Mace v Strategic Planning Group Limited no.2

[2014] NZHC 1925

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4106 [2014] NZHC 1925

BETWEEN

NEVILLE HOWARD MACE, VALERIE

GAY MACE AND DAVID GLOSTER DANIEL

Plaintiffs

AND

STRATEGIC PLANNING GROUP LIMITED

First Defendant

ANDREW HROTHGAR ROBINSON Second Defendant

SPG INVESTMENT COMPANY NO 1
LIMITED

Third Defendant

Hearing:	On the papers
Counsel:	E Grove and J Cole for Plaintiffs
Judgment:	15 August 2014

JUDGMENT (NO 2) OF FOGARTY J

This judgment was delivered by me on 15 August 2014 at 4.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date: ………………………….

Solicitors:           Skeates Law Limited, Auckland

MACE & ORS v STRATEGIC PLANNING GROUP LTD [2014] NZHC 1925 [15 August 2014]

[1]      Introduction

[2]      On  1  July  last,  after  a  trial,  I  delivered  a  judgment  against  the  second defendant.   The plaintiffs’ claims against the first and third defendants had been separately set down for formal proof, to be determined on the papers (per Wylie J on

29 April 2014).

[3]      The   first   and   the   third   defendants   are   limited   liability   companies. Accordingly, they can only act through agents.   By law their agents include their directors.  The second defendant was one of their directors at all relevant times.  This is recorded in the July judgment.1    The plaintiffs’ claims against the first defendant are identical to the plaintiffs’ claims against the second defendant.  It was the defence of the second defendant that he was personally not liable because at all times he was acting on the behalf of the first defendant.2

[4]      Accordingly, I am satisfied that the reasoning in the judgment against the second  defendant  is  wholly  applicable  to  resolve  the  claims  against  the  first defendant.  All the reasons and the findings are adopted and made applicable to the first defendant, where they are findings of conduct by the second defendant, he acting at all material times in respect of the first defendant, except for the distinct matter in respect of the third defendant, to which I will come.

[5]      For these reasons, the  damages  and  interest  sought  as  a consequence  of liability are awarded. These are as follows:

The Pulse dealings

(a)       First cause of action, breach of s 9 of the Fair Trading Act 1986, and second cause of action, negligence:  judgment in the sum of $200,000.

(b)Interest on the sum of $200,000 from 25 August 2011 onwards at the rate of 5 per cent per annum pursuant to s 87 of the Judicature Act.

1      Mace & ors v Strategic Planning Group Ltd & ors [2014] NZHC 1500 at [20], [31] and [46].

2 At [20].

(c)       Costs on a 2B basis.

Investment in Digi-Clik

(d)Fourth cause of action, breach of s 9 of the Fair Trading Act, and the fifth cause of action, negligence: judgment in the sum of $40,000.

(e)       Interest on the sum of $100,000 for the period 1 October 2009 to 19

August 2011 at the rate of 5 per cent per annum pursuant to s 87 of the

Judicature Act 1908.

(f)       Interest on the sum of $50,000 from 20 August 2011 to 14 December

2011 at the rate of 5 per cent per annum pursuant to s 87 of the

Judicature Act 1908.

(g)Interest on the sum of $40,000 from 14 December 2011 to date of judgment at the rate of $5,000 per annum pursuant to s 87 of the Judicature Act 1908.

(h)      Costs on a 2B basis.

The loan to the Allworthy Trust

(i)       Sixth cause of action, negligence: judgment in the sum of $15,000.

(j)Interest on the sum of $15,000 from 21 October 2010 to date of judgment at the rate of 5 per cent per annum pursuant to s 87 of the Judicature Act.

(k)      Costs of a 2B basis.

The Trust’s investment in Enviro Energy Limited

(l)Seventh  cause  of  action,  negligence,  and  eighth  cause  of  action, breach  of  s 9  of  the  Fair  Trading  Act:  judgment  in  the  sum  of

$550,000.

(m)Interest on the sum of $250,000 from 22 September 2009 to date of judgment at the rate of 5 per cent per annum pursuant to s 87 of the Judicature Act 1908.

(n)Interest  on  the  sum  of  $200,000  from  14  June  2010  to  date  of judgment at the rate of 5 per cent per annum pursuant to s 87 of the Judicature Act 1908.

(o)Interest on the sum of $100,000 from 4 November 2010 to date of judgment at the rate of 5 per cent per annum pursuant to s 87 of the Judicature Act 1908.

(p)      Costs on a 2B basis.

The Trust’s investment in Zeroshift

(q)Ninth cause of action, negligence, and tenth cause of action, breach of s 9 of the Fair Trading Act: judgment in the sum of $500,000.

(r)      Interest on the sum of $200,000 from 14 December 2010 to date of judgment at the rate of 5 per cent per annum pursuant to s 87 of the Judicature Act 1908.

(s)Interest  on  the sum  of  $300,000  from  14  March 2011  to  date of judgment at the rate of 5 per cent per annum pursuant to s 87 of the Judicature Act.

(t)       Costs on a 2B basis.

[6]      The plaintiffs’ cause of action against the third defendant is founded on a recommendation by its director, Mr Robinson, to Neville Mace that his trust invest

$150,000 through the third defendant.   This investment is discussed in the 1 July judgment in [46] which reads:

[46]     In August 2007, Mr Mace agreed to the Trust investing $150,000 in

SPGI, the third defendant.   He received documents saying that the money

would be used to invest in shareholding in other companies.  The documents also informed him that SPGI would be managed by two other companies, Inca Consultants Limited (Inca) and Chime Limited (Chime).  He later found out  that  Inca  is  Mr Robinson’s  company  and  Chime  is  Mr  Turnock’s company.   Mr Robinson was Inca’s sole director from 8 December 2004 until 1 April 2013 when he was replaced by Mrs Caroline Hansen.   Mrs Caroline Hansen has been Mr Robinson’s partner.   They have shared the same residential address.  She is no longer his partner.  Mr Turnock was the sole director of Chime and held 99 of its 100 shares.  Mr Robinson and Mr Turnock were the two directors of SPGI.  The Trust received one dividend of

$7,198.21 in August 2008.   No other payments have been received.   The plaintiffs sue SPGI in contract. That cause is not part of this trial.

[7]      The plaintiffs believe that SPGI is insolvent.

[8]      I am not satisfied that the narrative of facts set out in para [46] of the 1 July judgment justifies a judgment against SPGI in contract.  The liability of SPGI is, in the first instance, to account for the investments.

[9]      The accounts of SPGI as at 31 March 2009, for the year ending 31 March

2010, were produced at the first trial and are relied upon here.  The accounts disclose that SPGI operated as an investment company recording its equity as principally share capital of $1,122,000 for the year ending 31 March 2008. Almost half that was in cash with four investments - Digi-Clik of $300,000; Pahia Road of $256,761, foreign currency of $92,000 odd; and Wylie Properties of $29,500.   Similar total equity is recorded in the accounts of 31 March 2010.

[10]     Without seeing the terms of the investment, it is not clear to what extent SPGI promised return of the whole of the investment.   I am not going to enter judgment for the plaintiffs in respect of the claim against the third defendant.  Nor, however, am I going to enter judgment against the plaintiffs.

[11]     These proceedings against the third defendant are adjourned indefinitely with leave to apply to either party.