Wang v Guangzhou Dongjiang Petroleum Science & Technology Development Company Limited

[2023] NZHC 1739

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2020-404-921

[2023] NZHC 1739

UNDER

Part 17 of the High Court Rules 2016

BETWEEN

JIANPING WANG

First Applicant

ONE PURE INTERNATIONAL GROUP LIMITED
Second Applicant

AND

GUANGZHOU DONGJIANG PETROLEUM SCIENCE &

TECHNOLOGY DEVELOPMENT COMPANY LIMITED
First Respondent

YONGNAN KANG

Second Respondent

Hearing:	On the papers
Counsel:	G D Simms and S J Macintosh for Applicants J Strauss for Respondents
Judgment:	5 July 2023

JUDGMENT OF PETERS J

[Application for Leave to Appeal]

This judgment was delivered by Justice Peters on 5 July 2023 at 4.45 pm pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date: ...................................

JIANPING WANG v GUANGZHOU DONGJIANG PETROLEUM SCIENCE & TECHNOLOGY DEVELOPMENT COMPANY LTD [2023] NZHC 1739 [5 July 2023]

Introduction

[1]    On 9 May 2023, I dismissed an application by the first and second applicants, Mr Wang and One Pure International Group Ltd (“One Pure”), to vary an interim charging order in favour of the first respondent, Guangzhou Dongjiang Petroleum Science & Development Company Ltd (“GDP” and “GDP’s charging order”).1

[2]    The application to vary was made pursuant to High Court Rules 2016, r 17.44, on the basis that the applicants were prejudicially affected by GDP’s charging order.

[3]    By application dated 6 June 2023, the applicants seek leave to appeal my judgment to the Court of Appeal.2 The respondent opposes the application for leave.

[4]    Counsel have advised that they are content I should determine the application on the papers and without the need for submissions. I propose to grant leave for the reasons set out below.

Background

[5]    Mr Kang, the second respondent, is indebted to each of Mr Wang and GDP, and each has a charging order in respect of shares he holds in several companies. In each case the charged shareholdings include Mr Kang’s valuable 25 per cent shareholding in One Pure.

[6]Mr Wang holds the other 75 per cent of the shares in One Pure.

[7]    The variation the applicants’ sought to GDP’s charging order, and which I declined, was to exclude Mr Kang’s 25 per cent shareholding in One Pure.

[8]    GDP’s charging order charges Mr Kang’s shareholdings with payment of the sum due to GDP, denominated in Chinese Yuan. By my calculation the NZ$ equivalent of the sum charged is approximately $3.25 million.

1      Wang v Guangzhou Dongjiang Petroleum Science & Technology Development Company ltd

[2023] NZHC 1087.

2      Senior Courts Act 2016, s 56(3).

[9]    The sum charged in Mr Wang’s case is substantially more, being approximately (NZ)$23.7 million plus interest and costs.

Application to vary

[10]   A charging order charges a debtor’s beneficial interest in an asset. The applicants’ primary case before me was that Mr Kang’s shareholding should be excluded from GDP’s charging order as Mr Wang now holds the beneficial interest in that shareholding.

[11]   This transfer of the beneficial interest was said to result from Mr Wang having given Mr Kang a “transfer notice” as provided for in a Shareholders Agreement between Mr Wang and Mr Kang dated 29 November 2018.

[12]   Secondly, and alternatively, the applicants contended that One Pure was and is prejudiced by GDP’s charging order as its effect is to impose a “freeze” on Mr Kang’s One Pure shareholding. The applicants’ evidence was that this freeze inhibits the proper management of One Pure.

[13]   GDP’s case on the applicants’ first submission was that Mr Kang continued to hold the beneficial interest in the One Pure shareholding and that it should continue to be subject to GDP’s charging order, that is the variation sought should be declined. On the applicants’ second submission, GDP contended that the prejudice of which the applicants complain is not caused by GDP’s  charging order but by the fact that     Mr Kang’s whereabouts are unknown and he is not responding to attempts to contact him.

[14]I accepted GDP’s submissions and declined the application.

Grounds on which leave is sought

[15]   Some of the grounds on which the applicants seek leave to appeal do not entirely accord with my recollection of the submissions made at the hearing. Regardless, I accept that the question of whether Mr Kang continues to hold the beneficial interest in his shareholding in One Pure, and thus whether it should or can

be subject to GDP’s charging order, is important. Likewise, the applicants’ case on prejudice, if Mr Kang does retain the beneficial interest.

Relevant principles

[16]   In Finewood Upholstery Ltd v Vaughan, Fitzgerald J described the requirement for leave to appeal as a “filtering mechanism” to “ensure that unmeritorious appeals of interlocutory orders, or appeals of interlocutory orders of no great significance to either the parties or more generally, do not unnecessarily delay the proceedings in which the orders were made”.3

[17]   The principles which govern the grant or refusal of an application for leave to appeal are as follows:4

[6]... The following considerations [are] recognised as relevant on an application for leave to appeal:

(a)a high threshold exists;

(b)the applicant must identify an arguable error of law or fact;

(c)the alleged error should be of general or public importance warranting determination or otherwise of sufficient importance to the applicant to outweigh the lack of general or precedential value;

(d)the circumstances must warrant incurring further delay; and

(e)the ultimate question is whether the interests of justice are served by granting leave.

Discussion

[18]   The applicants’ proposed appeal meets both the rationale Fitzgerald J identified and the criteria above. The first part of the applicants’ case depends on the proper construction of the relevant provisions of the shareholders’ agreement and, more generally, their appeal concerns a sufficiently important issue to warrant leave. Resolution of the appeal may well result in resolution of this entire proceeding and thus the dispute between the parties.

3      Finewood Upholstery Ltd v Vaughan [2017] NZHC 1679 at [13].

4      Greendrake v District Court of New Zealand [2020] NZCA 122 at [6] and Lange v Lange [2020] NZHC 3151 at [26]. See also Gong v Commissioner of Police [2020] NZCA 598 at [9].

Result

[19]I grant leave to appeal accordingly.

Peters J

Solicitors:           Wynn Williams, Auckland

JC Legal, Auckland

Counsel:            J Strauss, Auckland