Li v EJ Holdings Limited - [2021] NZHC 1830

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2041

[2021] NZHC 1830

BETWEEN
NING LI

Plaintiff

AND

EJ HOLDINGS LIMITED

First Defendant

HEYDAY INTERNATIONAL LIMITED
Second Defendant

FANSHENG MENG
Third Defendant

SHAOYING SUN

Fourth Defendant

Hearing: On the papers

Appearances:

H McDermott for the Plaintiff

W McCartney for the Defendants

Judgment:

20 July 2021

JUDGMENT OF GORDON J

[As to costs]

This judgment was delivered by me on 20 July 2021 at 2 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar Date:

Solicitors: Righteous Law, Auckland
Carson Fox Legal, Auckland

Counsel: W McCartney, Auckland

LI v EJ HOLDINGS LTD [2021] NZHC 1830 [20 July 2021]

Introduction

[1] This is an application for costs by the defendants, EJ Holdings Limited, Heyday International Limited, Fansheng Meng and Shaoying Sun.

[2] In my judgment of 13 February 2020, I refused an application by the plaintiff, Ning Li, for freezing orders against the defendants. I found Ms Li was unable to establish a good, arguable case for any of her four causes of action: prejudice to a minority shareholder; breach of fiduciary duty as directors; conversion; and unjust enrichment. Nor was there a real risk of dissipation of assets by the defendants.

[3] The parties were not able to agree costs and in accordance with my direction they filed separate costs memoranda on 25 February 2020 and 5 March 2020.1 As is apparent, there has been a significant delay in costs being determined. The usual processes were not followed by the case officer concerned. As a consequence the memoranda were not provided to me until 16 July 2021. The Registry has apologised to counsel for this unacceptable lapse.

Background

[4] Ms Li lives in China. Her claim is she invested NZD 780,000 in the first defendant, EJ Holdings Ltd. She heard about EJ Holdings Ltd through Kenghong Li, who was her classmate at school in China. He told her he owned a furniture business in New Zealand. Mr Li said Ms Li’s investment would assist her daughter’s application to attend New Zealand schools.

[5] Ms Li claimed Mr Li convinced her to invest in EJ Holdings Ltd. He said it was a good investment and told her to transfer the money for the investment into his personal bank account in China to avoid any complicated international money transfer procedures and for convenience.

[6] Between 19 March 2017 and 8 May 2017, Ms Li transferred NZD 750,000 to Mr Li’s personal bank account. Mr Li also asked Ms Li to transfer NZD 30,000 in rent to EJ Holdings’ bank account. Ms Li did not know what the money was used for

1 Li v EJ Holdings Ltd [2020] NZHC 146 at [64].

or where it went. Mr Li said Ms Li would receive 20 per cent shares in EJ Holdings. Ms Li signed a shareholder agreement and then transferred NZD 250,000 afterwards.

[7] In August 2018, Ms Li heard that Mr…

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 Li v EJ Holdings Limited

Details

AGLC: Li v EJ Holdings Limited [2021] NZHC 1830
Case: [2021] NZHC 1830
Decision Date: 20 July 2021

CaseChat Overview and Summary

This matter concerns an application by the defendants for costs following an unsuccessful application by the plaintiff, Ning Li, for a freezing order. Ning Li had alleged four causes of action against the defendants, EJ Holdings Limited, Heyday International Limited, Fansheng Meng, and Shaoying Sun, however, these claims were dismissed by the court. The court was required to determine whether the defendants were entitled to increased costs in light of the unsuccessful application and the merits of the arguments presented by Ning Li. The court found that while Ning Li's application for a freezing order was unsuccessful, the arguments presented were not completely devoid of merit and therefore, did not warrant an uplift in costs. The court ultimately awarded the defendants costs of $7,279.11 against Ning Li.

The court considered the submissions made by both parties and found that the defendants were entitled to costs as successful parties. The court also considered whether the defendants were entitled to increased costs in light of the unsuccessful application and the merits of the arguments presented by Ning Li. The court found that while Ning Li's application for a freezing order was unsuccessful, the arguments presented were not completely devoid of merit and therefore, did not warrant an uplift in costs. The court compared the present case with other cases where increased costs were awarded, and found that the arguments presented by Ning Li were not of the same calibre as those in the other cases. The court ultimately awarded the defendants costs of $7,279.11 against Ning Li.

Orders