Zhang v Kamal - [2017] NZHC 1943

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2017-404-773 [2017] NZHC 1943

UNDER Section 284 of the Companies Act 1993

IN THE MATTER OF

the liquidation of ELT RECYCLING (NZ) LIMITED (IN LIQUIDATION)

BETWEEN

JUN ZHANG AND ORS Applicants

AND

IMRAN MOHAMMED KAMAL First Respondent

PETER GEORGE ADAMS Second Respondent

CORPORATE & PRESTIGE LTD Third Respondent

ROD OTTER Fourth Respondent

Hearing: 21 July 2017

Counsel:

S W Greer for Applicants
P G Adams, in person, Second Respondent
P G Adams, as director, and with leave, for Third Respondent
No appearance by or on behalf of First and Fourth Respondents

Judgment:

15 August 2017

JUDGMENT OF HEATH J

Solicitors:
Solv Law Ltd, Auckland Norling Law Ltd, Albany Copy to:
P Adams, Second Respondent

ZHANG AND ORS v KAMAL [2017] NZHC 1943 [15 August 2017]

Introduction

[1] ELT Recycling (NZ) Ltd (ELT Recycling) was incorporated as a limited liability company on 2 October 2015. It was designed to be a corporate vehicle through which Mr Jun Zhang, Mr Weidong Li, Mr Changlong Jiang and Mr Peter Adams could use intellectual property that Mr Adams was developing for tyre and battery recycling. Mr Adams had been working for some time on developing systems that would promote an environmentally sound approach to recycling of that type.

[2] On incorporation, Mr Zhang and Mr Adams were appointed as the first directors of ELT Recycling. Mr Zhang held 35 per cent of the shares. Mr Li, Mr Jiang and Mr Adams held 30 per cent, 10 per cent and 25 per cent respectively. Mr Zhang and Mr Adams live in Auckland. Mr Zhang does not speak English fluently, and is often out of New Zealand on business. Mr Li and Mr Jiang are resident in China and Australia respectively.

[3] The initial intention was that Mr Zhang, Mr Li and Mr Jiang (collectively, the Zhang interests) would together contribute $112,500 as working capital. Mr Adams was to pay $37,500. The Zhang interests paid $112,500 into the company, but Mr Adams did not make any monetary contribution.

[4] In the period between incorporation and April 2016, relationships between the Zhang interests and Mr Adams soured. Viewed from the perspective of the Zhang interests, Mr Adams had failed to pay his working capital contribution of
$37,500. Viewed from his perspective, Mr Adams believed that the Zhang interests were well aware that he was not able to contribute that sum until later, and his contribution in developing intellectual property was undervalued by them. Having heard from Mr Adams, I have no doubt that he sincerely holds that view.

[5] Things came to a head on 20 April 2016 when Mr Adams’ company, Corporate & Prestige Ltd (Corporate & Prestige), issued an invoice in the sum of
$36,732. This was claimed as remuneration for his personal services. The amount is marginally less than the sum of $37,500 that the Zhang interests had expected Mr Adams to contribute working capital.

[6] The Zhang interests refused to pay.…

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 Zhang v Kamal

Details

AGLC: Zhang v Kamal [2017] NZHC 1943
Case: [2017] NZHC 1943
Decision Date: 15 August 2017

CaseChat Overview and Summary

Zhang v Kamal is a case involving a dispute over the liquidation of ELT Recycling (NZ) Limited, a company incorporated for the purpose of recycling tyres and batteries. The applicants, Jun Zhang and others, sought to have the appointment of Imran Kamal as liquidator declared invalid and to restore the company's affairs to their previous status. The respondents were Imran Kamal, Peter George Adams, Corporate & Prestige Ltd, and Rod Otter. The High Court of New Zealand was tasked with deciding whether the liquidator's appointment was valid and if so, whether the liquidation should be terminated and the company's affairs restored.

The court found that the liquidator's appointment was invalid due to improper procedures and lack of notice to the shareholders. The court also found that the changes to the company's status, such as the appointment of an administrator and the issuance of new shares, were unlawful. The court ordered the termination of the liquidation and the restoration of the company's affairs to their previous status. The court also ordered the invalid resolutions and documents to be removed from the Register of Companies, and declared that Corporate & Prestige held no shares in ELT Recycling and was not a secured creditor. The court further ordered that Mr Zhang had not been removed as a director of ELT Recycling and directed Mr Kamal to return all property or company records belonging to ELT Recycling that were in his possession to the solicitors for the Zhang interests. The court reserved leave for the Zhang interests to apply for any further declarations or orders in relation to the Register of Companies. The court also ordered Mr Adams and Corporate & Prestige to pay costs to the Zhang interests on a 2B basis, together with reasonable disbursements, and for Mr Adams to meet the one-half share of the liquidator's costs paid by the Zhang interests to date.

Orders