Coxhead v Dwyer
[2015] NZHC 1600
•9 July 2015
IN THE HIGH COURT OF NEW ZEALAND NEW PLYMOUTH REGISTRY
CIV 2014-443-073 [2015] NZHC 1600
BETWEEN BARRY RAYMOND COXHEAD
Appellant
AND
DON DWYER First Respondent
MARY F HACKSHAW as trustee of the
NORTHWIND TRUST Second Respondent
HARJIT DHEIL Third Respondent
Hearing: 17 April 2015 Counsel:
J H Waugh for Appellant
P J Dale for RespondentsJudgment:
9 July 2015
JUDGMENT OF HEATH J
This judgment was delivered by me on 9 July 2015 at 2.00pm pursuant to Rule 11.5 of the High Court Rules
Registrar/Deputy Registrar
Solicitors: Halliwells, Hawera Grove Darlow, Auckland Counsel:
J H Waugh, Wanganui
P J Dale, Auckland
COXHEAD v DWYER [2015] NZHC 1600 [9 July 2015]
The appeal
[1] Mr Barry Coxhead sued Mr Don Dwyer, Ms Mary Hackshaw and Mr Harjit Dheil in the District Court at New Plymouth. In his primary cause of action, Mr Coxhead sought damages of about $30,000 arising out of the alleged conversion of a thoroughbred mare, called Miss Meena.
[2] In a judgment delivered on 13 October 2014,1 Judge Ross dismissed
Mr Coxhead’s claims. Mr Coxhead appeals against that decision.
A summary of relevant facts
[3] Mr Coxhead bought Miss Meena in September 2009. At a time when he was the sole owner, Mr Coxhead arranged for Miss Meena to be stabled and trained at a facility in Pukekohe, operated by Mr Dwyer.
[4] In October 2009, Mr Coxhead syndicated his ownership in the horse. Following that arrangement, Miss Meena was owned in the following shares: Mr Coxhead (13%), Ms Marita Coxhead (13%), Mr Warren Coxhead (13%), Mr Kerry Coxhead (13%), Mr Harjit Dheil (24%) and Mr Hardesh Dheil (24%). Mr Coxhead was appointed as Miss Meena’s “Racing Manager”, under the Rules of Racing (the Rules).2
[5] Together, the Coxhead interests held a 52% share in the horse, with the Dheil interests holding the balance of 48%. Messrs Harjit and Hardesh Dheil are brothers. They had been introduced to the Coxhead interests by Mr Dwyer.
[6] The dispute between Mr Coxhead and Mr Dwyer has its origin in a decision that Mr Coxhead made in late November 2011 to move the horse from Mr Dwyer’s care and to replace him with a trainer based in Taranaki. Those events began to unfold on Saturday 26 November 2011, when Mr Coxhead told Mr Dwyer that he
intended to change trainers. At the time of that conversation, not only had
1 Coxhead v Dwyer DC New Plymouth CIV 2013-043-0214, 13 October 2014 (Judge Ross).
2 The Rules of Racing are made under s 32 of the Racing Act 2003 and are treated in a manner akin to regulations made under statutory authority: see Cropp v Judicial Committee [2008] 3
NZLR 774 (SC) at para [1].
Mr Coxhead not consulted the Dheil brothers, but he had not even met them. While a subsequent email3 to them (on a benevolent view) could be interpreted as seeking their input into that decision, the evidence is reasonably clear that it was one that Mr Coxhead had made unilaterally, primarily for (what he believed to be) the benefit of the Coxhead interests.
[7] The nature of the decision is confirmed by an email that Mr Coxhead sent to the Dheil brothers, on Sunday 27 November 2011. He wrote:
As Racing Manager of Miss Meena, I have decided to change trainers. We have had a lot of bad luck with this mare. [Mr Dwyer] is a very good horseman, but is not getting the jockeys to work with him to get the wins, result being a very expensive venture for us and you.
Training and pre-training fees of $69.00 a day at [Mr Dwyer’s] and the high track fees in the north, is quite a bit higher than Alan Sharrock, New Plymouth, his pre-training of $49.45 and full training of $59.80 a day. I feel this is a better option.
Could you give us your thoughts so we can act quickly and settle [Mr Dwyer’s] account, as this is the right and accepted thing to do in thoroughbred racing.
Still looking forward to meeting you both one day.
[8] On 28 November 2011, Mr Coxhead paid outstanding fees owing to Mr Dwyer and requested that Mr Dwyer make the horse available to uplift and move to another training facility.
[9] Ms Hackshaw is Mr Dwyer’s domestic partner. She practises as a solicitor, and was instructed to act for the Dheil brothers. In an email sent to Mr Coxhead and his wife on 28 November 2011, Ms Hackshaw said:
As you may be aware, I act for Harjit and Hardesh Dheil. I discussed with them today what you advised [Mr Dwyer] on Saturday night.
Harjit and Hardesh do not agree to changing trainers and require the horse to stay where she is. As you may recall, they invested a 48% share in the horse when you could not afford to pay her purchase price. They also paid their share of her surgery for bone chip removal and agistment during the long recovery period. They are not prepared to see the horse go to a different environment from where she is settled and happy and with people she knows and trusts.
3 See para [7] below.
Harjit is concerned that decisions surrounding the horse have been made without any consultation with him. You advised [Mr Dwyer] on Saturday night that you were moving the horse and only informed Harjit by email afterwards. That is unacceptable.
They do not accept that [Mr Dwyer] is “not getting the jockeys to work with him” as you put it. The trainer and jockey want to win just as much as the owner does but the trainer is powerless once the horse leaves the birdcage. [Mr Dwyer] has wanted to put the best jockey on the horse at all times but has often been thwarted in his efforts to do so.
Harjit also does not accept that the costs will be less at New Plymouth as travelling costs to race meetings will be higher than in the northern region where there are more tracks and tracks are closer together. You also did not want [Mr Dwyer] racing the horse at New Plymouth when he wanted to take her there.
Harjit is happy to buy out your share at an agreed price. Failing that she will need to be put up for public auction at the next New Zealand Bloodstock sale in May 2012.
(Emphasis added)
[10] On 29 November 2011, Mr Coxhead advised Ms Hackshaw that he had spoken to a “Racecourse Detective” who had told him that, as Racing Manager and with a family interest of 52% in the horse, he had the right to move the horse to whatever location his interests wished for training purposes. Ms Hackshaw was advised that a commercial horse float would uplift Miss Meena from the stables on 1
December 2011.
[11] Ms Hackshaw responded on 30 November 2011, making it plain that she (on behalf of the Dheils) did not accept that the Coxhead interests had any ability to override the interests of co-owners. She pointed out that Mr Coxhead’s status as “Racing Manager” was irrelevant to the question of whether the horse should be moved to a different training location. Ms Hackshaw wrote:
This has got nothing to with NZTR. You cannot override the interests of a co-owner. You did this when the horse was named, but this was tolerated without complaint. This time you have gone too far.
Harjit has a legitimate interest in protecting the investment he has made. That investment stands to be ruined if the horse goes to a big stable, the same as has happened with horses such as Sitara and Netravati. Harjit does not want to see this happen. He has offered to buy you out. He is not willing to sell his share.
…
The fact that [Mr Coxhead] is racing manager is irrelevant. That only gives him power to receive stakesmoney and to sign transfers on behalf of up to
20% of owners with their consent. It does not give him power to over-ride other co-owners wishes.
[12] On the same day, Mr Harjit Dheil and Mr Dwyer removed Miss Meena from the Pukekohe stables to an undisclosed location. Judge Ross found that this was done to protect the interests of Mr Dheil as an owner, to prevent Mr Coxhead’s plan to move trainers from being effected,4 and to “facilitate what Mr [Harjit] Dheil believed was the ownership arrangement for the training of the horse to continue with” Mr Dwyer.5 In those circumstances, the Judge was not persuaded that either Mr Dwyer or Mr Harjit Dheil acted adversely to the interests of co-owners of the horse, with intent to retain possession of it for their own purposes.6
[13] Mr Coxhead became aware of the movement and endeavoured, through solicitors, to have the horse delivered up to him, so that he could pursue a change of trainer. However, with Mr Coxhead’s acquiescence, Miss Meena was returned to the Dwyer stables sometime in early December 2011. Indeed, Judge Ross went further in saying that it had not “been contradicted that [Mr Coxhead] instructed [Mr Dwyer] to prepare her for the race”.7 The mare was returned to enable Mr Dwyer to train her for a race on Boxing Day at Ellerslie. Judge Ross found that the decision to return the mare to Mr Dwyer’s care for training was consensual.8
[14] After the Boxing Day races, Miss Meena returned to the Pukekohe stables. Apart from some proposals falling short of a claim based on exclusive possession of the horse, correspondence between the Coxhead and Dheil interests tapered off. Mr Dwyer continued to tend and care for the horse, rendering invoices in December
2011 and January 2012, and invoices for agistment in March and April 2012. The
Dheil interests paid their proportion of the fees, but the Coxhead interests (while paying some) did not pay all. Mr Coxhead took the view that the outstanding
4 Coxhead v Dwyer DC New Plymouth CIV 2013-043-0214, 13 October 2014 at para [17].
5 Ibid, at para [26].
6 Ibid.
7 Ibid, at para [19].
8 Ibid.
charges had been charged had not been incurred on the instructions of the Coxhead interests, and that they were not liable to pay them.9
[15] On 16 April 2012, Mr Dwyer issued a Notice of Lien to claim the sum of
$1262.96, being a one-half share of unpaid agistment charges. The Coxhead interests did not challenge the issue of this notice. There is no doubt that Mr Dwyer was within the class of person who is entitled to exercise a possessory lien to retain possession of a chattel pending payment.10 The Notice of Lien11 stated that, unless payment was made, the horse would be sold at auction on 8 May 2013.
[16] No steps were taken by the Coxhead interests to prevent a sale, either by tendering the amount payable or by using the procedure for challenging liens set out in the District Court Rules.12 To the contrary, Judge Ross found that the Coxhead interests deliberately allowed the auction to proceed. The Judge relied on evidence from Mr Coxhead that he intended to attend the auction and either to buy the horse cheaply, or to bid to encourage a potential purchaser to pay a higher price.13
Ironically, as the Judge observed, Mr Coxhead did not attend the public auction, nor bid by agent.14 The auctioneer, New Zealand Bloodstock Ltd, had advertised the sale for 9 May 2012. In fact, it took place on 8 May 2012. That was the date to which the Notice of Lien expressly referred.15
[17] The horse was knocked down at auction for $200. It was purchased by Ms Hackshaw, in her capacity as a trustee of the Northwind Trust.16 Subsequently, ownership was transferred into the names of the Dheils, Ms Hackshaw and Mr
Dwyer. Miss Meena now races in Australia.
9 Ibid, at para [21].
10 Albeit in the context of a garage proprietor claiming the costs of repair under a possessory lien, an illustration of the use of a possessory lien to repel a claim in detinue can be found in Leeward
Holdings Ltd v Douglas [1982] 2 NZLR 532 (HC).
11 The Judge recorded that no issue had been taken with compliance with formalities for the issue of a Notice of Lien under s 3 of the Wages Protection and Contractors’ Liens Repeal Act 1987: see Coxhead v Dwyer DC New Plymouth CIV 2013-043-0214, 13 October 2014 at para [44].
12 At the relevant time, r 3.45 of the District Court Rules 2009 applied. See, for an explanation of the purpose of this procedure, the judgment of Kós J in Dugh v Dugh [2013] NZAR 491 at para
[16], in respect of the comparable provision in the High Court Rules, r 7.78.
13 Coxhead v Dwyer DC New Plymouth CIV 2013-043-0214, 13 October 2014 at para [47].
14 Ibid.
15 Ibid, at para [48]. See also para [15] above.
16 Ibid, at paras [48] and [49].
Analysis
[18] The essence of Mr Coxhead’s claim is that the defendants are liable to him in conversion because they failed to comply with his demands to deliver the horse to him so that the trainer could be changed. That conduct, he says, amounts to conversion. In my view, there is a single point that is determinative of his claim. Mr Coxhead never had an exclusive right to possession of the mare. In those circumstances, he was not entitled, as a matter of law, to demand release of the horse to him so that it could be transported for training at a different location.
[19] My reasons for reaching this view are consistent with those given by Judge Ross.17 Miss Meena was partnership property. It was not the property of Mr Coxhead personally. Nor was it owned by the majority Coxhead interests. In circumstances where other partners had not agreed (and, indeed, had evidenced clear opposition) to any change in the stabling and training arrangements for the horse, Mr Coxhead had no authority to demand possession of the mare or to move it.
[20] Although the arrangements for ownership into which the Coxhead and Dheil interests entered were described as a “syndication”, I agree with Judge Ross that, as a matter of law, they constituted a “partnership”, to which the Partnership Act 1908 (the Act) applies. The term “partnership” is defined by s 4(1) of the Act as “the relation which subsists between persons carrying on a business in common with a view to profit”. The term “business” is separately defined as including “every trade,
occupation, or profession”.18
[21] Mr Waugh, for Mr Coxhead, disputed the Judge’s finding that a partnership existed. The primary ground on which that contention was put forward was that the element of “business” was missing. But, that is contrary to Mr Coxhead’s own description of the enterprise, in an email which he sent to Mr Harjit Dheil on 30
November 2011. Among other things, he said:
Hello Harjit
Do you want Miss Meena to stay at Don Dwyers? How long should we give him to get results [Months]? And if were [sic] not making money, shouldn’t we change trainers?
This is my passion, but it is a business venture as well.
…
I apologise for treating you as a minor partner, but as racing manager that is what happens. In business controlling interest, I’m afraid means just that. I’ve had 30 years experience in racing thoroughbreds. We have had many winners to group class and after racing 3 horses at [Mr Dwyer’s] I’ve realised it’s not working for us or you.
….
(Emphasis added)
[22] The Dheil brothers took a similar view of the nature of the enterprise. That is evidenced by the emails sent by Ms Hackshaw to Mr Coxhead on 28 and 30
November 2011.19
[23] Mr Coxhead put some emphasis on his designation as “Racing Manager”, and the authority that he asserted had been conferred on him through that appointment. Judge Ross rejected a submission that Mr Coxhead’s status as “Racing Manager” clothed him with authority to make decisions about the training arrangements, for reasons with which I respectfully agree.
[24] Rule 427 of the Rules set out the responsibilities and authority of a “Racing Manager” in terms that restrict that authority to interactions between New Zealand Thoroughbred Racing Inc and the Racing Manager. The purpose of the role of Racing Manager is to enable the owners and New Zealand Thoroughbred Racing Inc to conduct business efficiently on matters covered by the Rules. They do not purport to replace the rules of common law and equity applicable to partnership
arrangements, or the provisions of the Act itself.20
[25] The tort of conversion arises when a plaintiff’s chattel is taken by a defendant
without lawful justification, and with the intention of exercising control over it in a
manner adverse to the owner.21 In analysing whether Mr Coxhead has a claim in conversion, the first question is whether he was the person with immediate rights to possession of the horse. Put in the context of Mr Coxhead’s clams, did any (or all) of the three defendants interfere with Mr Coxhead’s use and possession of the horse, both wilfully and without lawful justification?22
[26] I have already held that Miss Meena was partnership property. As a matter of law, one partner has no better right to possession of partnership property than another. That is why a partner may sue another for converting jointly owned property for his or her own use. As Devlin J observed, in Baker v Barclays Bank
Ltd:23
… I think it is quite clear that one co-owner can commit an act of conversion in respect of joint property. Of course, the mere fact that he takes possession of it will not be sufficient to amount to a conversion, because he is entitled to the possession of it. Neither party, however, is entitled to exclusive possession, and, if one of the two does an act which can be justified only by the right to exclusive possession, then he converts.
(Emphasis added)
[27] A decision to change the place at which a horse is stabled and trained is important to the owners and one that should, in my view, only be made by those entitled to exclusive possession of the horse. Those persons were all members of the partnership.24 It was not open to Mr Coxhead to assert a higher right to exclusive possession than all partners held together.
[28] The fact that Mr Coxhead had no authority to require Mr Dwyer to deliver up the horse to him is a complete answer to the claims against all three defendants. In addition, each of the defendants was entitled to rely on the lawful acquisition of Miss Meena by Ms Hackshaw following the sale on 8 May 2012, pursuant to the Notice of
Lien.
21 Cuff v Broadlands Finance Ltd [1987] 2 NZLR 343 (CA) at 346.
22 Ibid.
23 Baker v Barclays Bank Ltd [1955] 1 WLR 822 (Birmingham Assizes) at 827.
[29] It is unnecessary to deal with other arguments raised on appeal. In saying that, I intend no disrespect to Mr Waugh who said everything that could responsibly be said to advance Mr Coxhead’s interests on the appeal.
Result
[30] For those reasons, the appeal is dismissed.
[31] Mr Dale sought increased costs on behalf of the defendants on the basis that Mr Coxhead’s appeal was doomed to fail. I do not consider the appeal was so untenable as to require an order to that effect to be made. Rather, one set of costs are ordered in favour of Mr Dwyer, Ms Hackshaw and Mr Harjit Dheil on a 2B basis, together with reasonable disbursements. In the absence of agreement, costs and disbursements shall be fixed by the Registrar.
[32] If any questions of costs remain outstanding in the District Court, an application to fix them should be made to that Court.
P R Heath J
Delivered at 2.00pm on 9 July 2015
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