Whilst living back in China, Jie Cao left fellow shareholder Yi Wang in sole charge of their Auckland health food store. Ms Wang was ordered to hand over $157,244 wrongly taken from the business and to account for profits from $370,700 stock she diverted to her own rival business.
Cao and Wang agreed to join forces in 2017 setting up a health supplement store when Mr Cao as a recent immigrant met Ms Wang working as store manager on Dominion Road in Mt Eden. NZ Causeway Bay International Trading Ltd was registered with Mr Cao as sole director and shareholding split 70:30 between Mr Cao and Ms Wang. Unbeknown to Mr Cao, Ms Wang joined with another investor within months to set up a rival business trading as Oceania Health Care Product which set up shop over the road from Causeway Bay’s retail store.
The High Court was told Mr Cao spent most of his time in China, leaving Ms Wang in full control of Causeway Bay operations. He became suspicious when she stopped providing financial information. He later discovered she was diverting company cash for personal expenses, used her own WeChat barcode at Causeway Bay’s counter to divert store revenue into her own bank account and also transferred Causeway’s stock to Oceania Health across the road.
Justice Tahana held Ms Wang liable for a breach of directors’ duties as if she were a director of Causeway Bay. She was not in fact a director, but treated at law as a ‘de facto’ director since she had complete control of Causeway’s management decisions in the absence of Mr Cao. As a de facto director she did not act in good faith and she did not act in the best interests of Causeway Bay, Justice Tahana ruled.
Ms Wang did not appear in court to defend the claim.
NZ Causeway International Trading Ltd v. Wang – High Court (20.09.22)
22.166