Ali v West Village Capital Partners Limited (in receivership and liquidation)

[2024] NZHC 1068

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2021-404-2298

[2024] NZHC 1068

BETWEEN

DANIEL ALI

Plaintiff

AND

WEST VILLAGE CAPITAL PARTNERS

LIMITED (in receivership and liquidation) First defendant

M P LIMITED (formerly Echinus Limited) Second defendant

FARHAD MOINFAR
Third defendant

PERPETUAL CORPORATE TRUST LTD and A.C.N. 634 927 469 PTY LTD (as

trustee for the Union Green Trust) Fourth defendants

ANDREW JAMES FAWCET

First third party

Hearing:	1 May 2024
Appearances:	P J Wright and JAR Barrow for plaintiff
Date of judgment:	3 May 2024

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 3 May 2024 at 12.30pm. Pursuant to Rule 11.5 of the High Court Rules.

…………………………

Registrar/Deputy Registrar

Counsel/Solicitors:

P J Wright, Barrister, Auckland D J Chisholm KC, Auckland JAR Barrow, Barrister, Auckland Murdoch Price, Manukau

Claymore Partners Limited, Auckland

ALI v WEST VILLAGE CAPITAL PARTNERS LTD [2024] NZHC 1068 [3 May 2024]

[1]    As duty judge, I have Daniel Ali’s application for judgment by default on his claim against the second defendant (M P Limited (MPL), formerly Echinus Limited) for damages for breach of contract, either as a liquidated demand or by way of formal proof,1 or on formal proof of alternative causes of action  for breach of trust,  under ss 42–43 of the Fair Trading Act 1986 for misleading or deceptive conduct or for breach of s 174 of the Companies Act 1993.

Background

[2]    On 16 July 2014, Mr Ali acquired an interest in a property development in consideration of his payment of $1.125 million to MPL. The development did not proceed. At MPL’s suggestion, in March 2015, Mr Ali transferred his interest to another property development.

[3]    The structure of his interest was as 1.7 million shares in MPL, redeemable by him either for particular units in the completed development at a total price of

$1.7 million, or for cash from MPL at $1 per share by 21 July 2018. Any shares outstanding after 21 July 2019 “automatically” were to be redeemed by MPL for its payment to Mr Ali of $1 per share.

[4]    As illustrated in other judgments of this Court,2 also giving greater detail to the prior explanation, there were further complications including non-completion of the development by 21 July 2019 and anyway if MPL had ownership of the units in the development for which Mr Ali subscribed. Given the last, Mr Ali’s contractual claim for the perceived value of the units as calculated from their actual prices is unfounded.

[5]    In the event, Mr Ali did not redeem his shares either by 21 July 2018 or at all, and MPL accordingly was liable to pay him $1.7 million after 21 July 2019, but did not do so. As the other judgments confirm, MPL has admitted as much.

1      High Court Rules 2016, rr 15.7 and 15.9.

2      Ali v West Village Capital Partners Ltd [2021] NZHC 3090; Ali v West Village Capital Partners Ltd [2022] NZHC 3045.

Discussion

[6]    Although Mr Ali claims judgment by default, none of the relief claimed by him is “payment of a liquidated demand in money”.3 Rather, under a variety of causes of action as against MPL (which has filed no defence), he seeks specific performance, an accounting or payment of compensation, damages in an unquantified amount or minority relief. Despite MPL’s failure to file a defence, judgment cannot be sealed “for a sum not exceeding the sum claimed in the statement of claim”.4 Accordingly, Mr Ali must depend on formal proof of his claim.5

[7]    On a formal proof hearing, I need only be satisfied Mr Ali has filed affidavit evidence establishing “each cause of action relied on and, if damages are sought, providing sufficient information to enable the Judge to calculate and fix the damages”.6 By ‘satisfied’ is meant I just make up my mind that is the case.7

[8]    Mr Ali’s affidavit is unorthodox as not “the personal statement of the deponent”,8 but expressed in Mr Ali’s “second language” of English, read to him by his daughter “in [his] usual language [Indonesian] Bahasa” and only confirmed by him “correct”. Nonetheless I have not relied on his narrative as much as the documents he exhibits. Particularly given their consistency with facts found in the other judgments, and the absence of any defence from MPL, I consider it  unduly formulaic to have Mr Ali’s evidence re-presented in his personal words for translation (if necessary) on this application for judgment by default on formal proof.

[9]    The core pleading in Mr Ali’s contractual cause of action under which he seeks damages, although focused on MPL’s contended obligation to transfer units to him, is he is caused loss and damage by MPL’s breach. As not materially or unjustly diverting from the object of the original pleading,9 I consider breach of MPL’s obligation to pay on automatic redemption of his shares a cause of action open here to be relied on.

3      High Court Rules, r 15.7(1).

4      Rule 15.7(1).

5      Rule 15.9.

6      Rule 15.9(4).

7      Z v Dental Complaints Assessment Committee [2008] NZSC 55, [2009] 1 NZLR 1 at [96].

8      Evidence Act 2006, s 83(2)(a).

9      Stone v Smith (1887) 35 ChD 188 at 190.

[10]   I am satisfied the affidavit evidence establishes Mr Ali acquired 1.7 million shares in MPL for due consideration, on terms including MPL’s residual obligation to redeem his outstanding shares at $1 per share after 21 July 2019, and MPL’s failure to do so in relation to Mr Ali’s 1.7 million shares outstanding at that date. MPL’s breach and Mr Ali’s loss thus is made out. I therefore do not consider the alternative causes.

[11]   Given the precision of MPL’s obligation and the certainty of its breach I have sufficient information to calculate and fix damages. As a money judgment, I also must order interest from a date,10 which I specify if necessary as 21 July 2019.

Result

[12]   I order MPL pay Mr Ali damages in the amount of $1.7 million, together with interest calculated from 21 July 2019 and 2B costs in the amount of $7,887 plus disbursements as fixed by the Registrar.

—Jagose J

10     Interest on Money Claims Act 2016, s 9.