25 Mar 2019

Mainzeal director Richard Yan appeals $36 million High Court decision

1:21 pm on 25 March 2019

Mainzeal director Richard Yan is appealing a High Court decision which ordered him to pay $36 million relating to the company's collapse saying the court made several errors, including its findings relating to liability.

Mainzeal managed the demolition of the Clarendon Tower in Christchurch

Photo: CC BY-SA 3.0 / Schwede66

Mainzeal was the country's third-largest construction company when it collapsed in 2013, owing creditors more than $110 million.

Last month the High Court ruled that Mainzeal traded for nine years while it was insolvent and its parent company Richina Pacific borrowed money from Mainzeal to buy assets in China.

The court ruled Richard Yan should be liable for a third of the loss because as a shareholder in Richina Pacific, he benefited significantly from the money taken out of Mainzeal.

The appeal notice claimed the High Court made several errors, including its findings relating to liability and cause of the company collapse.

Mr Yan has appealed parts of the decision including that his "culpability was substantially greater than the other directors due to his conflict of interest and personal benefit".

The appeal notice said the High Court erred in finding that Mr Yan's "breach of s135 caused a total loss of $110m to Mainzeal's creditors upon Mainzeal's liquidation, and (implicitly) finding that this was sufficient to establish that Mr Yan's breach caused a $110m loss to Mainzeal".

He is also disputing the decision that allowed for some of the directors - Dame Jenny Shipley, Peter Gomm and Clive Tilby - to pay $6m each as opposed to his $36m.

Last year the liquidators, Andrew Bethell and Brian Mayo Smith of BDO, an accounting and advisory firm, took some of the directors and Richard Yan to court.

The liquidators alleged the directors had allowed the company to trade while insolvent and sought up to $75m to repay creditors, although the directors vigourously denied the claims.

Justice Cooke said the directors were not in breach while Mainzeal was backed by Richina, but when the two companies separated after a restructuring in 2009 that safety net ended.

He said allowing the company to keep trading at that point was a breach.

The High Court's findings were made "without Mr Yan having an adequate opportunity to be heard both as evidence and submission," the appeal notice said.

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