Beale v Lucky Fishing Limited HC Tauranga CIV-2011-470-3
[2011] NZHC 645
•28 June 2011
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV-2011-470-3
UNDER the District Courts Act 1947
IN THE MATTER OF an appeal against the decision of the
District Court Tauranga
BETWEEN MARK DWYGHT BEALE First Appellant
ANDBEALE FISHING LIMITED Second Appellant
ANDLUCKY FISHING LIMITED Respondent
Hearing: 22 June 2011
Appearances: C Harold for the Appellants
D E Smyth for the Respondent
Judgment: 28 June 2011
RESERVED JUDGMENT OF ELLIS J
This judgment was delivered by me on 28 June 2011 at 1 pm, pursuant to r 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: Alex Lee & Associates, PO Box 90943, Auckland 1142
Ronayne Hollister-Jones Lellman, PO Box 13063, Tauranga 3141
Counsel: D E Smyth, PO Box 105270, Auckland 1143
BEALE V LUCKY FISHING LIMITED HC TAU CIV-2011-470-3 28 June 2011
[1] This is an appeal from a decision of His Honour Judge Ingram in the District Court at Tauranga dated 30 November 20101. The proceeding essentially involved a dispute about ownership of fishing equipment used by the appellants (“Beale”) to catch hag fish for the Korean market.2
[2] The respondent (“Lucky”) claimed that Beale had converted its equipment. Beale said the equipment was not owned by Lucky but by a third party, Gold Fishing Limited (“Gold”). The hag fish caught by Beale had initially been sold to Korea by Lucky but at the time in question Beale had entered into a similar arrangement with Gold to on sell the fish.
[3] In terms of the conversion claim itself, orders were ultimately made by Judge Ingram by consent restraining Beale from using the Lucky’s fishing equipment and requiring the return of the equipment to Lucky.
[4] The Court was then required to determine the quantum of damages that was payable to Lucky for the conversion. In its pleadings, Lucky referred to the need for an inquiry but sought either:
(a) Loss of profits as a result of not being able to use its fishing equipment.
(b) An account of profits from Beale.
[5] During the case management phase of the proceeding Judge Ingram had, on
21 April 2010, issued a minute in which he recorded something of a holding position. He said:
... In the meantime, the defendant is free to continue his fishing trips using the disputed equipment, and will provide catch records and payment records to the plaintiff on request.
[6] It can reasonably be inferred that what His Honour had in mind was that those records would be relevant to the claim for damages. It appears, however, that
1 The judgment was given on 30 November with reasons delivered on 3 December.
2 The dispute also related to the conversion of the respondent’s confidential information.
Beale did not produce such records to Lucky, prior to the hearing before
Judge Ingram, despite four requests for them being made.
Judge Ingram’s calculation of lost profits
[7] The hearing on 30 November proceeded by way of formal proof. Because Beale had failed to provide any records to Lucky there was no evidential basis upon which an account of Beale’s profits could be assessed. Lucky elected (as it was entitled to do) to seek damages for loss of profits.
[8] An affidavit had been sworn on Lucky’s behalf by Mr J W Jun in which he estimated Lucky’s lost profits for the period in which it had been deprived of its fishing equipment. The assumptions made in the affidavit were based on evidence that had been filed on behalf of Beale which set out Gold’s income and expenses under its arrangement with Beale. As noted above Beale’s arrangement with Gold had effectively replaced its arrangement with Lucky. Mr Jun’s extrapolation of the Gold figures resulted in the following assumptions (over 6 months):
(a) A total catch of 60 tonnes;
(b)A net fish price of $4,000 per tonne (this being based on the lowest gross price ($6 per kilogram) obtained during the period;
(c) $45,000 expenses broken down as follows: (i) Packing wages: $15,000
(ii) Poly Bin (Maxi bins): $18,000 (iii) Transport fee to airport: $9,000 (iv) Oxygen etc: $3000.
[9] These assumptions led to the conclusion that the profit made by Gold (and lost by Lucky) over the six month period was $195,000.
[10] As recorded in Judge Ingram’s judgment, however:
... at the hearing the defendant produced tax invoices establishing the quantity of fish caught using the plaintiff’s equipment, with those fish having been sold on to other purchasers.
[11] The invoices produced by Beale at the hearing showed that its total catch had been only 36.17 tonnes rather than 60 tonnes and that the net fish price obtained by Gold was less than $4000 per tonne. But no evidence in relation to actual expenses was tendered.
[12] As a result of the invoices provided Judge Ingram altered Mr Jun’s figures as
follows:
(a) A total catch of 36.17 tonnes (which equated to 60.2833 per cent of the 60,000 tonne estimate);
(b) A net fish price of $3,443 per tonne;3
(c) Expenses reduced by 33 per cent4 to $30,000, broken down as follows:
(i) Packing wages: $10,000
(ii) Poly Bin (Maxi bins): $12,000 (iii) Transport fee to airport: $6,000
(iv) Oxygen etc: $2000.
3 Mr Collecutt submitted that, based on the invoices, the figure that was used by Judge Ingram in this respect should have been slightly higher. Any error made in this respect favours the appellants, however.
4 The division of the expenses by 33per cent also favoured the appellants. If the calculation had been done on a strictly pro rata basis (36.17/60) they would have been reduced by almost 40 per cent.
[13] These figures gave rise to a total lost profits figure of $94,520. This figure, which was considerably lower than that estimated by Mr Jun, was the amount of damages awarded by Judge Ingram to Lucky.
Basis for the appeal
[14] The only ground of appeal that was ultimately advanced by Beale was essentially that Judge Ingram should have awarded damages on an account of profits basis. Beale submitted that no evidence of Lucky’s actual loss was before the Court and that in fact an earlier affidavit sworn by Mr Jun showed that it was most unlikely that Lucky’s lost profits would have been anywhere near the amount of damages awarded. In that affidavit Mr Jun had deposed that:
In late February 2010 the demand in Korea for live hag fish lessened as a result of which I asked the defendants to cease catching live hag fish for a while and Mr Beale agreed. In the meantime I had investigated purchasing a boat which Lucky Fishing would use for catching live hag fish.
[15] In the same affidavit Mr Jun stated:
Although the business has only been operating since October 2009, I believe the return were such that I estimate it has made a profit of approximately
$20,000 to the end of February 2010.
[16] Accordingly Beale submitted that the Court was precluded from assessing damages on the basis that it did.
[17] Attached to Beale’s submissions before me was an extract from Beale Fishing Limited’s general ledger which showed that its net income over the relevant period was only $14,155.335 which, it was submitted, was the appropriate measure of damages.
[18] It was accepted, however that the amount of profit made by Gold under its
arrangement with Beale (which involved using Lucky’s wrongfully converted fishing
5 This net figure was the product of subtracting Beale’s expenses of $56,511.32 from its income of
$70,666.65.
equipment) was some $94,520.00. That figure is remarkably similar to the quantum of damages awarded to Lucky by Judge Ingram. That is of course unsurprising given the source of the figures upon which his calculations were based.
Discussion
[19] In my view there was no evidentiary basis upon which Judge Ingram could have assessed damages on an account of profits basis. This forensic lacuna could, by definition, only have been filled by Beale. Its failure to provide relevant documents cannot now be used against Lucky. In any event Lucky was entitled to elect to be
compensated for its loss of profits.6
[20] In my view Judge Ingram had sufficient evidence before him to calculate the quantum of loss of profits damages. Notwithstanding the earlier evidence of Mr Jun it was open to him to base his calculation on the actual profits made by Gold because that company was doing precisely what Lucky would have been doing had its equipment not been converted. Moreover when further information favouring Beale was provided to him at a very late stage he took it into account. It seems to me he was not required to do so.
[21] Even if it had been open to me on appeal to change the basis upon which damages were calculated notwithstanding Lucky’s right of election, no application to adduce further evidence on appeal was made and the extract from Beale’s general ledger could not therefore be taken into account. There appeared in any event to be an error in the extract because it showed Beale’s income from sales to be $70,666.65 when in fact the invoices revealed its income from sales to be more than that.
[22] I record for completeness that to the extent my decision might be thought to reflect rather dimly on the appellants it is not to be interpreted as being critical of their solicitors who were only recently instructed and whose submissions were both
responsible and coherent.
6 Anglia Television Ltd v Reed [1971] 3 All ER 690 at 692 (CA).
[23] Although Lucky sought leave to cross-appeal under rule 20.11 in relation to certain arithmetical errors that were said to have been discovered in the course of preparing the appeal, I was left with a degree of uncertainty as to whether in fact those errors existed. Any such errors were in my view minor and I do not consider that they justify disturbing Judge Ingram’s decision.
[24] For the reasons I have given the appeal is dismissed. The respondent is entitled to costs on a 2B basis.
Rebecca Ellis J
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