Lam v Mo - [2021] NZHC 1663

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2013-485-001736

[2021] NZHC 1663

BETWEEN MAN FUNG LAM, YUET MING BETTY WONG and MORAL DRAGON LIMITED
Plaintiffs

AND

CHIU CHEUNG MO and LILY YUET HA WONG

First Defendants

AND

SUNLINK DEVELOPMENTS LIMITED

Second Defendants

AND

PLIMMERTON HEIGHTS CONSTRUCTION LIMITED

Third Defendants

AND

STEVEN WEE HONG LEE

Fourth Defendant

Hearing: 20 May 2021

Appearances:

R J B Fowler QC and P W F Cheng for the Plaintiffs

M R C Wolff and H J Dempsey for the First, Second and Third Defendants
No appearance for the Fourth Defendant

Judgment:

6 July 2021

JUDGMENT OF NATION J

[1] I refer to the plaintiffs in the way they have been referred to in earlier judgments of the Court as “the Lams”. I refer to the first defendants as “the Mos”.

LAM v MO [2021] NZHC 1663 [6 July 2021]

[2] The second defendant, Sunlink Developments Ltd (Sunlink Developments), was involved in a residential subdivision in Plimmerton. The third defendant, Plimmerton Heights Construction Ltd (Plimmerton Heights), built homes on that site. The sole director and registered shareholder of those two companies is one of the first defendants, Mo Chiu Cheung, known in the litigation by his English name David Mo.

[3] In these proceedings the Lams claimed they had an interest in the businesses associated with the Mos, particularly the Plimmerton development.

[4]In a judgment of 16 May 2017 (Judgment No. 1), Williams J said:1

[7] The essential dispute between the Lams and the Mos is therefore over which of the Sunlink Group’s companies the Lams have interests in, and the comparative size of that interest as against the Mos and any other interest holders. There is then a downstream issue about what obligations the Mos and any relevant Sunlink companies might owe the Lams by way of account of profits.

[5]Williams J summarised his findings as:

[214] I have found that the Lams hold a 35 per cent interest in the Plimmerton subdivision joint venture incorporating Sunlink Developments and Plimmerton Heights Construction Ltd.

[215] I have found that the Mos (and David in particular) owed fiduciary obligations to the Lams in relation to the Plimmerton joint venture, in addition to obligations owed by the companies and David as director and any rights of ordinary shareholders. These obligations required that deductions and expenses from revenue for the purpose of deriving profit were only such as were reasonably necessary to derive that profit, and in light of the no conflict fiduciary obligation owed to the Lams.

[216] I have held that it is in order for reasonable deductions to be made to account for the time and skill expended [by] David in deriving the Plimmerton joint ventures profits and that this issue must be returned to this Court for final resolution.

[217] I have held further that the Lams had no entitlement to the shareholder salaries they claimed were promised to them.

[218] And I have held…

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 Lam v Mo

Details

AGLC: Lam v Mo [2021] NZHC 1663
Case: [2021] NZHC 1663
Decision Date: 6 July 2021

CaseChat Overview and Summary

The case of Lam v Mo was heard in the High Court of New Zealand, Wellington Registry. The plaintiffs, Lam and Wong, sought a determination of their interest in various businesses associated with the defendants, Mo and Sunlink Developments Limited. The main dispute was over which companies the plaintiffs held interests in and the size of those interests compared to the defendants and any other interest holders. Additionally, the plaintiffs claimed obligations owed to them by the defendants. The proceedings involved a series of hearings and judgments, with the latest hearing taking place on 20 May 2021.

The legal issues before the Court were the calculation of interest and costs. The plaintiffs sought interest on their share of profits from the joint venture from 20 June 2013 to the date of payment, while the defendants argued for an offset of interest on certain sums. The Court found the plaintiffs were entitled to interest on the sum of $57,475 at a rate of five per cent per annum from 20 June 2013 to the date of judgment and interest on $96,856 at the same rate from 15 February 2019 to the date of judgment.

Regarding costs, the plaintiffs sought costs on a 2B basis for the proceedings up to the completion of the hearing for Judgment No. 2, and further steps in the proceedings up to the end of the hearing that led to this judgment. The defendants argued that the costs should be reduced for the limited success the plaintiffs achieved. The Court determined that neither Sunlink Developments nor Plimmerton Heights were entitled to costs as against the plaintiffs. The plaintiffs were entitled to costs and disbursements on a 2B basis against the defendants for the period up to 16 May 2017 and from 9 November 2018 to this judgment.

In conclusion, the Court found in favour of the plaintiffs on both interest and costs. The plaintiffs were awarded interest on their share of profits and costs on a 2B basis against the defendants. The Court reserved leave for the parties to file a memorandum setting out the precise terms of the orders to be made in accordance with this judgment.

Orders