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Hyzon Motors Inc v Bartlett

Hyzon Motors Inc v Bartlett

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2022-404-1755

[2024] NZHC 3687

BETWEEN
HYZON MOTORS INC

Plaintiff

AND

MICHAEL BARTLETT

Defendant

Hearing: 18 November 2024

Appearances:

S C Trevella and J K Rogers-Jenkins for Plaintiff No appearance for Defendant

Judgment:

5 December 2024

JUDGMENT OF O’GORMAN J

[Formal proof hearing]

This judgment was delivered by me on 5 December 2024 at 4 pm pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

…………………………………

Solicitors:
Bell Gully, Auckland

HYZON MOTORS INC v BARTLETT [2024] NZHC 3687 [5 December 2024]

Overview

[1] The plaintiff, Hyzon Motors Inc (Hyzon), seeks judgment by way of formal proof against the defendant, Michael Bartlett, for deceit and misleading conduct. Hyzon is incorporated in Delaware, United States. It is in the business of designing and producing hydrogen fuel cells that provide zero emission power for trucks and heavy industry. This claim relates to an investment it made in a New Zealand company that it believed operated a complementary business.

[2] Hyzon says Mr Bartlett fraudulently induced it to pay USD 2,448,000 for shares in Global NRG H2 Ltd (H2), based on false representations that H2 had exclusive intellectual property rights to commercialise revolutionary methods for manufacturing biogas and syngas from waste material, and that it was a company within the Global NRG group operating successfully in more than 50 countries.

[3] Hyzon now believes those matters were all fabricated, as part of a long-term scam to lure investment payments, and that H2 is (and has always been) just a worthless shell.

[4]The plaintiff pursues three causes of action:

(a)the tort of deceit;

(b)breaches of ss 9 and 13 of the Fair Trading Act 1986 (FTA); and

(c)breaches of ss 19 and 22 of the Financial Markets Conduct Act 2013 (FMCA).

[5]The key issues for determination for the deceit claim are:

(a)Given the cross-border aspects, does the Court have jurisdiction and what is the proper law?

(b)Did the defendant make the alleged representations of fact to the plaintiff?

(c)Were those false, and did the defendant knowingly or recklessly deceive the plaintiff?

(d)Did the defendant intend that the representations be relied on?

(e)Did the misrepresentations cause the plaintiff’s payments (and is contributory negligence relevant)?

(f)Has the plaintiff thereby suffered loss?

[6]For the statutory causes of action:

(a)Do the FTA and FMCA apply to the conduct, given the cross-border aspects?

(b)Was the defendant “in trade” in New Zealand?

(c)Can claims under both statutes arise for the same conduct, along with a claim for deceit?

(d)Following on from the misrepresentation issues, was Mr Bartlett’s conduct misleading in relation to “goods” and “financial products”?

(e)What relief is appropriate as a matter of statutory discretion?

[7] Mr Bartlett initially took steps to defend the claims, but his defence was eventually struck out for non-compliance with court orders for discovery and interrogatories. The claim has therefore proceeded as a formal proof.

Formal proof hearings

[8] Under r 15.9(4) of the High…

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.

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Details

Case: [2024] NZHC 3687
Decision Date: 5 December 2024

CaseChat Overview and Summary

Hyzon Motors Inc, a Delaware-incorporated company in the business of designing and producing hydrogen fuel cells, has brought a claim against Michael Bartlett for deceit and misleading conduct. Hyzon alleges that Bartlett fraudulently induced it to pay USD 2,448,000 for shares in Global NRG H2 Ltd (H2), based on false representations that H2 had exclusive intellectual property rights to commercialise revolutionary methods for manufacturing biogas and syngas from waste material. Hyzon also claims that Bartlett made false representations about the success and global reach of H2, which it now believes were part of a long-term scam designed to attract investment payments. The plaintiff pursues three causes of action: deceit, breaches of the Fair Trading Act 1986, and breaches of the Financial Markets Conduct Act 2013.

The Court found that Hyzon had established its entitlement to relief under all three causes of action. The Court declared that Bartlett was liable in deceit for his misrepresentations that induced Hyzon's investment in H2. The Court also found that Bartlett's conduct was misleading and deceptive in breach of sections 9 and 13 of the FTA, and in breach of sections 19 and 22 of the FMCA. The Court ordered damages of USD 2,448,000 plus interest to the date of judgment of USD 338,846.96, making a total judgment debt of USD 2,786,847. The Court also ordered interest pursuant to sections 9 and 10 of the Interest on Money Claims Act 2016 on the above sum until the judgment debt (including all interest payable under the Act) is paid in full, and costs and disbursements calculated on a 2B basis.

The Court found that Bartlett's representations about H2's business activities, technology, experience, and know-how were false. The Court accepted that Bartlett knew these representations were false and that he pursued a deliberate strategy of seeking to deceive Hyzon to induce investment payments. The Court also found that Bartlett intended that Hyzon would rely on the representations in making its decision whether to invest in H2. The Court found that Hyzon, via its principals, relied upon the misrepresentations when it entered into the share subscription agreement and option agreement, as well as when it made the related payments at Bartlett's direction. The Court found that Hyzon suffered a loss of USD 2,448,000 as a result of Bartlett's conduct.

The Court found that both the FTA and FMCA apply to the conduct, even if the representations were made at a time when Bartlett was located overseas. The Court found that Bartlett was acting "in trade" when he made the misrepresentations, and that his conduct was designed to and did cause the loss of Hyzon making investments in H2, which was a shell company with no value. The Court found that the relief sought was appropriate within the above statutory frameworks, seeking to restore Hyzon to the position it would have been in had the misleading conduct not occurred. The Court found that interest is appropriately payable pursuant to sections 9 and 10 of the Interest on Money Claims Act from the dates the payments were made until the judgment debt (including all interest payable) is paid in full.

Orders