Part of a carefully camouflaged plot, a Cessna 172 aircraft registration was changed from ZK-DXP to ZK-LIT. Junjie Li was ordered to pay $126,000 damages for his part in a deceptive scheme having his company take on lease of a light aircraft on terms favouring a second company he secretly controlled, then trying to cover his tracks with misleading and evasive answers denying any personal benefit from the deal.
Wanaka-based Classic Flights Ltd is in liquidation, owing creditors some $189,000.
Liquidators were perplexed by a so-called licensing deal which saw a Cessna aircraft leased on uncommercial terms from a business called Apex Aviation. Classic Flights was bearing the costs whilst Apex appeared to be enjoying the benefits.
Ownership and management of Apex was proving opaque.
Liquidators had little more than Companies Office records to work with. They showed Junjie Li as director of Classic Flights for some two years before resignation in 2019.
Mr Li is also known as Fox Li.
A Wanaka address was given as a residential address for two replacement directors. This address was Classic Flights’ hanger at Wanaka airport. These new directors in fact live in China, leaving Classic Flights in breach of Companies Act rules requiring at least one director live in New Zealand.
A contract set up earlier by Mr Li saw Cessna registered ZK-DXP leased by Classic Flights from Apex on unusual terms. Classic was liable for all maintenance costs. The aircraft was only twenty hours short of a major mandatory commercial overhaul, due after 1800 hours operation.
Classic Flights paid $126,000 for a full engine overhaul, upgraded avionics and an engine upgrade from 150 hp to 180 hp.
Classic saw limited benefit from its lease; Apex had first claim on the aircraft’s use.
Unable to get clear answers from Mr Li about circumstances of the lease, he was summoned for examination on oath by Classic Flights’ liquidators. His answers on oath proved equally evasive.
He could not identify who were the accountants supposedly holding Classic Flights accounting records.
He would not identify his relationship with one Lin Shi who was apparently in control of a company called U-Fly New Zealand Ltd which by then had possession of ZK-DXP, re-registered since late 2019 as ZK-LIT.
Mr Li implied Lin Shi is male. Later enquiries identified she is Mr Li’s spouse. Their relationship was disguised in Companies Office registrations by having the two recorded as living at separate addresses.
The High Court was told Mr Li is senior flying instructor at U-Fly. Through family nominees, he controls the company.
In the High Court, Mr Li was held liable for breach of directors’ duties as director of Classic Flights for not acting in good faith and for abusing his power as director by arranging a ridiculously uncommercial deal for lease of the Cessna aircraft by Classic on terms benefitting his family through its ownership of rival business U-Fly.
He was ordered to pay $126,600 damages to Classic Flights, being Classic’s maintenance costs overhauling the aircraft.
At a later court hearing, Mr Li was ordered to pay, in addition, liquidators’ full costs of nearly $100,000 incurred taking legal against him. Mr Li’s evasive behaviour had frustrated liquidation enquiries and subsequent litigation, Justice Churchman ruled.
Classic Flights Ltd v. Li – High Court (6.05.25 & 26.06.25))
25.147