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Clyma & Ors v Kaminski

Clyma & Ors v Kaminski

Case [2023] NZHC 3026 30 October 2023

Misleading or Deceptive Conduct

Contract Formation

Unconscionable Conduct

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IN THE HIGH COURT OF NEW ZEALAND ROTORUA REGISTRY

I TE KŌTI MATUA O AOTEAROA

TE ROTORUA-NUI-A-KAHUMATAMOMOE ROHE

CIV-2019-463-000035

[2023] NZHC 3026

UNDER the Companies Act 1993 and the Fair Trading Act 1986

IN THE MATTER

of prejudiced shareholders and misleading nd deceptive conduct

BETWEEN

THOMAS JAMES CLYMA, QIAN WANG, JU LI, CHRISTINA KALESITA CLYMA, JIA ZHAO, XIANMEI MENG, MARCO DUMAS and STEPHEN MICHAEL

REILLY as shareholders of KIWI RIDER LIMITED

Plaintiffs

AND

THOMAS KAMINSKI

Defendant

Hearing: 1-5 May 2023

Appearances:

E St John (1 May 2023) and S Maloney for the Plaintiffs Defendant in Person

Judgment:

30 October 2023

JUDGMENT OF WALKER J

[Interim judgment as to liability]

This judgment was delivered by me on 30 October 2023 at 4 pm Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

CLYMA & ORS v KAMINSKI [2023] NZHC 3026 [30 October 2023]

[1] This claim arises out of a failed tourism venture promoted and set up by the defendant, Thomas Kaminski, in 2016. The plaintiffs each invested in the venture in return for a shareholding in Kiwi Rider Limited (Kiwi Rider). Kiwi Rider is the corporate vehicle for the venture which traded as the Rotorua Orbserver. The plaintiffs claim they invested in reliance on representations by Mr Kaminski which were misleading or deceptive within the meaning of s 9 of the Fair Trading Act 1986 (the Act).1 They bring this claim to recoup their investment losses.

[2] The plaintiffs comprise most of the shareholders in Kiwi Rider but not all shareholders are plaintiffs.2 Mr Kaminski is the single largest shareholder in Kiwi Rider despite not contributing any start-up capital.

[3] It is common ground that Kiwi Rider was Mr Kaminski’s idea. He discovered tethered helium hot air balloons at various international locations offering rides to passengers. The plan was to buy a balloon and cable/winch system from an international supplier to offer the experience of panoramic views over Rotorua for up to 20 passengers at a time from a fixed site. Mr Kaminski’s aspiration was to expand to other tourist hotspots in New Zealand, and then to Australia.

[4] The obstacle was Mr Kaminski’s financial circumstances. He was not in a position to fund a start-up. Finding investors was crucial. Two friends, Marco Dumas and his wife Ju Li, became involved. Other investors, invited by Mr Dumas and Ms Li, followed. Mr Kaminski distributed an information memorandum to would-be investors. He then met them to introduce himself and present his vision for the venture. It is principally statements in the information memorandum and at that meeting on which the claim for misleading and deceptive conduct is based.

[5] The venture was beset by problems from the start. Delay (and the reasons for it) absorbed investor funds even before the balloon could be launched. Having missed the 2016 summer tourist season, the eventual launch in April 2017 failed to ignite

1 There is a second cause of action under the Companies Act 1993 which, while not formally abandoned, was not pressed…

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 Clyma & Ors v Kaminski

Details

AGLC: Clyma & Ors v Kaminski [2023] NZHC 3026
Case: [2023] NZHC 3026
Decision Date: 30 October 2023

CaseChat Overview and Summary

This case involved a claim by shareholders of Kiwi Rider Limited (Kiwi Rider) against Thomas Kaminski, the founder and largest shareholder of the company, for misleading and deceptive conduct under the Fair Trading Act 1986. The shareholders claimed they were induced to invest in Kiwi Rider based on misleading representations made by Mr Kaminski about his credentials, the research underpinning the business model, and the suitability of the AB20 tethered helium balloon supplied by AeroBalloon. The shareholders sought compensation for their losses and an order that Mr Kaminski transfer his shareholding to them to hold in trust for all shareholders.

The court found that Mr Kaminski made several misleading and deceptive representations to the shareholders, including exaggerating his credentials, the extent of his research, and the suitability of the AB20 balloon. The court held that these representations were misleading and deceptive as they were not supported by the evidence and were made with the intention of inducing the shareholders to invest. The court also found that the shareholders reasonably relied on Mr Kaminski's representations and suffered loss as a result.

The court awarded damages to the shareholders who invested at the start-up stage of Kiwi Rider, calculated by reference to their initial investment less any sum they recover on liquidation of the company. The court declined to make an order that Mr Kaminski transfer his shareholding to the plaintiffs, finding that such an order was not appropriate as the shares were not the plaintiffs in the first place.

The court held that the shareholders were presumptively entitled to costs on a 2B basis, meaning the losing party would pay the winning party's costs, unless the parties could agree on a different basis. The court invited the parties to file written memoranda on the quantum of costs if they could not agree.

Orders