Zheng v Jun Yue Investment Limited

[2023] NZHC 2169

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-001743

[2023] NZHC 2169

BETWEEN

YINJI ZHENG

First Plaintiff

FUNJUN LIU
Second Plaintiff

AND

JUN YUE INVESTMENT LIMITED

First Defendant

PING FAN
Second Defendant

YUE YANG

Third Defendant

HONGTAO ZHANG

Fourth Defendant

Hearing

On the papers

Counsel:

JWA Johnson and C Jiang for Plaintiffs SRG Judd for Second Defendant

T Cooley for Interim Receiver

Judgment:

14 August 2023

JUDGMENT OF LANG J

[on application by interim receiver for directions]

This judgment was delivered by Justice Lang

On 14 August 2023 at 1.00 pm Pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:

Tompkins Wake, Auckland Righteous Law, Auckland JWA Johnson, Auckland SRG Judd, Auckland

YINJI ZHENG v JUN YUE INVESTMENT LTD [2023] NZHC 2169 [14 August 2023]

[1]                 On 13 July 2023 Downs J  delivered  a  judgment  in  which  he  appointed Mr Francis as the interim receiver of the first defendant.1 He reserved leave to the interim receiver to apply to the Court for any directions he may require.2

[2]                 Counsel for the interim receiver has now filed a memorandum seeking further directions. In the absence of Downs J the memorandum has been referred to me as Duty Judge this week.

[3]                 I note that counsel for the second defendant has also filed a memorandum seeking an order rescinding the orders made by Downs J. As counsel for the plaintiffs point out, it is inappropriate for such an application to be advanced by way of memorandum. Any challenge to the orders made by Downs J would need to be by way of appeal against the substantive judgment or by a formal application seeking rescission of the order appointing the interim receiver.

The application

Sections in Pokeno

[4]                 The interim receiver seeks directions giving him the power to sell certain of the company’s assets to provide cashflow to enable the company to meet its ongoing financial obligations. Urgency is required because the companies entered into unconditional agreements to purchase three sections in Pokeno and these will need to be settled within five working days of titles being issued. At this stage it is not known when titles will issue. Once that occurs, however, the company will obviously be required to complete the purchase of the sections at very short notice.

[5]                 The company has paid a deposit in the sum of $200,000 on each of these transactions and currently has insufficient funds to complete settlement without arranging back-to-back on-sale agreements for the sections. If this cannot be done, the company will not be able to complete the purchase of the sections and will forfeit deposits totalling $600,000. The interim receiver accordingly seeks an order permitting him to enter into contracts for the sale of the three remaining sections.

1      Zheng v Jun Yue Investment Ltd [2023] NZHC 1824.

2      At [23](b).

Sections in Flat Bush

[6]                 The company owns six residential sections in Flat Bush, three of which have been sold. The sections are subject to a mortgage securing advances totalling $2 million. These are due for repayment on 15 December 2023.

[7]                 The sale of the three sections will not be completed until November 2024 and December 2025. The interim receiver needs to sell the remaining three sections so he can repay the advances in December 2023.

[8]                 This is made more urgent by the fact that the appointment of the interim receiver has triggered a default interest obligation under the term loan agreement. The interest rate has now increased from 12 per cent per annum to 24 per cent per annum. This means that monthly payments of interest have increased from $20,000 to $40,000 as from the date on which the interim receiver was appointed.

Motor vehicles

[9]The company also owns three motor vehicles that are surplus to requirements.

Debt owing to the Commissioner of Inland Revenue

[10]             The interim receiver has entered into an instalment arrangement with the Inland Revenue Department that will require monthly payments in the sum of $10,000.

Directions sought

[11]The interim receiver now seeks directions as follows:

(a)giving him the power to market and on-sell the three sections at 106 Great South Road, Pokeno that the company has agreed to purchase;

(b)giving him the power to market and sell the three unsold residential sections at 1 Uki Way, Flat Bush, 3 Uki Way, Flat Bush, Auckland and 39 Te Kura Road, Flat Bush, Auckland; and

(c)giving him the power to sell the company’s motor vehicles, namely a 2019 BMW X7 registration number X7X7X7, a 2014 Audi A8 registration number PZN690 and a 2015 Toyota Alphard registration number PUZ667.

Orders

[12]             I am satisfied it is necessary for the Court to make the directions sought to enable the interim receiver to ensure the company meets its ongoing financial obligations. I therefore make orders sought by the interim receiver.

Lang J