Li v EJ Holdings Limited - [2020] NZHC 146

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2041

[2020] NZHC 146

BETWEEN
NING LI

Plaintiff

AND

EJ HOLDINGS LIMITED

First Defendant

HEYDAY INTERNATIONAL LIMITED
Second Defendant

FANSHENG MENG
Third Defendant

SHAOYING SUN

Fourth Defendant

Hearing: 3 February 2020

Appearances:

H McDermott for the Plaintiff

W McCartney for the Defendants

Judgment:

13 February 2020

JUDGMENT OF GORDON J

This judgment was delivered by me
on 13 February 2020 at 2.00 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 [2020] NZHC 146 [13 February 2020]

Introduction

[1] This is an application by the plaintiff, Ning Li, for a freezing order against all four defendants.

Background

[2] Ms Li lives in China. She claims she invested $780,000 in the first defendant, EJ Holdings Ltd (EJ Holdings). In her affidavit in support of the application, Ms Li says that in around 2016, a person by the name of Kenghong Li, who had been her classmate at school in China, told her that he had a furniture business called EJ Holding [sic] Ltd in New Zealand.

[3] She says Mr Li wanted her to invest in EJ Holdings and asserted that it would support her daughter’s application to New Zealand schools if Ms Li had a business in New Zealand. Mr Li told her that the third defendant, Fansheng Meng, was the director of EJ Holdings and that Mr Meng and the fourth defendant, Shaoying Sun, were the shareholders of EJ Holdings.1

[4] Ms Li says that from about January 2017 to April 2017 Mr Li sent her documents about EJ Holdings. He told her that EJ Holdings would import furniture from China to New Zealand and sell it under the trading name of “Heyday”. She says that Mr Li convinced her that investing in EJ Holdings was a good investment opportunity and advised her to transfer the money to his personal bank account in China to avoid any complicated international money transfer procedures, and also for the convenience of EJ Holdings’ accountant.

[5] Ms Li says because of their pre-existing relationship and the trust she held in Mr Li, she transferred RMB¥3,600,000 in total (approximately NZ$750,000) to Mr Li’s personal bank account in China between 19 March 2017 and 8 May 2017.

[6] She says Mr Li told her that in exchange she would receive 20 per cent of the shares in EJ Holdings. She says that of the $750,000 she transferred RMB¥2,400,000 (approximately NZ$500,000) to Mr Li’s bank account before she came to Auckland

1 Companies office documents show that Mr Li was also a shareholder.

to sign the shareholder agreement. She transferred the remaining RMB¥1,200,000 (approximately NZ$250,000) after signing the agreement.

[7] Ms Li says she flew to Auckland at the end of April 2017 with her father for the purpose of signing the relevant documents. On 1 May…

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 [2020] NZHC 146
Case: [2020] NZHC 146
Decision Date: 13 February 2020

CaseChat Overview and Summary

Ning Li filed an application for a freezing order against the defendants EJ Holdings Limited, Heyday International Limited, Fansheng Meng, and Shaoying Sun. Ms Li claims she invested $780,000 in EJ Holdings and wants the court to freeze the defendants' assets to prevent dissipation pending the outcome of her litigation. The court must determine whether there is a good arguable case on an accrued cause of action, if there are assets to which an order can apply, and if there is a real risk that the assets of the prospective judgment debtor might be removed or diminished in value. The court found that Ms Li had not established a good arguable case on any of her four causes of action, which include prejudice to a minority shareholder, breach of fiduciary duty as directors, conversion, and unjust enrichment. The court also found that Ms Li had not satisfied the court of there is a danger assets will be dissipated by the defendants. The application for a freezing order is therefore refused. The court reserves costs, with the parties to file memoranda within 20 working days of the date of the judgment.

Orders