Defendant acted with deliberate intent to deceive the plaintiff into making an investment
The High Court awarded US$2.78m in damages to a US-based hydrogen fuel cell company after determining that a New Zealand businessman fraudulently induced the company to invest in a shell entity through false claims about groundbreaking hydrogen production technology.
The plaintiff, a Delaware-incorporated company specializing in hydrogen fuel cells for zero-emission vehicles, alleged that the defendant fabricated claims about the intellectual property and operational capabilities of Global NRG H2 Ltd (H2). These claims led the plaintiff to invest US$2,448,000 in H2 shares between 2020 and 2021.
The court found that the defendant falsely represented H2 as a key player in the energy sector, claiming it had exclusive rights to revolutionary waste-to-energy technologies. These representations included assertions that H2 could produce green hydrogen at a cost of US$2 per kilogram—significantly cheaper than market rates—and claims of extensive global operations with hundreds of hydrogen hubs under development. Evidence presented at trial, however, revealed that H2 was a shell company with no assets, technology, or operational facilities to support these claims.
The court noted that the defendant repeatedly refused to provide evidence substantiating his claims, citing excuses such as transactions being conducted exclusively in Bitcoin and a lack of traditional business records. Investigations commissioned by the plaintiff revealed inconsistencies, including false claims about patents, staff, and the defendant’s professional background.
The High Court determined that the defendant acted with deliberate intent to deceive the plaintiff into making the investment. It held that the plaintiff relied on the defendant’s misrepresentations when entering into share subscription agreements governed by New Zealand law. The court also ruled that the defendant’s conduct constituted misleading and deceptive behaviour under the Fair Trading Act 1986 (FTA) and the Financial Markets Conduct Act 2013 (FMCA).
The High Court awarded US$2,448,000 in compensatory damages, reflecting the total investment made by the plaintiff. Additionally, the court ordered US$338,846.96 in pre-judgment interest, bringing the total judgment to US$2,786,847. Interest will continue to accrue until the judgment is fully paid.
