Hemi v Tyler - [2020] NZHC 2166

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2018-419-243

[2020] NZHC 2166

BETWEEN
HOHUA WARREN HEMI

Plaintiff

AND

MICHAEL STEPHEN TYLER

Defendant

Hearing: 13 August 2020

Appearances:

J A MacGillivray and M K Brady for Plaintiff K T Bond and U B Keller for Defendant

Judgment:

26 August 2020

JUDGMENT OF ASSOCIATE JUDGE LESTER

This judgment was delivered by me on 26 August 2020 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules

Registrar/Deputy Registrar 26 August 2020

HEMI v TYLER [2020] NZHC 2166 [26 August 2020]

[1] This is a factually dense case involving business relationships undertaken through multiple companies spanning 15 or more years, which is not a promising starting point for a defendant’s application for summary judgment or to strike out the plaintiff’s claim.

[2] This proceeding has already been subject to a judgment of Paul Davison J delivered on 21 May 2019, dealing with an appearance under protest to jurisdiction by Mr Tyler and a forum conveniens argument.1

[3] I gratefully adopt his Honour’s summary of the background and nature of the claim, albeit with some minor variations to reflect amendments to the statement of claim since Paul his Honour’s judgment:

[2] In his statement of claim the plaintiff sets out the background and context of his claim against the defendant, which arises from a wider dispute between himself and his business partner, Mr Robert Stone (Mr Stone). The plaintiff pleads two causes of action. The first alleges that the defendant has acted in breach of his duties as trustee for [a Cayman Island company, Auto Net] of shares in Autoterminal New Zealand Limited (ATNZ). The second alleges that the defendant has breached fiduciary duties owed to the plaintiff.

[3] The plaintiff and Mr Stone entered into a business relationship around 1991 for the purpose of purchasing used cars in Japan and exporting them to New Zealand and elsewhere in the world. The plaintiff says that his partnership with Mr Stone was on the basis that they each had a half share or interest in all partnership assets, and would operate all aspects of the partnership business together for their joint and equal benefit.

[4] The plaintiff says that his business partnership with Mr Stone is conducted through a complex structure of corporate entities incorporated in various jurisdictions around the world, all of which are ultimately beneficially owned by himself and Mr Stone equally. The plaintiff says that one of the corporate entities in the partnership structure is ATNZ, which was incorporated in April 2000 at his and Mr Stone’s direction. Its role was to sell and distribute cars imported into New Zealand from Japan on behalf of IBC Japan Co Limited (IBC), which was the first corporate entity established by the partnership, and which undertakes the core business of the partnership, buying and exporting used cars from Japan around the world including to New Zealand.

[5] The plaintiff says that another corporate entity…

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 Hemi v Tyler

Details

AGLC: Hemi v Tyler [2020] NZHC 2166
Case: [2020] NZHC 2166
Decision Date: 26 August 2020

CaseChat Overview and Summary

Hemi v Tyler is a factually dense case involving business relationships undertaken through multiple companies spanning 15 or more years. The plaintiff, Mr Hemi, commenced proceedings against the defendant, Mr Tyler, seeking relief for breaches of fiduciary duty and trusteeship. Tyler brought an application for summary judgment and/or to strike out Hemi's claim. The court was required to decide whether the pleaded fiduciary duties were sustainable and whether the claim disclosed a reasonably arguable cause of action. The court found that the pleaded fiduciary duties were reasonably arguable and that the claim disclosed a reasonably arguable cause of action. The court rejected Tyler's argument that the corporate structure put in place by Hemi and his business partner, Mr Stone, meant that Tyler was not subject to any fiduciary duties towards Hemi. The court held that equity looks to the substance and not to the form and that the evidence showed that Tyler had accepted that control ultimately rested with Hemi and Stone. The court also rejected Tyler's argument that the fiduciary duties, if any, were owed to Hemi and Stone jointly, and that it was not open to Hemi to bring the claim in his own name. The court held that if Hemi was right, Tyler was in breach of his fiduciary duty to Hemi by co-operating with Stone to damage Hemi's interests. Finally, the court made an order for Hemi to be granted discovery of certain documents relating to Tyler's involvement in various proceedings arising out of the wider business dispute between Hemi, Stone and their entities. The court held that there was a reasonable basis for believing the documents existed and that Hemi was entitled to know who and when Tyler had been corresponding with. The court ordered that costs should follow the event on a 2B basis together with disbursements as fixed by the Registrar.

Orders