Sahar Ehsani Investment Limited v Sinclair
[2024] NZHC 570
•7 March 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2022-404-2080
[2024] NZHC 570
UNDER The Contempt of Court Act 2019 BETWEEN
SAHAR EHSANI INVESTMENT LIMITED
Applicant
AND
WARREN GRAEME SINCLAIR
First Respondent
RETYRED (2020) LIMITED
Second Respondent
Hearing: 7 March 2024 Appearances:
T Ashley for Applicant
G Simms for Respondent
Judgment:
7 March 2024
Reasons:
18 March 2024
JUDGMENT OF WOOLFORD J
This judgment was delivered by me on Monday, 18 March 2024 at 2:30 pm pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors:Daniel Overton and Goulding (B Hantz), Auckland Wynn Williams (G Simms), Auckland
Counsel: T Ashley, Auckland
SAHAR EHSANI INVESTMENT LIMITED v SINCLAIR [2024] NZHC 570 [7 March 2024]
[1] This is an application under the Contempt of Court Act 2019 (the Act) for orders that:
(a)A warrant be issued committing the first respondent, Warren Graeme Sinclair, to a term of imprisonment as the Court considers it appropriate or, in the alternative, that a fine be imposed on Mr Sinclair, payable to the applicant, Sahar Ehsani Investment Limited (SEIL).
(b)A fine be imposed on the second respondent, Retyred (2020) Limited (Retyred), payable to SEIL.
(c)The respondents pay SEIL’s costs in this application.
[2] SEIL alleges that the respondents have breached Court orders, dated 24 November 2022 and 2 December 2022, to refrain from bringing tyres on to premises that were leased by Retyred at 177 Dominion Road, Red Hill, Auckland.
[3] I heard the application on 7 March 2024, following which I dismissed the application, saying my reasons would follow in due course. These are my reasons.
Background
[4] SEIL owns land at 177 Dominion Road, Red Hill, Auckland (the premises). It leased the premises to Retyred. The premises consist of a fenced yard of about 7,500 square metres with a gated entrance from Dominion Road. SEIL also owns the neighbouring property, 179 Dominion Road, from which it runs an auto parts business.
[5] SEIL leased the premises to Retyred under an agreement to lease dated 28 February 2022. The term of the lease was five years, commencing 30 March 2022. The first respondent, Mr Sinclair, was the sole director and shareholder of Retyred when the agreement to lease was entered into. Mr Sinclair guaranteed Retyred’s obligations under the lease.
[6] The agreement described the business use of the premises as “recycling tyres and show home display yard for modular house business”.
[7] In proceedings commenced on 27 October 2022, SEIL made two substantive claims. It’s main claim against both respondents was that Retyred had dumped and stored large quantities of used tyres on the premises. SEIL said Retyred did this without SEIL’s consent (in breach of cl 16.1 of the deed of lease) and that it had covered almost the whole of the premises with piles of tyres that were a fire risk and a nuisance (in breach of cls 8.2 and 22.1). SEIL said the quantity of tyres exceeded 100 cubic metres without a resource consent (in breach of cl 21.1). Finally, SEIL said the storage of the tyres meant Retyred had not kept the grounds clean and tidy (in breach of cl 8.2). SEIL said that Mr Sinclair was liable as guarantor for Retyred’s breaches.
[8] SEIL’s second claim was against Retyred alone, in trespass. SEIL pleaded that Retyred agents had, at various times since commencement of the lease, used a driveway that is part of SEIL’s neighbouring property (at 179 Dominion Road) to access the premises. SEIL said it had informed both respondents on many occasions that Retyred had no right to use the driveway to access the premises and that, on 11 October 2022, it served a trespass notice on Retyred warning that further use of the driveway would be a trespass. SEIL alleged that Retyred’s employees and agents had continued to use the driveway.
[9] When commencing the proceedings on 27 October 2022, SEIL also applied on notice for interim injunctions restraining the second respondent from storing any more tyres at the premises and requiring the respondents to remove most of the tyres that were already there.
[10] When the application was first called on 24 November 2022 before Muir J, there was no appearance by the respondents. Muir J was unable to fully deal with the interim injunction application on that date but made an interim order that the respondents “be restrained from dumping or otherwise accumulating further tyres at
177 Dominion Road, Red Hill pending determination of the interlocutory application.”1
1 Sahar Ehsani Investments Limited v Retyred (2020) Limited CIV-2022-404-6080, 24 November 2022 at [9].
[11] The interim injunction application was heard on 30 November 2022 by Wylie J. Again, there was no appearance by the respondents. In a judgment dated 2 December 2022, Wylie J granted an interim injunction prohibiting Retyred from bringing tyres on to the property at 177 Dominion Road, Red Hill, Auckland with immediate effect and until further order of the Court.2 The orders made by Wylie J were served on the respondents on 12 December 2022.
[12] Nine days later, on 21 December 2022, SEIL filed an application seeking orders for contempt of court. SEIL alleged that the respondents had failed to comply with the interim order made by Muir J and with interim injunction made by Wylie J (the interlocutory orders). The respondents filed a notice of opposition to the contempt application on 27 January 2023. That was the first step taken by the respondents in the proceeding. Directions were then made by consent for the disposition of the contempt application. It was scheduled to be heard on 1 May 2023.
[13] On 10 March 2023, SEIL filed a memorandum seeking a formal proof hearing. The memorandum noted that although the respondents were legally represented in relation to the contempt application, counsel for the respondents had indicated that they did not have instructions to act on the substantive proceeding. Because the respondents had not filed a defence, SEIL sought a fixture for a formal proof hearing. On 13 March 2023, Wylie J directed that there be a formal proof hearing and that it proceed at the same time as the hearing of SEIL’s contempt application.
[14] SEIL filed affidavits and a synopsis in support of formal proof. It also filed and served a synopsis in support of its contempt application.
[15] On 28 April 2023, the respondents filed an interlocutory application for orders adjourning the formal proof hearing, granting a stay of the proceeding, granting leave to the respondents to file a statement of defence and varying the terms of the interim injunction granted by Wylie J on 2 December 2022. SEIL filed a notice of opposition to that application.
2 Sahar Ehsani Investments Limited v Retyred (2020) Limited [2022] NZHC 3213.
[16] At a hearing on 1 May 2023, counsel agreed that the application for orders for contempt of court should not proceed because an issue had arisen as to whether SEIL should be able to cross-examine Mr Sinclair, who had filed an affidavit in support of the respondents’ notice of opposition. After discussion with counsel, it was agreed that the presiding Judge, Campbell J, should determine the respondents’ application to stay the proceeding, their application for leave to file a defence and SEIL’s application for leave to cross-examine Mr Sinclair. If the Judge were to grant either of the respondents’ application, he would not proceed to consider formal proof. However, if he declined both their applications, he would proceed to deal with formal proof (in a separate judgment, most likely on the papers).3
[17] In a judgment dated 16 June 2023, Campbell J declined the respondents’ application for a stay of proceeding and leave to file a statement of defence.4 He also granted SEIL leave to cross-examine Mr Sinclair on the affidavit he filed in opposition to the contempt application.5
[18] Campbell J then proceeded to deal with formal proof of SEIL’s claim, having decided that it could be dealt with on the papers. In a judgment dated 21 August 2023, Campbell J awarded damages against Mr Sinclair and Retyred in the sum of
$1,645,262.39 on SEIL’s first cause of action.6 On SEIL’s second cause of action, he
granted an injunction restraining any agent or employee of Retyred from entering onto a driveway that is part of 179 Dominion Road or any part of that property.7 He also awarded general damages of $5,000 and exemplary damages of $20,000 against Retyred.8
[19] I am advised that, following Campbell J’s judgment, SEIL retook possession of the premises and is currently removing all tyres from the premises.
3 As discussed in Sahar Ehsani Investments Limited v Retyred (2020) Limited [2023] NZHC 1515 at [24].
4 At [52] and [62].
5 At [67].
6 Sahar Ehsani Investments Limited v Retyred (2020) Limited [2023] NZHC 2258 at [29].
7 At [30(a)].
8 At [30(b)].
Application for contempt orders
[20] SEIL now wishes to proceed with its application for contempt orders under the Act.
[21] SEIL alleges that the respondents have, without reasonable excuse, knowingly failed to comply with the interlocutory orders by dumping tyres on the premises on (at least) 25, 26 and 27 November and 5, 16, 17 and 21 December 2022.
[22] At the time it filed its originating application for contempt orders on 21 December 2022, SEIL relied on the affidavit of its sole director Safar Sahar, sworn on the same date. Mr Sinclair filed an affidavit in opposition to the contempt of court application on 27 January 2023. Mr Sahar then responded with an affidavit in reply dated 16 February 2023.
Affidavit of Safar Sahar dated 21 December 2022
[23] Mr Sahar’s original affidavit documents in detail the alleged incidents upon which SEIL claims the respondents have breached the interlocutory orders. Mr Sahar says that he has direct knowledge of events because his business is located on the neighbouring property, from where he has a direct view of the premises. On 24 November 2022, his lawyers emailed Mr Sinclair after the hearing before Muir J to tell him about the interim order made by the Court.
[24] The next morning, on 25 November 2022, more trucks came and dumped tyres. He texted Mr Sinclair, who told him he had not received the email from SEIL’s lawyers. In response, Mr Sahar sent him Muir J’s minute and the sealed interim order as PDFs by text message.
[25] Straight after Mr Sahar sent the minute and interim order to Mr Sinclair, the site foreman, Fraser Milham, stopped work. Mr Sahar understands that Mr Sinclair had texted him. Mr Sahar recorded a video of a conversation between him and Mr Milham speaking over the fence. Mr Sahar said to Mr Milham, “You know you’ve got a Court order that you can’t bring tyres here anymore”. Mr Milham responded, “I
got a text message right now … there will be no more tyres. There will be no more dropping off, not until he gets consent or something he’s saying.”
[26] On that day, three more truckloads of tyres were dumped. On Saturday and Sunday (26 and 27 November 2022), about 15 more truckloads were dumped. Workers on the premises were using loaders to pile the existing tyres higher and higher to make space.
[27] Following the interlocutory hearing before Wylie J on 13 November 2022, things were quiet at the premises for a few days. On 5 December 2022, he got a voice mail message from Mr Milham. He sounded apologetic, saying that a truck load of tyres had been dumped and that he was “going to arrange for that load to be removed again.” As far as Mr Sahar knows, that load was never removed.
[28] On 6 December 2022, Mr Sahar said that SEIL received the sealed orders and had these sent to Mr Sinclair. Mr Sinclair did not respond, but it seemed like there was less activity at the premises.
[29] Around 13 December 2022, Mr Sahar could see that there was some more activity at the premises. Mr Milham started working there again, using a big loader to make piles of tyres higher. Mr Sahar assumes Mr Milham was doing this to make space for more tyres to be dumped.
[30] On 14 December 2022, Mr Milham came to the premises in the late afternoon where he hit a security camera with a metal bar, breaking the camera.
[31] On 16 December 2022, at least one truckload of tyres was dumped. He took a video of a pile of tyres, including the freshly dumped tyres, from which he attaches a screenshot. Mr Sahar says, “you can tell which ones have just been dumped because they are less dusty and look darker black”.
[32]That day, he texted Mr Sinclair as follows:
You still bring tyres every night. You need to stop this.
To which Mr Sinclair responded:
Gates are blocked and locked .. no one is sposed to be bringing anything. Have you got camera footage you can give me?
[33]The following exchange then took place:
can you give me fraser last name? Milham
He is working every day in the yard and night he brings tyres you need to stop him
I know he’s moving existing to tyres to undercover for when we start shredding but he is aware of the order to stop bringing tyres
[34]Then, on 17 December 2022, Mr Sahar says more tyres were dumped at around
5.30 am. The neighbour across the street allowed Mr Sahar to look at the footage from their security camera and provided him with some screenshots, which are attached.
[35] On 21 December 2022, at least one load of tyres was dumped between 3 am and 4 am. Mr Sahar concludes:
From the amount of activity moving tyres around, making bigger piles and creating more space on the ground, it looks like the respondent is preparing to dump many more tyres over the break. I won’t be able to watch as closely over the holiday because my business will be closed.
Affidavit of Warren Sinclair in support of opposition dated 27 February 2023
[36]In his response affidavit, Mr Sinclair states:
Rather than simply accumulating more tyres as has been alleged by SEIL, the work that Mr Milham has been doing on site has been to move tyres in order to make space for the largescale machinery involved in the tyre shredding process on site. That is why Mr Milham has been observed moving truckloads of tyres. Indeed, this is why particular piles were made higher and the tyres perhaps looked of different shades because they were moved around the site.
Finally, Mr Sahar says in his affidavit that he was concerned a large space had been cleared to dump more tyres over the break. This is not the case. As I have said, that large space was cleared in order to allow for a largescale shredding machinery to get on site for the breakdown of the tyres. This is part of the recycling process. No further tyres were dumped on site during the break. Mr Sahar has previously been told what is involved in the business and what would be happening on site.
The only instance, as far as I am aware, from Mr Sahar’s affidavit that may be correct regarding tyres actually [being] left at the site is the load of tyres referred to in paragraph 19 of his affidavit: here, he says he has had a message from Mr Milham that a load had been dumped but he was removing this. This may be correct; in which case we will arrange for that to be removed as soon as possible. To the extent this occurred, this was an accident and no one from Retyred was responsible for the dumping.
Affidavit of Safar Sahar in reply dated 16 February 2023
[37] In his affidavit, Mr Sahar refers to Mr Sinclair’s contention that no tyres had been dumped at the premises since the interlocutory orders were served on him. Apart from the dumping that he mentioned in his original affidavit, Mr Sahar says that tyres had been dumped over the Christmas break. He says that, on his return to work, he found new piles of tyres that had been freshly dumped. He says:
They must have been dumped on the premises within a few days before I returned. It is easy to recognise tyres that have been recently been dumped because they are clean and black — once they have been on the premises for a week or more they get dusty.
[38] Mr Sahar also annexes three reasonably short videos in support of his contention that tyres have continued to be dumped on the premises.
Legal principles
[39] Section 16 of the Act provides that certain court orders and undertakings may be enforced. There are, however, a number of pre-conditions that must be satisfied before enforcement procedures can be initiated. These are set out in s 16(3):
16 Certain court orders and undertakings may be enforced
…
(3)The court—
(a)must not proceed further under this section unless it is satisfied that other methods of enforcing the court order or undertaking have been considered and are inappropriate or have been tried unsuccessfully; and
(b)if so satisfied, must make a finding as to whether it is proved beyond reasonable doubt that—
(i)the court order or undertaking being enforced has been made in clear and unambiguous terms and is clearly binding on the person; and
…
Discussion
(ii)the person had knowledge or proper notice of the terms of the court order or undertaking being enforced; and
(iii)the person has, without reasonable excuse, knowingly failed to comply with the court order or undertaking being enforced.
Other methods of enforcing Court orders
[40] Counsel for SEIL submits that there are no other appropriate methods of enforcing the orders. Mr Sahar says he contacted the Auckland Council and the Police, but this did not help. Mr Sahar considered chaining the gate, but he had no legal right to do so and, in any event, the respondent had previously been undeterred by chained gates. Counsel submits it would have been ill-advised for SEIL to take self-help remedies as this would have given the respondent grounds to cancel the lease, leaving SEIL potentially liable to the Council for the removal of the tyres at great cost.
[41] On the other hand, counsel for the respondents submits that there were other methods of enforcing the Court orders. There is a process available under the Property Law Act 2007 of issuing a notice giving Retyred a reasonable timeframe for remedying the breaches of the lease.9 If unremedied, the lease could be cancelled. In reliance on the make good provisions under the lease, SEIL could then require Retyred to remove the tyres or remove them itself. If neither Mr Sinclair, as guarantor, nor Retyred pay the costs of the make good works, then they could be pursued to bankruptcy or liquidation.
[42] Furthermore, counsel refers to r 7.48 of the High Court Rules 2016, which sets out alternative methods for enforcing interlocutory orders such as sequestration of the premises or the appointment of a receiver of Retyred’s property.
[43] In any event, I do not have to determine that other methods of enforcing the Court orders have been considered and are inappropriate or have been tried unsuccessfully (s 16(3)(a)). This is because I am of the view that SEIL has not been
9 Property Law Act 2007, s 246.
proved beyond reasonable doubt that Retyred and Mr Sinclair have, without reasonable excuse, knowingly failed to comply with the Court orders (s 16(3)(b)(iii)). That is the issue to which I now turn.
Knowing failure to comply with Court orders
[44] I have no reason to doubt Mr Sahar’s sincerity and credibility when he says tyres were dumped on various dates in November and December 2022, but I am of the view that the conclusions he draws from his observations may not be entirely accurate.
[45] Although Mr Sahar says tyres were dumped on various days, there is no further verification such as times or other circumstances recorded, nor are there any photographs. No persons or vehicles are identified. Mr Sahar does refer to the same truck coming to dump tyres, but it is not otherwise identified as the property or under the control or direction of the respondents.
[46] The videos provided by Mr Sahar also do not provide any material of evidential significance. The videos show:
(a)A person in a Hi-Vis jacket who opens the boot of a car parked on the grass verge by the entrance to the premises, who walks up to and underneath a security camera then appears to break it.
(b)A truck on-site on 17 December 2022, which can be seen moving around but not entering or leaving the premises.
(c)A narrated video pointing to tyres of different shades present on the premises.
[47] Mr Sahar also assumes that tyres had been dumped because they were not dusty like others that had been on the premises for a while. However, Mr Sinclair advises that Mr Milham was moving piles of tyres to allow access for the heavy machinery needed to shred the tyres. This would account for the different shading of the tyres, according to Mr Sinclair.
[48] Counsel for SEIL explains this lack of verification on the basis that Mr Sahar is not a detective.
[49] It appears that other persons also had access to the premises. On 25 November 2022, Mr Sinclair advised Mr Sahar that other people had the gate code, and he would come down from up north on 28 November 2022 to put a chain on the gate so no one could access it. Mr Sahar says that, to the best of his knowledge, the gate was not then chained. However, on 22 December 2022, Mr Sinclair’s lawyers did offer to chain the gate, but Mr Sahar’s lawyers declined the opportunity to ensure compliance with the Court orders. Mr Sahar explains that he had plans to travel outside of Auckland during the break and did not want to be in a position where it could be alleged that he had stopped the respondents from removing tyres.
[50] During the hearing, Mr Sinclair was cross-examined by counsel for SEIL. I formed the view that he was open and honest and did not have knowledge of any dumping in contravention of the Court orders.
[51] In conclusion, I am of the view that SEIL has not demonstrated a “wilful” breach of the Court orders by either Mr Sinclair or Retyred. The activities witnessed by Mr Sahar do not prove beyond reasonable doubt — as is the threshold under the Act — that tyres were dumped in contravention of the Court orders. For contempt procedures to be initiated, a probable wilful breach of the Court order is insufficient. The Court needs to be satisfied to the criminal standard of beyond reasonable doubt. In this case, I was not so satisfied. I accordingly dismissed the application for contempt orders.
Costs
[52] Costs should normally follow the event. If counsel cannot agree, memoranda of no more than five pages are to be filed by 31 March 2024.
Woolford J
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