Avon Parnell Limited v Chevin
[2021] NZHC 650
•29 March 2021
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV 2019-404-001119
[2021] NZHC 650
BETWEEN AVON PARNELL LIMITED
First Plaintiff
AND
RYAN MATTHEW LEGGATT
Second Plaintiff
AND
PETER LOUIS CHEVIN
First Defendant
AND
CLARK VINCENT VALMONT and RUSSELL PKR TRUSTEE LIMITED
Second Defendant (Discontinued)
continued overleaf…
Hearing: 22 March 2021 Appearances:
D J Chisholm QC & M J W Lenihan for the Plaintiff
Judgment:
29 March 2021
JUDGMENT OF VAN BOHEMEN J
This judgment was delivered by me on 29 March 2021 at 4.00pm Pursuant to Rule 11.5 of the High Court Rules
…………………………
Registrar/Deputy Registrar
Solicitors/Counsel:
Brown Partners Auckland
D J Chisholm QC, AucklandM J W Lenihan, Barrister, Auckland
AVON PARNELL LIMITED v CHEVIN [2021] NZHC 650 [29 March 2021]
AND
continued from previous page…
GRAEME HAYWARD SKEATES
Third Defendant (Discontinued)AND
NORTHERN INVESTORS TRUSTEE LIMITED
Fourth Defendant
AND
VIADUCT HARBOUR NOMINEES LIMITED
Fifth Defendant
AND
BASECORP FINANCE LIMITED
Sixth Defendant (Discontinued)
AND
TIMOTHY LAIRD EDNEY
Third Party (Stayed)
Introduction
[1] The plaintiffs, Avon Parnell Ltd (Avon Parnell), the owner of properties at 20 and 22 Avon Street Parnell (the Avon properties), and Ryan Leggatt, the sole director and shareholder of Avon Parnell, seek declaratory and injunctive relief and damages of $256,432.32, plus interests and costs, from the first defendant, Peter Chevin.
[2] The proceeding was filed after Mr Chevin had caused the Companies Office to alter Avon Parnell’s registration details to show Avon Parnell’s sole director and sole shareholder respectively as being the second defendants, Clark Valmont and Russell PKR Trustee Ltd (Russell PKR), a trustee company whose shares Mr Valmont held on trust for Mr Chevin.
[3] Following the changes to Avon Parnell’s Companies Office registration details, the sixth defendant, Basecorp Finance Ltd (Basecorp), agreed to lend Avon Parnell approximately $1.1 million, secured by a mortgage against the Avon properties.1 Mr Valmont signed the loan and mortgage documentation as apparent director of Avon Parnell.
[4] At Mr Valmont’s instruction, Basecorp advanced the loan monies to the third defendant, Mr Skeates of Skeates Law Ltd, who was acting for Mr Chevin and Mr Valmont. The loan monies were then transferred, via a new Avon Parnell bank account established for the purpose, to entities owned or controlled by Mr Chevin, including the fourth defendant, Northern Investors Trustee Ltd (NI Trustee), and the fifth defendant, Viaduct Harbour Nominees Ltd (VH Nominees).
[5] Mr Valmont says he acted on the basis of an assurance from Mr Chevin that these arrangements had been agreed orally between Mr Chevin and the third party, Timothy Edney, who is the beneficial owner of the Avon properties.
[6] Avon Parnell, Mr Leggat and Mr Edney deny there was any legal basis for any of these transactions, which took place without their knowledge or agreement. Once they became aware of what had happened, they took urgent steps to try to halt the
1 The agreed loan amount was slightly higher but the amount advanced was $1,000,000.
transactions and to recover the funds advanced by Basecorp, and they alerted the Police, the Registrar of Companies, Land Information New Zealand and the New Zealand Law Society.
The proceeding
[7] On 18 June 2019, Avon Parnell and Mr Leggatt commenced this proceeding by filing a statement of claim.
[8] As a result of freezing orders granted by Palmer J on 19 June 2019,2 approximately $313,600 of the funds advanced by Basecorp were recovered and repaid to Basecorp.
[9] On 24 June 2019, Davison J, granted by consent, an interim injunction restraining Mr Chevin, Mr Valmont, and Russell PKR, and their employees and agents, from, among other things, holding themselves out as agents of Avon Parnell, entering into any transaction or incurring any liability or obligation on behalf of Avon Parnell and lodging any documents at the Companies Office on behalf of Avon Parnell.
[10] On 8 July 2019, Avon Parnell and Mr Leggatt filed an amended statement of claim.
[11] On 18 October 2019, Mr Chevin filed a defence to the amended statement of claim.
[12]In July 2020, Basecorp filed cross claims against Mr Valmont and Mr Skeates.
[13] In October 2020, following a mediation, Avon Parnell, Mr Leggatt, Mr Valmont, Mr Skeates and Basecorp settled the claims and cross claims involving those parties. Under the settlement agreement:
2 Avon Parnell Ltd v Chevin [2019] NZHC 1398.
(a)Basecorp agreed to accept an amount in settlement and discharge of the loan and mortgage less than the $1,000,000 it had advanced to Avon Parnell;
(b)Basecorp received payments from other parties, including Avon Parnell which paid $120,000; and
(c)Basecorp assigned to Avon Parnell and Mr Leggatt any claims Basecorp had against Mr Chevin, which claims were to be brought in the name of Avon Parnell or Mr Leggatt.
[14] Subsequently, Avon Parnell and Mr Leggatt discontinued their claims against Mr Valmont and RPK Trustees, Mr Skeates and Basecorp, and Basecorp discontinued its cross claims against Mr Valmont and Mr Skeates.
[15] Russell PKR, NI Trustee and VH Nominees were put into liquidation on 13 November 2019 and did not take part in the proceeding. Accordingly, Mr Chevin is the only defendant.
The claims against Mr Chevin
[16] In November 2019, Avon Parnell and Mr Leggatt filed a second amended statement of claim in which they pleaded three alternative causes of action against Mr Chevin:
(a)Breach of s 9 of the Fair Trading Act 1986;
(b)Deceit; and
(c)Injurious falsehood.
[17]In the second amended statement of claim, Avon Parnell and Mr Leggatt seek:
(a)A declaration that Mr Leggatt is the sole director and shareholder of Avon Parnell;
(b)An injunction restraining Mr Chevin, his employees and agents, from:
(i)Holding themselves out as agents of Avon Parnell;
(ii)Entering into any transaction or incurring any liability or obligation on behalf of Avon Parnell;
(iii)Lodging any documents at the Companies Office on behalf of Avon Parnell;
(c)Damages, including interest; and
(d)Costs.
[18] Avon Parnell and Mr Leggatt seek damages of $256,432.32 in the Fair Trading Act cause of action, $136,432.32 in the deceit cause of action, and $120,000 in the injurious falsehood cause of action.3
Mr Chevin’s defence struck out
[19] Mr Chevin did not file a defence to the second amended statement of claim. Mr Chevin also did not comply with various timetable orders made for the conduct of the proceeding, including unless orders made by Toogood J on 5 March 2021. In accordance with the orders of Toogood J, and as confirmed by Campbell J in his minute dated 17 March 2021, Mr Chevin’s defence to the proceeding was struck out and Mr Chevin was not permitted to appear at the hearing.
The hearing on 22 March 2021
[20] Following the striking out of Mr Chevin’s defence, the claims of Avon Parnell and Mr Leggatt were heard before me on 22 March 2021 by way of formal proof.
3 The figures under the first two causes of action differ from those in the amended statement of claim to include, in relation to losses suffered by Basecorp, only losses suffered in reliance on Mr Chevin’s alleged misleading and deceptive conduct and alleged deceit.
[21] Affidavits sworn by Mr Edney, Mr Leggatt, Mr Valmont and Craig Rolls, the lending manager for Basecorp, were filed in support of the claims. Although all four deponents were available, I did not consider it necessary to ask questions of them.
[22] Mr Chevin was present for some of the formal proof hearing. Mr Chevin informed the Court that he had sought leave to appeal Toogood J’s order striking out his defence.
Relevant background
[23] In 2015, Mr Chevin was working with Mr Edney on various property projects. In May 2015, Mr Edney agreed, on Mr Chevin’s recommendation, to fund the purchase of 22 Avon Street. 22 Avon Street is a cross-leased property. 20 Avon Street is the other half of the cross lease.
[24] Mr Edney says that under the arrangements agreed between himself and Mr Chevin, Mr Edney provided 100 per cent of the purchase price. The purchase was settled in the name of Avon Parnell, which was established for the purpose, on the basis that Avon Parnell would hold the property as bare trustee for Waihapu Ltd, a company wholly owned by Mr Edney. Mr Leggatt, Mr Edney’s son-in-law, was the sole director and shareholder of Avon Parnell.
[25] Under an agreement to lease between Avon Parnell and NI Trustee, NI Trustee was the tenant of the property, with Mr Chevin the guarantor of NI Trustee’s obligations.
[26] Mr Edney says he and Mr Chevin had an informal understanding that Mr Chevin could purchase the property on terms to be agreed, provided Mr Chevin was satisfactorily meeting his obligations to Mr Edney. However, the agreement to lease contained no option to purchase.
[27] Mr Chevin assisted Mr Leggatt with the incorporation of Avon Parnell. As a consequence, Mr Chevin had authority at that time to lodge documents with the Companies Office on Mr Leggatt’s behalf, including Mr Leggatt’s director’s consent and shareholder’s consent, and to file Avon Parnell’s annual return.
[28] In September 2017, Mr Edney agreed to fund the purchase of 20 Avon Street which had become available for purchase. Mr Chevin undertook the negotiations for the purchase, which was completed on terms similar to the purchase of 22 Avon Street in January 2018. It was settled in the name of Avon Parnell on the basis that Avon Parnell would hold it as bare trustee for Waihapu. Again, NI Trustee was to be the tenant, with Mr Chevin the guarantor of NI Trustee’s obligations. In this case, there was no informal understanding between Mr Edney and Mr Chevin regarding an option to purchase.
Other dealings between Mr Edney and Mr Chevin
[29] Mr Chevin has a history of financial mismanagement and dishonesty.4 Despite that history and despite Mr Chevin apparently owing $3 million to interests owned or controlled by Mr Edney, and despite Mr Chevin and NI Trustees falling into arrears in meeting the rental obligations under the Avon properties’ leases and under a lease from Mr Edney of a storage unit at Rosebank Road, Avondale, Mr Edney continued to work with Mr Chevin on a number of property projects and to support Mr Chevin by advancing him personal loans, principally through Waimauri Ltd, a company controlled by Mr Edney.
[30] Mr Edney says he made these loans to keep Mr Chevin afloat financially so Mr Chevin could continue with property developments in which Mr Chevin was involved. Mr Edney says that Mr Chevin’s success in these developments would have left Mr Chevin in a better position to start to repay the $3 million Mr Chevin owed to Mr Edney’s interests.
[31] However, Mr Edney says that because of Mr Chevin’s history, he was careful to document any loans he made to Mr Chevin. Mr Edney produced documents evidencing 10 loans made between March 2016 and 27 September 2018 in which Waimauri advanced Mr Chevin amounts ranging from $3,500 to $49,900. The largest
4 Between May 1991 and April 2017, Mr Chevin was adjudicated bankrupt four times, although the fourth adjudication was later annulled. In August 2016, he was disqualified from being a company director. In February 2017, he was sentenced to a period of home detention after pleading guilty to a representative charge under s 220 of the Crimes Act 1961 of theft by a person in a special relationship.
loans were to fund the purchase of a Toyota Hilux and a Ford Ranger by Mr Chevin. The total amount of principal and interest owing on these loans is $371,314.25.
Glenvale Holdings
[32] Mr Chevin was involved in a development by Glenvale Holdings Ltd at Te Kauwhata. Under a term loan agreement dated 26 July 2017, Waimauri agreed to advance Glenvale Holdings $3,560,000. The loan agreement recorded that Glenvale Holdings acknowledged and agreed, among other things that:
(a)advances of $307,772.77 made by Waimauri at Glenvale Holdings’ request to Peter and Anne-Marie Chevin for rental at 22 Avon Street; and
(b)advances of $75,386.07 made by Waimauri at Glenvale Holdings’ request to Peter Chevin,
would, if still outstanding, be repaid by Glenvale Holdings at the expiry date of the loan.
[33] In the event, Glenvale Holdings was put into liquidation in October 2018 because of debts owed to the Inland Revenue Department. Mr Edney says that he was surprised by this turn of events and that Mr Chevin had given him no indication that the development was in difficulty. He says that from this point all financial assistance from his interests to Mr Chevin personally stopped, but that he continued discussions with Mr Chevin about various property developments in which Mr Chevin was involved and about how Mr Chevin’s indebtedness to Mr Edney’s interests might be reduced. Mr Edney says he was prepared to consider offering property finance if that might result in Mr Chevin being in a position to start to repay that indebtedness.
Triangle Road development
[34] Mr Chevin was also involved in a development at Triangle Road, Massey. In October and November 2018, Mr Chevin sent Mr Edney emails setting out a proposed structure for a new company to take over the development from the existing
development vehicle and which would require a loan of $5.5 million to pay out the intended developer, Martin Cooper.
[35] Mr Edney says he routinely receives emails soliciting finance for development projects and he did not pay the emails from Mr Chevin much attention. However, it is apparent from emails exchanged between Mr Chevin and Mr Edney and between their respective solicitors in November 2018 that there were on-going discussions about Waimauri funding the take-over of the Triangle Road development and a new company being formed for the purpose, with settlement of the land purchase to be on 30 November 2018.
[36] On 26 November 2018, Mr Chevin sent Mr Edney an email referring to a meeting that morning with Mr Edney and setting out in a proposal for taking over the Triangle Road development. Further emails were exchanged that day as Mr Edney asked questions and Mr Chevin responded. In one of his emails, Mr Chevin noted that settlement date of the land purchase was 30 November 2018.
[37] On Wednesday, 28 November 2018, Mr Chevin sent an email to Mr Edney saying Mr Cooper was spinning out on him and asking Mr Edney to contact him urgently. Mr Edney replied that he was too busy advising Mr Chevin’s consultant on what to do about the Glenvale Holdings liquidation and that he would be back in town on Monday, that is 3 December 2018. Mr Chevin responded saying Mr Edney had already approved and said yes to the Triangle Road settlement and that Mr Chevin would lose the Triangle Road development that day, which would mean $8 million in lost profit and $4 million in spare land, a $12 million loss in total.
[38] In the following week, Mr Chevin had further discussions with Mr Edney and with Mr Cooper and others involved with the Triangle Road development about settling the land purchase on 7 December 2018. However, on the morning of 7 December, Mr Edney told Mr Chevin by email that Mr Cooper had declined to meet with him and that Mr Edney now preferred to purchase the land directly from the owner. Further emails followed in which Mr Chevin said the deal would fail if Mr Edney took that path. Mr Chevin also advised that the amount necessary to settle the purchase was $5.72 million. That afternoon, Mr Chevin sent Mr Edney an email
saying Mr Edney had failed to honour his numerous agreements to settle the Triangle Road purchase and reiterating that he had lost the ability to generate $8 million in profit and to have $4 million in retained spare land. Mr Chevin also said he had lost over $135,000 in cash put into the project.
[39] There is no evidence of any reply by Mr Edney to those assertions. In his affidavit, Mr Edney says he never agreed to finance the Triangle Road purchase. He agrees that he talked to Mr Chevin over a number of weeks about the purchase and had said he was interested, but no agreement was reached. Mr Edney says it is his invariable practice to have significant agreements recorded in writing and it is inconceivable that he would have agreed to a loan of around $5.72 million without it being documented. Mr Edney also says he has a fundamental rule never to be rushed when lending on or investing in property, and that he does not fund difficult deals on the “death knock.” Mr Edney says the Triangle Road deal was a complex transaction with many moving parts and that he had other matters to deal with at the time that meant he was not able to give the Triangle Road deal the time and attention it required.
[40] Mr Edney says that following the demise of the Triangle Road deal, Mr Chevin ceased making rental payments in respect of 20 Avon Road.
On-going discussions
[41] In early 2019, Mr Edney and Mr Chevin and others, including Mr Valmont, Mr Skeates and Mr Chevin’s accountant, Nigel Smith of Covisory Partners Ltd, had discussions by email and in person about the liquidation of Glenvale Holdings, of which Waimauri was a significant creditor. In some of his emails, Mr Chevin made disparaging remarks about the willingness of Mr Edney and entities controlled by Mr Edney to complete agreements they had entered into. Mr Valmont’s notes of a meeting held on 5 February 2019 record that Mr Chevin remained very angry with Mr Edney and alleged that Mr Edney had engaged in criminal conduct. The notes also show that various property projects were discussed, including the purchase of “Lot 4” and “Superlot 100,” which were apparently part of the Glenvale development. The notes record no discussion about the Avon properties. Mr Valmont says in his affidavit that the Avon properties were not mentioned at all.
[42] On 19 February 2019, Mr Valmont sent Mr Edney an email prepared by Mr Chevin. The email discussed the sale of lots at the Glenvale development and at another project at Coronation Road, and implied, but did not state directly, that Mr Edney had been delaying the settlements. The email concluded by stating:
The events you created in terms of the Triangle Road Project debacle in late 2018 and thus the loss of that project to our group are massive and weight [sic] heavily on all our discussions going forward.
[43] Mr Edney replied the same day acknowledging receipt of “this self-serving note” and stating that he did not accept the claims and that it seemed the note had been ghost-written, as it apparently had been.
[44] The follow day, 20 February 2019, Mr Chevin sent an email to Mr Edney and others commenting, in red type face, on an earlier email he had sent regarding various projects including Superlot 100 and Coronation Road. Under the notation “Triangle project land used for a different purpose by Martin Cooper. Serious profit lost,” Mr Chevin wrote in red:
Despite Edney’s deranged comments around this, this issue of non performance is not going away. And will be resolved one way or another. The lack of adherence by Edney to the deal is the culmination of a litterany [sic] of broken agreements and bullied deals orchestrated by Edney dating back to 2006. This was the last straw.
We will have a conclusion to this one way or another.
[45] The same day, 20 February 2019, Mr Chevin visited the office of Mr Edney’s team and threatened to go to the Serious Fraud Office unless he received a payout of
$8 million for his hurt and humiliation. Mr Edney recorded the visit and Mr Chevin’s threat in an email to Mr Smith that day.
[46] On 8 March 2019, Mr Chevin sent an email to Mr Edney and others providing an update on various projects including Superlot 100, other lots in the Glenvale development, Coronation Road and Triangle Road. In relation to Triangle Road, Mr Chevin repeated his complaints about Mr Edney failing to complete his agreement to fund the land and losses of $8 million in profit and $4 million in land. The email made no reference to the Avon properties.
[47] On 26 March 2019, Mr Edney sent an email to Mr Smith setting out Mr Edney’s understanding of various projects not including Triangle Road.
[48] Mr Chevin responded the following day. Mr Chevin’s email first addressed Triangle Road and repeated his complaints about profit lost and Mr Edney’s non- performance. Mr Chevin’s email also asserted that Mr Edney was responsible for lost profits of over $15 million in relation to Coronation Road and stated that another project, Powell Street, and “Avon Street (x2)” were going to be repaid from Triangle Road or Coronation Road. The email made other complaints about Mr Edney, including in relation to insurance for and ownership of the Ford Ranger, which had been involved in an accident. The email ended:
Im over it.......... what ever happens …. happens.
Meeting on 11 April 2018
[49] Mr Edney, Mr Chevin and Mr Smith met on 11 April 2019 at Mr Smith’s office. Following the meeting, Mr Chevin sent an email summarising “the agreements reached today.” The summary identified steps in relation to Lots 4 and 100, the Ford Ranger, the Coronation Road project and issues in relation to Glenvale Holdings. Mr Edney replied later that day with his own understanding of what had been agreed with respect to Lots 4 and 100, Coronation Road and the Ford Ranger and asked a number of questions.
[50] In an email the following day, Friday 12 April 2019, Mr Chevin thanked Mr Edney for his email and said Mr Edney had not lived up to his agreement on the Ford Ranger and said:
We need to add on the remedying or your default on the Triangle Road Project settlement. That issue still has not been addressed and is absolutely not going away.
So, in regards to Triangle as previously stated we are now out of pocket $8 million in project margin, plus $4 million in residual land value plus circa
$250.000 in cash put [into] the project by us.
Happy to run with your details as per below and at the same time you transfer both Avon properties to our nominated entity at no cost, the same for Gills Road at no cost. Then you provide an additional cash settlement paid to our solicitor of $8.0 million.
[51] Mr Edney replied soon afterwards with a short email explaining that the insurance company (for the Ford Ranger) wanted one of their forms executed by Mr Edney personally and said he was prepared to do that. The mail also said Mr Edney was waiting for Mr Chevin’s promised analysis of what was wrong with his documentation and for answers to the questions. Mr Edney says the Avon properties were not raised at the meeting of 11 April 2019 and that he did not take Mr Chevin’s suggestion of their transfer seriously.
[52] The following Monday, 15 April 2019, Mr Chevin responded by email to Mr Edney’s questions about documentation and asked how Mr Edney wanted to handle the transfer of the Avon properties. Mr Edney says he did not respond to this email because he regarded the suggestion as ridiculous and he believed Mr Chevin was playing games. He says Mr Chevin did not repeat the demand for the Avon properties either in emails or verbally after that and that he would have broken off discussions with Mr Chevin if he had maintained this as a serious demand.
Meeting on 29 April 2019
[53] On 29 April 2019, Mr Edney, Mr Chevin and Mr Smith met at Mr Smith’s office.5 Mr Smith was present for only part of the meeting. When Mr Smith was absent, the meeting comprised only Mr Edney and Mr Chevin.
[54] Mr Edney says the matters discussed at the meeting were Mr Chevin starting to meet his obligations and the possible provision of funding by Waimauri for the purchase of Lots 4 and 100 by Clear White Investments Ltd, a company controlled by Mr Chevin.
[55] Mr Edney says Mr Chevin’s assertion that Mr Edney agreed at this meeting to give Mr Chevin the shares in Avon Parnell and thus ownership of the Avon properties in partial compensation for losses incurred on the Triangle Road development is a lie. Mr Chevin says that proposition was not raised by Mr Chevin or discussed at the
5 In an affidavit sworn on 12 July 2019, Mr Chevin says the meeting took place on 24 April 2019. Mr Edney says that, having reviewed documents provided in discovery, it appears the meeting took place on 29 April 2019. It is clear from the documents discussed in this judgment that the meeting took place on 29 April 2019.
meeting. Mr Edney says Mr Chevin’s hand-written note of the meeting is a fabrication.
[56] Mr Chevin’s note is dated 29 April 2019. In the note, Mr Chevin records that Mr Edney agreed, among other things:
(a)To provide 100 per cent short term funding for the transfers of Lot 4 and Superlot 100;
(b)To sign and return by 5.30 pm the documentation for the loans which Mr Chevin was to prepare and provide by 4.30 pm that day;
(c)That compensation for the loss of the Triangle Road project was required;
(d)Once the loans for the Lot 4 and Superlot 100 had been repaid, that Mr Chevin could transfer the shares in Avon Parnell to an entity nominated by Mr Chevin and could appoint a new director in place of Mr Leggatt.
[57] Mr Valmont, who produced a copy of the note during discovery, says he was sent the note by Mr Chevin in an email dated 5 July 2019, after this proceeding had been filed.
Developments after meeting of 29 April 2019
[58] Mr Chevin sent Mr Edney the loan offer forms by email at 4.29 pm on 29 April 2019. The email did not refer to what had been discussed at the meeting earlier that afternoon. A few minutes later, at 4.31 pm, Mr Edney sent Mr Chevin an email setting out Mr Chevin’s rental payments and their due dates for 20 Avon Street, 22 Avon Street and the Rosebank Road unit, and interest payments on a loan for another property. Mr Edney says these payments were in arrears and he wanted this addressed before finance was provided to Clear White Investments.
[59] In the event, the documents were not signed on 29 April 2019 because issues arose over some of their terms. Further issues arose over the following days as Mr Edney sought the advice of his solicitor, Peter Nolan, who pointed out that the proposed loan for Lot 4 required completion of the registration of the transfer of that lot to a previous purchaser, Golden Belt Mining Co Ltd (Golden Belt), and removal of a caveat lodged by Clear White Investments.
[60] The email exchanges continued over the balance of that week and into the following week. At various points, Mr Chevin complained about Mr Edney’s lack of reliability and alluded to what he might say when he met the liquidator of Glenvale Holdings and a financial journalist who, he said, was trying to make contact with him. The purported timings of those meetings appeared to have been more or less proximate depending on whether Mr Chevin was happy or unhappy with developments. Mr Chevin also included comments in his emails such as “See you on the battlefield.”
[61] Nonetheless, on 7 May 2019, Mr Edney forwarded a message from Mr Nolan advising that registration of the transfer of Lot 4 to Golden Belt was complete. Mr Edney asked Mr Chevin to ensure that lease and rental payments as promised were made from that day.
[62] By letter dated 9 May 2019, Mr Nolan sent Mr Skeates, via email, an agreement for the sale and purchase of Lot 4 and, in anticipation of the agreement being signed, a settlement statement as at 10 May 2019. The last paragraph of Mr Nolan’s letter stated:
With regard to the sale of Lot 100, I advise that my client may be willing to enter into an agreement for the sale of that lot to Clear White Investments Limited once the loan from Waimauri Limited over Lot 4 has been repaid in full.
[63] Mr Edney says that Mr Nolan was merely repeating what had been agreed at the meeting on 29 April 2019 – that funding for Lot 100 would not be provided until Lot 4 had been repaid.
[64] Mr Skeates forwarded Mr Nolan’s letter to Mr Chevin at 4.03 pm on 9 May 2019. By email sent to Mr Edney at 4.28 pm, Mr Chevin said:
Tim, you have completely fucked me over this on. [sic] It is now War.
You have again failed to deliver on what you agreed at the meeting of 2.00pm on 29/04/2019. Nigel Smith will attest to this. And I am completely not surprised…..
You need to prepare yourself for me now devoting my life to fucking you so hard it is still going to hurt you after you are dead……………………
Meetings with all third parties have been re-set up again in the last 5 minutes. They are locked in for Monday.
[65] Despite the tone and content of that message, Mr Edney replied just over an hour later advising that the documents for the sale and purchase of Lot 4 had been signed from his side and that he was waiting on Clear White Investments. Mr Edney asked if Mr Chevin was going ahead with the purchase and finance. Mr Chevin replied two minutes later, “You have refused to proceed on Lot 100… deal broken by you.”
[66] Mr Edney replied later than evening saying that Mr Chevin was incorrect and that Lot 4 would go ahead if Mr Chevin desired, and that the Lot 100 transaction could occur if Mr Chevin performed with respect to repayment of the loan and the lease payments. Mr Edney also said that when the Lot 100 transactions conditions were met, he would “entertain Lot 3 at Coronation”, and that this sequence had been spelt out before.
[67] Mr Smith, who was copied on Mr Edney’s email, commented a few minutes later that that was not what Mr Edney had agreed, which was that both lots would be sold at the same time and that loan documents were to be sent with respect to both properties.
[68] Mr Edney replied to Mr Smith just over an hour later, recording his understanding of what had been agreed. According to Mr Edney, considerable time had been spent at the meeting on 29 April 2019 on the ways and means the debt was to be repaid.
[69] Further emails were exchanged that evening, including an email from Mr Skeates to Mr Nolan advising that his client may accept the separation of the Lot 4
and Lot 100 purchases on conditions set out in the email. Despite that message and further email exchanges the following day, 10 May 2019, no agreement was reached.
[70] Early on Friday, 10 May 2019, Mr Chevin sent an email to Mr Edney, copied to Mr Smith, in which he stated, among other things, that:
(a)He would be off to meetings on the following Monday and Tuesday, which I infer to mean meetings with the liquidator of Glenvale Holdings and the journalist;
(b)Lessee payments were arranged to start on 1 June but would not be happening if Mr Chevin attended the meetings;
(c)It seemed all too little and too late from Mr Edney;
(d)He needed to understand how Mr Edney was going to pay him the $12 million he owed Mr Chevin over the Triangle project, which issue was not going to go away;
(e)He guessed people might come up with a solution for Lots 4 and 100 over the weekend.
[71] Mr Chevin sent Mr Edney emails on 13 and 15 May 2019 which did not advance matters. It appears communications were paused for a period until Mr Skeates sent an email to Mr Nolan on 21 May 2019 proposing an alternative basis for settling the purchase of Lots 4 and 100. Mr Edney says he was not prepared to accept the proposed conditions but that any response by him was overtaken by events.
Mr Chevin advises Companies Office of change of director of Avon Parnell
[72] Mr Leggatt says that on 21 and 22 May 2019, Mr Chevin, without Mr Leggatt’s knowledge, authority or consent, presented documents to the Companies Office which showed:
(a)The removal of Mr Leggatt as shareholder in Avon Parnell and Russell PKR as the new shareholder; and
(b)The appointment of Mr Valmont as director of Avon Parnell and Mr Leggatt ceasing to be a director of Avon Parnell.
[73] Mr Leggatt has produced copies of the documents presented to the Companies Office which record the transfer of shareholding taking place in two stages, Mr Valmont’s consent and certificate of director and Mr Leggatt’s ceasing to be a director.
[74] Mr Valmont says he signed the consent to be director of Avon Parnell at Mr Chevin’s request. Mr Valmont says Mr Chevin did not say why this was required but he did not consider the request unusual because he had agreed to act as director of a number of companies for Mr Chevin.
[75] The documents filed with the Companies Office state on their face that they were presented by Mr Chevin. Moreover, in his defence to the amended statement of claim, Mr Chevin admits presenting the documents but says he had authority to do so. Mr Chevin also admits in his statement of defence that there were no underlying share transfers executed by Mr Leggatt evidencing the transfer of shares, no receipt of share transfers by Avon Parnell, and no shareholders resolutions appointing Mr Valmont as a director of Avon Parnell and removing Mr Leggatt.
Mr Chevin arranges for loan to APL
[76] Mr Rolls says that on 21 May 2019, Basecorp received a proposal from People Property Financiers Ltd (PPF) for a loan of $1,096,200 to be made to Avon Parnell with security over the Avon Properties. The proposed draw down date for the loan was 24 May 2019. Mr Rolls produced a copy of the proposal which shows handwritten notations by James Thorburn-Wilson, a lending officer at Basecorp, correcting the name of Avon Parnell and noting that, contrary to what was stated in the proposal, Mr Valmont was not a shareholder of Avon Parnell.
[77] In the afternoon of 21 May 2019, Mr Thorburn-Wilson sent an email to Angela Peters of PPF confirming that Basecorp was happy with the indicative pricing for the loan as set out in the email, subject to conditions, one of which was an updated company extract for Avon Parnell which Mr Thorburn-Wilson said he would do the following day. The email stated that the loan amount was “2X$500k plus $95,5k retained interest.”
[78] On 22 May 2019, Mr Chevin forwarded to Gary Hey of PPF a Companies Office extract showing Mr Valmont as director of Avon Parnell and asked, “Can we settle tomorrow??????”. Also on 22 May 2019, an officer at Basecorp obtained a company extract for Avon Parnell which showed Mr Valmont as the sole director and Russell PKR as the sole shareholder. The same day, Mr Thorburn-Wilson sent a letter to Mr Skeates instructing him to act for Basecorp on the proposed loan and noting that Mr Skeates would also be acting on behalf of Avon Parnell as borrower and Mr Valmont as guarantor of the loan.
[79] Mr Rolls says Basecorp relied on the fact that Mr Valmont was shown as the director of Avon Parnell in the Companies Office records in deciding to grant the loan application. Mr Rolls also says Basecorp had no knowledge that Mr Valmont was not in fact the sole director of Avon Parnell and accepted that the Companies Office records were correct and that Mr Valmont had Avon Parnell’s authority to enter into the loan agreement and grant the mortgage over the Avon properties.
[80] On 23 May 2019, Mr Chevin sent Mr Valmont an email saying he urgently needed an Avon Parnell bank account opened and operational by 12 pm the following day.
[81] Mr Valmont says his recollection is that Mr Chevin had told him a few days earlier that a settlement had been arranged with Mr Edney but did not go into the detail of what the settlement entailed. Mr Valmont also says that, at the time Mr Chevin asked him to arrange for the new Avon Parnell bank account, Mr Chevin told him that a loan from Basecorp had been arranged and was to be secured on the Avon properties and that Mr Valmont had to execute all necessary documents to make that happen. Mr Chevin also told him that the money from the Basecorp loan was going towards a
property at Travers Road in Te Kauwhata. Mr Valmont says he did not have personal contact with Basecorp and that the loan was arranged through Mr Hey at PPF and Sally Herbert of Covisory Partners.
[82] On 24 May 2019, the loan and mortgages were executed. After receiving the completed loan and mortgage documentation from Skeates Law, Mr Rolls sent Skeates Law a fax confirming that $1,000,000 would be paid to its bank account. Later that day, the money was paid to Skeates Law, the mortgage was registered on the titles to the Avon properties and Skeates Law transferred $990,000 to the Avon Parnell Kiwibank account that Mr Valmont helped set up.
Onward transfer of the loan monies
[83]Bank accounts produced by Mr Valmont show that:
(a)On 24 April 2019:
(i)$990,000 was transferred from the Avon Parnell Kiwibank account to an account of NI Trustees;
(ii)$440,000 was transferred from NI Trustees’ account to Mr Skeates, with the notation “Travers Road”; and
(iii)$470,000 was transferred to an ASB Bank account unknown to Mr Valmont.
(b)On 27 April 2019, $440,000 was transferred from Mr Skeates to NI Trustees.
(c)On 30 May 2019, $440,000 was transferred from NI Trustees to VH Nominees.
[84] On 30 May 2019, Mr Chevin instructed that $440,000 be transferred to Vodanovich Law. Mr Valmont produced a settlement statement dated 5 June 2019 from Vodanovich Law which shows that $440,000 received from VH Nominees
comprised part of the funds used to settle the purchase of 102A Travers Road, Te Kauwhata.
Mr Edney and Mr Leggatt become aware of developments
[85] The evidence does not disclose how Mr Edney and Mr Leggatt became aware of the changes of director and shareholder of Avon Parnell. However, on 24 May 2019, Mr Nolan, on Mr Edney’s instruction, sent an email to Mr Skeates in which he said his client was not willing to consider the revised proposal until he received a satisfactory response to requests for, among other things, the immediate rectification of the fraudulent and unauthorised change of ownership and shareholding and directorship of Avon Parnell and a schedule of repayments for the various liabilities and debts that remained outstanding. Mr Nolan sent a follow up email on 28 May 2019, noting that the Companies Office Register had not been rectified and the implications of this.
[86] Mr Skeates’s response on 29 May 2019, that he had no instructions from Avon Parnell and suggesting that Mr Edney contact Mr Smith, elicited a strong response from Mr Nolan on 4 June 2009. Mr Nolan said it had come to his client’s attention that a mortgage had been granted by Avon Parnell to Basecorp and that Mr Skeates had acted for both parties. Mr Nolan stated that the mortgage had been obtained by fraud and that this was being referred to the Police and/or the Serious Fraud Office.
[87] On 5 June 2019, Mr Skeates informed Mr Nolan that his client vehemently denied that any aspects of the events were fraudulent and that senior counsel had been retained. On 7 June 2019, Mr Skeates informed Mr Nolan that he had been advised by his client that:
… the transfer of the shares in, and control of, Avon Parnell Limited was part of a settlement agreement in relation to a claim that your client had cost a related company a very significant opportunity cost in relation to reneging on a commitment in relation to another property. We were instructed that the agreement was reached at a meeting in Nigel Smith’s office in late April.
[88] On 12 June 2019, Mr Nolan replied to Mr Skeates advising that his client said the matter of Avon Parnell was not even discussed at the meeting in April and that the purpose of that meeting was to discuss arrangements for Mr Skeates’s clients to repay
the substantial debt still owing to his client. Mr Nolan also advised his client had reported the matter to the Police, the Registrar of Companies, Land Information New Zealand and the New Zealand Law Society and had instructed senior counsel to take whatever steps were necessary to restore his client’s ownership and control of Avon Properties, to remove the Basecorp mortgage and to recover the cost of having to repay the mortgage if Mr Skeates’s clients fail to do so.
[89] This proceeding was filed the following week, and Palmer J issued freezing orders the following day.
[90] Mr Leggatt says that, despite the orders made by Palmer J, he was unable to access Avon Parnell’s listing on the Companies Office website for some time because Mr Chevin had locked out Mr Leggatt’s access and the Companies Office did not accept that Mr Leggatt was an authorised person. However, following the injunction issued by Davison J on 24 June 2019, Mr Valmont cooperated in the reinstatement of Mr Leggatt as director and sole shareholder of Avon Parnell.
[91] On 3 July 2019, the Companies Office confirmed that Mr Leggatt was registered as the director of Avon Parnell. On the same day, Mr Chevin’s authority to file documents with the Companies office on behalf of Avon Parnell was removed. On 4 July 2019, Mr Leggatt’s authority to file documents with the Companies office on behalf of Avon Parnell was reinstated. Mr Valmont was subsequently removed as a director of Avon Parnell in the Companies office records and Mr Leggatt’s position as sole shareholder of Avon Parnell was reinstated.
Discussion
[92] I have set out the background in some detail because, although Mr Chevin’s defence has been struck out, I must nonetheless be satisfied that Avon Parnell and Mr Leggatt have proven, on the balance of probabilities, the facts necessary to support their claims based on the Fair Trading Act and the torts of deceit and injurious falsehood. In that regard, I consider that I must take into account the explanations and justifications advanced by and on behalf of Mr Chevin in his dealings with Mr Edney, at the time the purported changes in the directorship and shareholding of Avon Parnell
became known and in Mr Chevin’s statement of defence to the first amended statement of claim.
[93] All three causes of action are based on the allegation that Mr Chevin acted without the authorisation and agreement of Mr Leggatt, the sole director and shareholder of Avon Properties, or of Mr Edney, the beneficial owner of the Avon properties, when he effected the changes in the directorship and shareholding of Avon Properties and arranged for the loan from Basecorp and the grant of a mortgage over the Avon Properties. Mr Chevin’s response is that he took those actions in accordance with an agreement he had made with Mr Edney.
[94] In his statement of defence, Mr Chevin asserts an interest in the Avon properties on two principal bases:
(a)The properties were purchased by Mr Edney on the understanding that they would transfer to Mr Chevin once he had repaid the amount of the finance advanced by Mr Edney;
(b)Subsequently, that agreement was varied as part of the resolution of his dispute with Mr Edney over the Triangle Road development.6
[95]Mr Chevin does not assert any agreement with Mr Leggatt.
Did Mr Chevin have an interest in the Avon properties from the time of their purchase?
[96] I am satisfied from Mr Edney’s evidence that the first of Mr Chevin’s asserted bases of interest in the Avon Properties is not tenable. It is clear the two Avon properties were purchased by Avon Parnell with funds provided by Mr Edney and that Avon Parnell held the properties on trust for Mr Edney, through Waihapu or another entity owned or controlled by Mr Edney.7 Mr Chevin and his wife occupied 22 Avon
6 I do not deal with Mr Chevin’s allegation that his agreement with Mr Edney over the Avon properties also related to asserted wrongful withholding of GST by Mr Edney in relation to the Glenvale holdings development at Te Kauwhata. There is no evidence to support that allegation.
7 It appears from Mr Edney’s evidence that the Deed of Trust in respect of 22 Avon Street may have been concluded in the name of the Rockfield Trust rather than Waihapu, but in any event, the two properties are held on trust for entities controlled by Mr Edney.
Street under the agreement to lease between Avon Parnell and NI Trustee and, through NI Trustee, controlled the occupancy of 20 Avon Street.
[97] Mr Edney acknowledges an informal understanding that Mr Chevin could purchase 22 Avon Street if he was satisfactorily meeting his obligations to Mr Edney. However, the terms of any purchase had not been agreed and the precondition of satisfactory performance by Mr Chevin in respect of his obligations to Mr Edney had not been met. The 10 personal loans made by Waimauri to Mr Chevin and the term loan agreement between Waimauri and Glenvale Holdings show that, far from reducing his indebtedness to Mr Edney’s interests, Mr Chevin continued to increase it, including by defaulting on the rental obligations for 22 Avon Street.
[98] For these reasons, I am satisfied that Mr Chevin had no legal or beneficial interest in the title to the properties prior to the alleged agreement with Mr Edney over the Triangle Road development. Moreover, even if there had been an understanding that the properties would pass to Mr Chevin once he had repaid the finance advanced by Mr Edney, Mr Chevin did not fulfil that pre-condition.
Was there an agreement with Mr Edney after the Triangle Road project fell over?
[99] In considering Mr Chevin’s claim that he and Mr Edney reached an agreement on 29 April 2019 to transfer the Avon properties to Mr Chevin to compensate for Mr Chevin’s asserted losses in relation to the Triangle Road project, it useful to consider Mr Chevin’s dealings with Mr Edney after the project fell over.
[100] The emails Mr Chevin sent Mr Edney when Mr Edney refused to approve settlement on 30 November 2018 show the extent of Mr Chevin’s disappointment and anger at losing the deal and the profit that he asserted he would have made. That anger and disappointment continued to manifest over the subsequent months in the intemperate remarks that Mr Chevin made to and about Mr Edney in various emails.
[101] Given that anger and disappointment and the scale of the asserted losses, and given Mr Chevin’s apparent lack of personal regard for Mr Edney, I consider it likely that Mr Chevin would have tried to extract compensation, whether by bringing or threatening legal proceedings or otherwise, if he considered Mr Edney had made a
binding commitment to him to finance the Triangle Road purchase, as Mr Chevin asserted in his email of 7 December 2018. Apart from Mr Chevin’s own emails, however, there is no evidence of any such agreement with Mr Edney prior to the project falling over. Nor is there any evidence that Mr Chevin threatened or even hinted at legal proceedings. As a person experienced in property matters, Mr Chevin would have known that his chances of success would have been low absent documentary evidence of an agreement with Mr Edney.
[102] I am satisfied, therefore, that there was never any binding agreement between Mr Edney and Mr Chevin that Mr Edney would fund the Triangle Road purchase. The only agreement regarding the purchase was that which Mr Edney refused to go through with once Mr Cooper declined to meet him. It follows that because Mr Edney owed no obligation to Mr Chevin in respect of the Triangle Road project, it is unlikely that Mr Edney would have made any agreement to compensate Mr Chevin for Mr Chevin’s asserted losses, particularly when Mr Chevin was indebted to Mr Edney for over $3 million.
[103] Between December 2018 and 31 March 2019, Mr Chevin continued to make disparaging comments about Mr Edney and occasionally to hint or threaten that Mr Edney would be made to pay for what he had done to Mr Chevin. There is, however, evidence of only one reference to the Avon properties over that period. Mr Chevin’s email of 27 March 2019 asserts that the Avon properties were going to be paid for from profits from the Triangle Road or Coronation Road projects. That may have been Mr Chevin’s intention but that does not establish that Mr Edney considered the Avon Road properties should be handed over in compensation for lost profits on Triangle Road.
[104] That idea arises first in Mr Chevin’s email of 12 April 2019, written after the meeting of 11 April 2019 at which, according to Mr Edney, the Avon properties were not raised. Mr Chevin’s proposition that Mr Edney transfer both properties and the Gills Road property to Mr Chevin at no cost was not taken seriously by Mr Edney and nor was Mr Chevin’s subsequent email asking how Mr Edney wanted to handle the transfer of the Avon properties.
[105] Mr Chevin’s claim to there being an agreement that he would obtain the Avon properties in compensation for the Triangle Road losses rests principally on the meeting of 29 April 2019 at Mr Smith’s offices attended by Mr Chevin, Mr Edney and, for some of the time, Mr Smith. There is no dispute that the Avon properties were not discussed at the times during the meeting when Mr Smith was present. While Mr Smith took issue with Mr Edney over what had been agreed at that meeting over Lots 4 and 100, there is no evidence that Mr Smith asserted any knowledge of a discussion over the Avon properties.
[106] The only evidence of such an agreement at that meeting is what Mr Chevin has said himself and the hand-written file note which Mr Chevin prepared and which Mr Chevin sent to Mr Valmont some two months after the meeting and a month after this proceeding had been commenced.
[107] I have concluded that it is more likely than not that Mr Chevin’s file note is a fabrication, as asserted by Mr Edney. My reasons for that conclusion are:
(a)As already discussed, prior to the meeting on 29 April 2019, there is no evidence of any agreement between Mr Edney and Mr Chevin that Mr Edney owed any obligation to Mr Chevin with respect to the Triangle Road development.
(b)Mr Chevin was already in considerable debt to Mr Edney and Mr Edney had made a number of efforts to try to ensure that Mr Chevin would start to repay that debt to Mr Edney. Those efforts included:
(i)Mr Edney’s informal understanding with Mr Chevin that Mr Chevin could purchase 22 Avon Street if he was satisfactorily meeting his obligations to Mr Edney;
(ii)Mr Edney’s careful documentation of the Waimauri loans to Mr Chevin as well as including repayment of those loans and other liabilities in the Glenvale Holdings term loan agreement;
(iii)Mr Edney’s willingness to keep working with Mr Chevin despite Mr Chevin not keeping up with his obligations as effective tenant and guarantor under the agreement to lease for 22 Avon Street and despite Glenvale Holdings being put into liquidation.
(c)Given Mr Chevin’s indebtedness to Mr Edney and Mr Edney’s efforts to preserve Mr Chevin’s ability to start to repay that indebtedness, it is inherently unlikely that Mr Edney would agree to transfer the Avon properties to Mr Chevin.
(d)Mr Edney’s email sent at 4.31 pm on 29 April 2019 establishes that it was Mr Edney’s expectation after the meeting earlier that day that Mr Chevin had committed to resuming rental payments for the Avon properties. Mr Chevin’s email of 10 May 2019 confirms that a resumption of lessee payments was part of the 29 April 2019 agreement. Such a resumption of payments would have been unlikely if the parties had agreed at that meeting that the Avon properties were to transfer to Mr Chevin.
(e)The statement in Mr Chevin’s email of 10 May 2019 that he needed to understand how Mr Edney was going to pay him the $12 million he owed Mr Chevin over the Triangle project, and that that issue was not going to go away, is also inconsistent with an agreement having been made two weeks earlier to transfer the Avon properties in part satisfaction of the alleged Triangle Road losses.
(f)There is no extrinsic evidence of any agreement between Mr Edney and Mr Chevin of an agreement to transfer the Avon properties, which had an estimated value of over $3,000,000 at the time Basecorp agreed to make its loan, purportedly to Avon Parnell. That stands in marked contrast to Mr Edney’s practice of documenting his agreements with Mr Chevin when advancing, through Waimauri, much smaller sums to Mr Chevin, and to the care with which Mr Edney scrutinised the
arrangements for the purchase of the Triangle Road land and Lots 4 and 100.
(g)As soon as Mr Edney became aware of the transfers of shareholding and directorship in Avon Parnell, he instructed Mr Nolan to take those issues up in forceful terms with Mr Skeates and agreed that Mr Nolan should refer the matter to the Police and/or the Serious Fraud office and the New Zealand Law Society. Those are not the actions of a person who has made an agreement that the Avon properties should transfer to Mr Chevin.
(h)Mr Chevin’s past history of bankruptcies and dishonesty offending, coupled with his evident anger, his intemperate and inappropriate remarks to and about Mr Edney, and his attempts to threaten Mr Edney with what he might say to the liquidators for Glenvale Holdings and to a financial journalist, indicate that considerable caution should be exercised when considering Mr Chevin’s account of what occurred on 29 April 2019.
[108] For all these reasons, I find that Mr Chevin’s note of the meeting on 29 April 2019 is unreliable and, probably, a fabrication. I also find that there was no agreement between Mr Edney and Mr Chevin that Mr Chevin should have ownership and control of Avon Parnell and the Avon properties.
[109] I also agree with Mr Chisholm, counsel for Avon Parnell and Mr Leggatt, that even if Mr Chevin genuinely believed he had made an oral agreement with Mr Edney about the transfer of ownership and control of Avon Parnell, that did not give Mr Chevin the right to amend the Companies Office records so as to represent to the world that Mr Valmont was the sole director of Avon Parnell and Russell PRK was the sole shareholder of Avon Parnell.
[110]As a consequence, I find that:
(a)Mr Chevin was acting without the authority or agreement of Mr Edney or Mr Leggatt when he caused the Companies Office to alter Avon Parnell’s registration details to show Mr Valmont as Avon Parnell’s sole director and Russell PKR as Avon Parnell’s sole shareholder; and
(b)Mr Chevin was acting dishonestly and with an intention to defraud Avon Parnell, Mr Leggatt and Mr Edney when he caused the Companies Office to alter Avon Parnell’s registration details and when he arranged for the loan from Basecorp and the mortgage over the Avon properties.
Breach of Fair Trading Act
[111] Section 9 of the Fair Trading Act provides that no person shall, in trade, engage in conduct that is misleading and deceptive or is likely to mislead and deceive.
[112] As Thomas J said in Paper Plus NZ Ltd v Robert Mitchell Ltd, section 9 uses plain language and its meaning and intent are clear enough without refining or adding to its terms.8
[113]Section 2 of the Fair Trading Act defines “trade” to mean:
… any trade, business, industry, profession, occupation, activity of commerce, or undertaking relating to the supply or acquisition of goods or services or to the disposition or acquisition of any interest in land
[114] There is no doubt that Mr Chevin was in the business or occupation of developing and trading in land. Despite the prohibition on his being a director of a company, and despite styling himself as an “RMA specialist”, Mr Chevin engaged personally, and through vehicles such as Russell PRR, NI Trustees, and VH Nominees, in the acquisition, development and sale of land. That is apparent from his involvement in the Glenvale Holdings and Triangle Road developments, his efforts to secure the acquisition of Lot 4 and Lot 100, and the use of the funds received from Basecorp in the purchase of 102A Travers Road. I am satisfied that Mr Chevin was “in trade” for the purposes of s 9.
8 Paper Plus NZ Ltd v Robert Mitchell Ltd HC Auckland CL53/92, 10 March 1993, at 5.
[115] I am also satisfied that Mr Chevin engaged in conduct that was misleading and deceptive when he submitted to the Companies Office documents purporting to show changes in the shareholding and directorship of Avon Parnell.
[116] I have already found there was no agreement between Mr Chevin and Mr Edney about the transfer of Avon Parnell to Mr Chevin. Even if Mr Chevin genuinely believed there was such an agreement, which I do not accept, Mr Chevin has acknowledged that there were no underlying share transfers executed by Mr Leggatt evidencing the transfer of shares, no receipt of share transfers by Avon Parnell, and no shareholders resolutions appointing Mr Valmont as a director of Avon Parnell and removing Mr Leggatt. In terms of the requirements of the Companies Act 1993,9 Mr Chevin had no right and no authority to submit those documents to the Companies Office and I am satisfied that he knew that.
[117] There can be no doubt that Mr Chevin knew that the changes in the Companies Office records that were made as a consequence of the documents he submitted would be relied upon by Basecorp and PPF. His email to Mr Hey on 22 May 2019 specifically linked the Companies Office extract showing Mr Valmont as the director of Avon Parnell to the settling loan agreement Mr Hey was arranging on his behalf. Mr Rolls states categorically that Basecorp would not have advanced the loan if the Companies Office records had not shown Mr Valmont as the director of Avon Parnell.
[118] For these reasons, I am satisfied that Mr Chevin contravened s 9 of the Fair Trading Act.
[119] I am also satisfied that Avon Parnell and Mr Leggatt, and also Basecorp, are entitled to remedies as a consequence of that contravention.
9 Section 84(2) of the Companies Act 1993 provides that, for the purpose of transferring shares, a form of transfer signed by present holder of the shares or his or her personal representative must be delivered to the company or its agent.
Section 153(2) of the Companies Act requires that subsequent directors of a company must, unless the constitution otherwise provides, be appointed by ordinary resolution of the company.
Section 159(1) of the Companies Act requires the board of a company to ensure that notice of any change in the directors of a company is delivered to the Registrar of Companies for registration.
Remedies
[120] Mr Leggatt seeks a declaration that he is the sole director and sole shareholder of Avon Parnell. Ordinarily, those are matters to be established from Avon Parnell’s records in accordance with the Companies Act. However, because of the confusion that arose as a result of Mr Chevin’s actions, I accept that the declaration sought is appropriate.
[121] Avon Parnell also seeks to make permanent the injunction granted by Davison J as it applies to Mr Chevin, restraining Mr Chevin and his employees and agents from holding themselves out as agents for Avon Parnell and from purporting to act on behalf of Avon Parnell.
[122] Having regard to s 41 of the Fair Trading Act, I am satisfied that Mr Chevin and others acting for him have purported to act on behalf of Avon Parnell, notably in presenting documents to the Companies Office and in arranging the loan from Basecorp and granting the mortgage over the Avon Properties, and that an injunction is appropriate.
[123] I am also satisfied that Avon Parnell in its own right and as assignee of Basecorp’s rights is entitled to damages for the losses they suffered as a consequence of Mr Chevin’s misleading and deceptive conduct. Avon Parnell puts its own losses at $120,000; the amount it contributed to the settlement with Basecorp. Mr Chisholm advises that Basecorp’s losses are $136,432.32; this is the difference between the
$1,000,000 Basecorp paid out on the loan to Avon Parnell and the amounts it has recovered as it and Avon Parnell sought to mitigate their losses.
[124] I am satisfied that both losses arose from Mr Chevin’s misleading and deceptive conduct and that an order for damages for $256,432.32 is appropriate in accordance with s 43(3)(f) of the Fair Trading Act.
Interest
[125] Avon Parnell and Mr Leggatt seek interest of $1,137.70, being the amount calculated in accordance with ss 9 and 10 of the Interest on Money Claims Act 2016,
but only for the period 3 November 2020 to 22 March 2021, the date of the hearing. They are entitled to judgment for that amount.
Claim in deceit
[126] Because the causes of action based on deceit and injurious falsehood were pleaded as alternatives to the Fair Trading Act cause, it is unnecessary for me to decide the claims under these causes of action, having already found for Avon Parnell and Mr Leggatt under the Fair Trading Act cause of action. In addition, the relief sought under these causes of action is, taken together, the same as that I have already decided to grant under the Fair Trading Act cause of action.
[127] Lest there be any doubt, however, I am satisfied that the claim in deceit, which is limited to Basecorp’s losses, has been proved.
[128] As confirmed by the Court of Appeal in Amaltal Corporation Ltd v Maruha Corporation, the essential elements of the tort of deceit are:10
(a)A false representation as to a past or existing fact was made by the defendant;
(b)The defendant knew that representation to be untrue, or had no belief in its truth, or was reckless as to its truth;
(c)The defendant intended that the plaintiff should act in reliance on the representation; and
(d)The plaintiff acted in reliance on the representation and suffered damage as a result.
[129] All of these elements have been established. Mr Chevin falsely represented that Mr Valmont was the director and Russell PKR the shareholder of Avon Parnell; he knew that was untrue; he intended Basecorp to act on the basis of that
10 Amaltal Corporation Ltd v Maruha Corporation [2007] 1 NZLR 608 (CA) at [46] and [55].
representation; Basecorp advanced the loan in reliance on the representation and suffered damage as a result.
Claim for injurious falsehood
[130] As Mr Chisholm says, to succeed with this cause of action, Avon Parnell and Mr Leggatt must prove that Mr Chevin made a false statement, the statement was published, the statement was made maliciously and that the statement caused damage.11
[131] I agree that, on the evidence, all of those elements have been proven. Mr Chevin made a false statement by presenting to the Companies Office information about changes to the directorship and shareholding of Avon Parnell that was false. That information was published on the Companies Office website and the publication of the false information caused damage to Avon Parnell, namely the $120,000 it contributed to the settlement with Basecorp after Basecorp made the loan in reliance on the information that Mr Valmont was the director of Avon Parnell.
[132] I also accept that the publication was malicious. That is, it was made with an intent to injure Mr Edney and with a dishonest motive, namely to extract money from Avon Parnell, an entity owned or controlled by Mr Edney, in the sense discussed by Mahon J in Customglass Boats Ltd v Salthouse Bothers Ltd.12 That is established from the comments in Mr Chevin’s emails, most notably his email of 9 May 2019 in which he promised, in vulgar terms, to do what he could to hurt Mr Edney.
[133]For these reasons, I am satisfied that this cause of action has also been proven.
Costs
[134] Mr Chisholm asks for costs on a category 2B basis but for category 2C costs for discovery because of the volume of documents. The total costs sought are,
11 S Todd (ed) The Law of Torts in New Zealand (8th ed, Thompson Reuters, Wellington, 2019) at 829.
12 Customglass Boats Ltd v Salthouse Bothers Ltd [1976] 1 NZLR 36 (SC) at 49.
exclusive of GST, $65,324.00 plus disbursements of $9,924.04. I am satisfied that those costs are appropriate.
[135] I also consider it appropriate to order costs as sought in the memorandum of counsel dated 8 March 2021 in respect of the application for unless orders granted by Toogood J on 5 March 2021 and for steps leading to that application. In his minute dated 5 March 2021, Toogood J ordered costs on a 2B basis. The costs sought are
$8,245.50 plus disbursements of $478.26 (excl GST). I am satisfied that those costs are appropriate.
[136]The total figure for all costs and disbursements is $83,971.30 (excl GST).
Result
[137]Avon Parnell and Mr Leggatt have proved their claims against Mr Chevin.
[138]As a consequence:
(a)I declare that Mr Leggatt is the sole director and shareholder of Avon Parnell;
(b)I order that Mr Chevin, his employees and agents, are restrained from:
(i)Holding themselves out as agents of Avon Parnell;
(ii)Entering into any transaction or incurring any liability or obligation on behalf of Avon Parnell;
(iii)Lodging any documents at the Companies Office on behalf of Avon Parnell;
(c)I order Mr Chevin to pay Avon Parnell Ltd and Mr Leggatt jointly damages of $256,432.32 plus interest of $1,317.70;
(d)I order Mr Chevin to pay Avon Parnell Ltd and Mr Leggatt costs and disbursements of $83,971.30 (excl GST).
G J van Bohemen J
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