANIE BETH JEFFREYS and MALCOLM RUSSELL MOORE as

liquidators of CAODE HOLDINGS LIMITED and RED BEACH

CONSTRUCTION LIMITED (BOTH IN LIQUIDATION)
Plaintiffs

AND

CHANGXIN (JASON) PAN

Defendant

Hearing: 6 June 2024

Appearances:

I J Thain and S Khatau for Plaintiffs No appearance for Defendant

Judgment:

13 June 2024

REASONS JUDGMENT OF ANDREW J

This judgment was delivered by Justice Andrew on 13 June 2024 at 10.00 am
pursuant to r 11.5 of the High Court Rules 2016 Registrar / Deputy Registrar

Date …………………………………..

JEFFREYS v PAN [2024] NZHC 1545 [13 June 2024]

[1] At the conclusion of the hearing, I granted the plaintiffs’ application for summary judgment and on the terms sought in the statement of claim.

[2] This judgment contains my reasons for granting the summary judgment application.

Introduction

[3] These proceedings were undefended. The defendant has taken no steps to oppose them. On 5 June 2024, he was adjudicated bankrupt in this Court, and on the application of an unrelated creditor.

[4] Under s 76(1) of the Insolvency Act 2006, on adjudication, all proceedings to recover any debt provable in the bankruptcy are halted. However, under s 76(2) the Court may allow proceedings that had already begun before the date of adjudication to continue on the terms and conditions that the Court thinks appropriate.

[5]It is appropriate in this case to allow the proceedings to continue.1

[6] The plaintiffs are the liquidators of Red Beach Construction Ltd (RB Construction) and Gaode Holdings Ltd (Gaode). The defendant, Changxin (Jason) Pan (Mr Pan), was the sole director and shareholder of both RB Construction and Gaode.

[7]Mr Pan ran a property development business through the following companies:

(a)RB Construction;

(b)Gaode;

1 An order under s 76(2) is only required in relation to the first cause of action, because those are the only causes of action which involve the recovery of a debt provable in the bankruptcy. The second, third, and fourth causes of actions are not proceedings to recover any debt provable in the bankruptcy. The compensation that I order under s 301 of the Companies Act 1993 in relation to the second, third, and fourth causes of action are not debts or liabilities that the bankrupt defendant owed at the time of adjudication. No debt or liability arose in relation to the second, third, and fourth causes of action until such time as I made the relevant orders at the conclusion of the hearing.

(c)Red Beach Development Ltd (RB Development);

(d)Fangzhou International Ltd (Fangzhou);

(e)CNNZ Trustee Services Ltd (CNNZ); and

(f)Wanbao Solution Ltd (Wanbao).

[8] RB Construction was put into liquidation on 19 May 2021. Gaode was put into liquidation on 22 September 2022.

[9]The plaintiffs seek summary judgment against Mr Pan in relation to:

(a)Mr Pan’s outstanding shareholder account debt in relation to Gaode, which he has failed to repay on demand ($255,314); and

(b)Payments that…

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 Jeffreys v Pan

Details

AGLC: Jeffreys v Pan [2024] NZHC 1545
Case: [2024] NZHC 1545
Decision Date: 13 June 2024

CaseChat Overview and Summary

The High Court of New Zealand delivered judgment in the case of Stephanie Beth Jeffreys and Malcolm Russell Moore, as liquidators of Caode Holdings Limited and Red Beach Construction Limited (both in liquidation) v Changxin (Jason) Pan. The plaintiffs sought summary judgment against the defendant, who was the sole director and shareholder of the companies in liquidation. The plaintiffs sought to recover an outstanding shareholder account debt of $255,314 from the defendant in relation to Gaode, and relief under section 301 of the Companies Act 1993 for payments made from Red Beach Construction's accounts to related entities. The defendant was adjudicated bankrupt, but the court allowed the proceedings to continue under section 76(2) of the Insolvency Act 2006.

The court considered whether the plaintiffs had satisfied the legal requirements for summary judgment, namely that the defendant had no defence to a cause of action in the statement of claim. The court held that the plaintiffs had discharged their onus by providing sufficient evidence to show that the defendant had no defence to the first cause of action, and that the defendant had failed to provide any evidence in opposition. The court found that the outstanding shareholder account debt was a repayable advance and that the defendant had no defence to this claim.

The court also considered the second, third, and fourth causes of action, seeking relief under section 301 of the Companies Act 1993 for breaches of directors' duties. The court held that the plaintiffs had established that the defendant had no reasonably arguable defence to these claims, as the related party net payments made by the defendant were in breach of his duties under sections 131, 133, and 135 of the Act. The court granted summary judgment in favour of the plaintiffs for the sum of $196,842, plus interest and costs.

In conclusion, the court granted summary judgment on the terms sought by the plaintiffs. The defendant was ordered to repay the outstanding shareholder account debt of $255,314, plus interest and costs. The defendant was also ordered to contribute $196,842 to Red Beach Construction's assets, plus interest and costs.

Orders