Carey v Smith - [2013] NZHC 2291

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-005819 [2013] NZHC 2291

BETWEEN GRAHAME and JANICE CAREY Plaintiff

ANDBRUMAC ENTERPRISES LIMITED Second Plaintiff

ANDBRUCE JAMES COPELAND SMITH First Defendant

ANDINGAR MARIANNA DOLK Second Defendant

ANDEKO GARDEN LIMITED Third Defendant

Hearing: 8-12 April 2013;
[Final Submissions Received on 15 May 2013]

Counsel: N W Woods for the Plaintiffs
R A Edwards and A Borchardt for the Defendants

Judgment: 5 September 2013

JUDGMENT OF DUFFY J

This judgment was delivered by Justice Duffy on 5 September 2013 at 10.30 am, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Counsel: R A Edwards, Auckland
A Borchardt, Auckland

Solicitors: Rice Craig, Papakura

CAREY and ANOR v SMITH and ORS [2013] NZHC 2291 [5 September 2013]

[1] The first plaintiffs, Grahame and Joyce Carey, and the second plaintiff, Brumac Enterprises (hereafter Brumac), together with the first defendant, Bruce Smith, and the second defendant, Ingar Dolk, were shareholders of a company that has gone into liquidation, NZ Peat Southland Limited (hereafter NZ Peat). The third defendant, Eko Garden Limited (hereafter Eko), is a company that took over the business of NZ Peat after it went into liquidation.

[2] In its trading days, NZ Peat was in the business of producing and selling peat and peat-based products in the North Island. During this time, Brumac and the Careys purchased and paid for a large pile of peat from NZ Peat (hereafter the peat pile). They never took delivery of the peat pile. It remained on land that was leased by NZ Peat. They planned over a period of time to sell this peat back to NZ Peat. There are aspects of this arrangement that are in dispute in this proceeding, including whether it can be properly characterised as a sale that gave Brumac and the Careys free and clear ownership of the peat pile. However, it is clear that, in various ways, the peat pile was reduced without Brumac and the Careys receiving all that they say they were entitled to receive for it under the terms of purchase. They have no realistic recourse against NZ Peat. Therefore, they have sought to recover their losses in this proceeding by making claims in conversion and alternatively, claims in trespass, against Mr Smith and Ms Dolk. They have also claimed in conversion and alternatively, trespass against Eko in relation to that company’s allegedly wrongful acquisition of the peat pile from the liquidation of NZ Peat. The defendants deny the claims against them.

[3] The issues for this Court to determine are:

(a) Did Brumac and the Careys have the right to demand immediate possession of the peat pile at the time of the alleged conversions;

(b)Did Mr Smith and Ms Dolk personally convert or trespass against the peat pile;

(c) Did Mr Smith, Ms Dolk or Eko, either severally or jointly, cause the losses that Brumac and the Careys claim they have suffered;

(d)Did Brumac and the Careys acquire free and clear…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Carey v Smith

Details

AGLC: Carey v Smith [2013] NZHC 2291
Case: [2013] NZHC 2291
Decision Date: 5 September 2013

CaseChat Overview and Summary

The plaintiffs, Grahame and Janice Carey, and Brumac Enterprises, brought claims against Bruce Smith, Ingar Dolk, and Eko Garden Limited in conversion and trespass. The plaintiffs had purchased a peat pile from NZ Peat Southland Limited but never took delivery of it. The peat pile was left on land leased by NZ Peat. The plaintiffs planned to sell the peat back to NZ Peat. They have no recourse against NZ Peat. The defendants denied the claims. The Court had to decide whether the plaintiffs had the right to demand immediate possession of the peat pile, whether the defendants had caused the plaintiffs' losses, whether the plaintiffs had acquired free and clear ownership of the peat pile, whether Eko's acquisition of the peat pile amounted to conversion or trespass, and whether the plaintiffs had proved their losses. The Court found that the plaintiffs did not have the right to immediate possession of the peat pile. The plaintiffs' ownership of the peat pile was stripped of the usual rights of ownership by the terms of the sale and buy-back agreement. The plaintiffs' claims in conversion and trespass against the defendants failed because they did not have possessory rights in the peat pile. The plaintiffs' losses were due to NZ Peat's failure to perform its obligations under the agreement. The plaintiffs did not acquire free and clear ownership of the peat pile. The sale and buy-back agreement was not in the ordinary course of NZ Peat's business, and the plaintiffs' contractual rights in the peat were subject to a perfected security interest held by a bank. The plaintiffs failed to establish their claims in conversion and trespass against Eko and Mr Smith. The claims were dismissed. Judgment was entered for the defendants.

Orders