Goodey v Property Teachers New Zealand Limited

[2012] NZHC 1551

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2010-404-006027 [2012] NZHC 1551

BETWEEN  STEVEN DAVID GOODEY Plaintiff

ANDPROPERTY TEACHERS NEW ZEALAND LIMITED

First Defendant

ANDPHILIP JONES Second Defendant

ANDPT 2009 LIMITED Third Defendant

Hearing:         On the papers

Judgment:      3 July 2012

JUDGMENT OF COURTNEY J

This judgment was delivered by Justice Courtney on 3 July 2012 at 11:00 am

pursuant to R 11.5 of the High Court Rules

Registrar / Deputy Registrar

Date……………………….

Solicitors:           Skeates Law, P O Box 56179 Dominion Road, Auckland 1446

Fax: [phone]
Ganda & Associates, P O Box 27227, Mount Roskill, Auckland 1041
Fax: [phone]

Counsel:             C Patterson, P O Box 2886, Auckland

Fax:  [phone] – Email: [email protected]
G Harrison, P O Box 5444, Auckland 1141

Fax: [phone] – Email: [email protected]

GOODEY V PROPERTY TEACHERS NZ LTD HC AK CIV-2010-404-006027 [3 July 2012]

[1]      The plaintiff, Steven David Goodey, has obtained judgment as to liability by default against the defendant, Philip Jones, for breaches of contract in failing to ensure that money owed to Mr Goodey by companies controlled by Mr Jones were paid.  The matter comes before me for determination of quantum by formal proof. The circumstances giving rise to the claim and evidence as to quantum are set out in Mr Goodey’s affidavits sworn on 10 September 2010 and 19 March 2012.

[2]      Mr Jones  was  the  director  and  shareholder  of  the  companies  Property Teachers NZ Ltd (PTNZ) and PT 2009 Ltd.   The business activities of these companies included the marketing and presentation of property investment and mentoring programmes. Both were originally named as defendants but have been struck off the Companies’ Office register and so Mr Goodey proceeds only against Mr Jones.

[3]      Mr Goodey had known Mr Jones since 2005 and had worked for a franchised business associated with a company run by him.  Mr Goodey subsequently started his own property investment advisory business.  In 2009 Mr Jones approached him and asked if he was interested in entering into a joint venture selling property advice and  training  to  customers.    That  joint  venture  (which  was  operated  through  a company owned by Mr Jones and Mr Goodey) was unsuccessful. However, in May

2009, shortly after Mr Jones incorporated PTNZ, he invited Mr Goodey to work with him  in  that  business  as  a  contractor,  marketing  and  presenting  a  mentoring programme called the Millionaire Mastery VIP Programme (MMVIP).

[4]      Mr Jones proposed that Mr Goodey’s own client database be consolidated with that of PTNZ’s for the purposes of marketing MMVIP and, in return, promised Mr Goodey 60 per cent of the net profits from the MMVIP business.   Mr Goodey agreed and began work marketing and presenting the programme.

[5]      At the end of 2009 Mr Jones offered, and Mr Goodey accepted, the position of CEO of PTNZ.  The agreed arrangement was that Mr Goodey would receive 50 per cent of PTNZ’s net profits with any pre-existing liabilities of PTNZ excluded from the profit calculations.   This was to be in addition to the 60 per cent of net profits from the MMVIP business.

[6]      Although some money was paid, most was not. By the end of 2010 PTNZ was insolvent and there is evidence that most of its revenue was diverted to meet Mr Jones’ personal expenses. The basis for the judgment as to liability was Mr Jones’ failure to ensure the payment of money due to Mr Goodey under the agreements. The relief sought was:

(a)       An inquiry into the net profits of Mr Jones and of PT 2009 Ltd and

PTNZ;

(b)      Damages comprising 60 per cent of the net profits of Mr Jones, PT

2009  Ltd  and  PTNZ  relating  to  the  MMVIP  programme,  less

$200,000 already paid to Mr Goodey;

(c)       Damages comprising 50 per cent of the net profits of Mr Jones, PT

2009 Ltd and PTNZ from 9 December 2009 onwards insofar as they relate to the PTNZ business excluding the MMVIP programme, and less the $60,000 already paid to Mr Goodey.

[7]      In his first affidavit Mr Goodey exhibited various documents supporting his claim for damages including emails from Mr Jones attaching spreadsheets showing the gross revenue of the companies.   That affidavit was served on Mr Jones in September 2010.   Mr Jones failed to provide any further documents pursuant to orders for discovery made in May 2011.  As a result, quantum falls to be considered solely on the basis of the documents Mr Goodey has in his possession.

[8]      Mr Goodey received a series of spreadsheets from Mr Jones between October

2009 and May 2010 which detailed the gross revenue from the MMVIP business. As at 4 May 2010 $1,002,686.51 had actually been received, with a further $236,311.02 owing by customers. Mr Goodey deposed that the person responsible for managing the income and expenditure at PTNZ, Debbie Greenwood, told him that most of the amount outstanding in May 2010 was collected. For present purposes I make a 15% reduction from that figure to reflect the amount not collected, producing a figure of

$200,864.37.

[9]      Based on his knowledge of actual expenses at the time MMVIP was set up and his experience of other aspects of the business, Mr Goodey has estimated the expenses to be deducted from the gross figure at 20 per cent of the revenue received and 5 per cent of the amount that had not been received as at May 2010. This is because the profit on later sales is higher as a result of the set-up costs associated with earlier sales.   I am prepared to accept this estimate which would produce a figure for the net income from MMVIP of $992,970.36.  Sixty per cent of this, being Mr  Goodey’s  share,  would  be  $595,782.22.    Mr  Goodey says  that  he  received approximately $200,000 that can be related to MMVIP, leaving $395,782.22 payable to him.

[10]     Mr Goodey has no documents at all to support his claim in respect of the revenue other than the MMVIP Programme.  There had been reporting of only one programme and he did receive payment for that.  His 50 per cent share of profits in respect of that programme was $60,000.  The only evidence to support this aspect of the claim is Mr Goodey’s recollection that between December 2009 and May 2012 there were “perhaps three other small courses and events run by the property tutors business excluding the Millionaire Mastery VIP Programme”.

[11]     Mr Goodey’s position has been made very difficult by the lack of documents and the refusal by Mr Jones to comply with the order for discovery.  Nonetheless, there is simply no evidence on which I could make any assessment as to what the gross revenue of the business other than MMVIP was.  I therefore decline to make any award in respect of it.

[12]     There will be judgment in the sum of $$395,782.22,  together with interest at the rate of 5 per cent from 4 May 2010.

[13]     Mr Goodey is also entitled to costs on a 2B basis together with reasonable disbursements to be fixed by the Registrar.

P Courtney J