SHOTCRETE AUCKLAND LIMITED (In Liquidation) WATERTITE SHOTCRETE LIMITED (In Liquidation) AND GLENN NORMAN TIRA
[2024] NZHC 2913
•8 October 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-001464 [2024] NZHC 2913
UNDER the Companies Act 1993 IN THE MATTER OF
the Liquidation of SHOTCRETE AUCKLAND LTD and WATERTITE
SHOTCRETE LTD (both In Liquidation)
BETWEEN
SHOTCRETE AUCKLAND LIMITED
(In Liquidation) First Plaintiff
WATERTITE SHOTCRETE LIMITED
(In Liquidation) Second Plaintiff
AND
GLENN NORMAN TIRA
Defendant
Hearing: 16 September 2024 Appearances:
B Pamatatau for the Plaintiffs No appearance for the Defendant
Judgment:
8 October 2024
JUDGMENT OF WALKER J
This judgment was delivered by me on 8 October 2024 at 1 pm Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar
Counsel:
B Pamatatau, Barrister, Auckland
SHOTCRETE AUCKLAND LIMITED v TIRA [2024] NZHC 2913 [8 October 2024]
[1] This is a damages claim in conversion. Its genesis is the breakdown of a 10-year business relationship between the co-directors and shareholders of the plaintiffs. The cause and circumstances of that breakdown are not material for present purposes.
[2] The plaintiffs seek damages of $130,454 representing the book value of assets allegedly converted by Glenn Tira, the first defendant. Mr Tira was formerly a co-director and shareholder of the plaintiffs, along with Duncan McLay. Mr Tira filed a defence to the statement of claim but subsequently took no further steps. The solicitors acting for him withdrew from representing him. Mr Tira has not filed a statement of defence to the amended statement of claim.
[3] The plaintiffs and second defendant have settled the claims and counterclaims between them.
[4]The plaintiffs’ claims against Mr Tira now proceed by way of formal proof.1
Background
[5] The plaintiffs, Shotcrete Auckland Limited (in liq) (Shotcrete) and Watertite Shotcrete Limited (in liq) (Watertite) (together, the Companies) specialise in the application of wet sprayed concrete and waterproofing.
[6] By early 2020, the business relationship between Mr Tira and Mr McLay had broken down to the point where Mr McLay asserts the companies were unable to trade on. They negotiated an option for Mr Tira to purchase Mr McLay’s shares but it did not proceed. On the eve of appointment of a liquidator to the Companies, on the petition of Mr McLay and his associated interests, Mr Tira entered the Companies’ premises and removed assets. He had no authority to do so.
[7] The next day, the remaining shareholders of the Companies appointed Grant Reynolds, an experienced insolvency practitioner, as liquidator.
1 High Court Rules 2016, r 15.9.
[8] Shortly after the liquidator was appointed, Mr Tira sought without notice freezing and related search orders. Those orders were made on 11 June 2020. Mr McLay, and interests associated with him, sought to discharge those orders, alleging a failure by Mr Tira to disclose relevant information to the Court about the business relationship and actions Mr Tira had taken to seize and put to his own use assets of Shotcrete and Watertite.
[9] Following a hearing on 21 July 2020, van Bohemen J determined it was not appropriate to renew the freezing and related orders that were due to expire that day because he was satisfied that those orders would never have been made if the evidence then before the Court had been disclosed in the application.2
[10] At the date of the appointment of Mr Reynolds, the Companies’ assets consisted of:
(a)at least 13 vehicles, concrete pump equipment, stock and general plant equipment; and
(b)power tools supplied by Hilti (New Zealand) Limited subject to a lease between Hilti and Shotcrete. Hilti had a registered security interest in the power tools.
[11]Mr Reynolds has provided an affidavit in support of the formal proof claim.
[12]His evidence is that:
(a)As of 31 March 2020, the fixed assets owned by Shotcrete had a book value of $331,905.
(b)As of 31 March 2020, the fixed assets owned by Watertite had a book value of $31,903.
2 Tira v McLay [2020] NZHC 2991.
(c)Hilti has made a claim in the liquidation for either the debt due or the replacement value of the power tools for $25,553.95.
(d)The Companies’ assets and power tools combined had a book value of
$389,361.95 at liquidation.
[13] Mr Reynolds requested Mr Tira return the assets and reported the unauthorised removal to police. He also engaged several private investigation firms to try to locate the assets, without success.
[14] The explanation from Mr Tira for not returning the assets appeared to be because of his view that Mr McLay had conspired to obtain his (Mr Tira’s) share in the Companies when the buyout option failed. Mr Tira did not deny continuing to use the assets to trade on.
[15] Mr Tira then attempted to negotiate a lease of assets from the liquidator with a view to subsequent purchase. He initially offered to purchase the assets for $400,000. Although two draft agreements to purchase the assets of both Shotcrete and Watertite were prepared, Mr Tira did not complete the purchase. Subsequently, he offered to lease the assets for $22,500 plus GST per month to complete a construction project known as the Glentunnel Project. Mr Reynolds declined that offer.
[16] In or around December 2020, some of the assets were delivered to Turners Auctions in Wiri without any prior notice. The returned assets included commercial concrete pump trucks.
Turners Auctions sold the returned assets on behalf of the Companies for
$434,361.58 plus GST.
[18] Mr Reynolds has prepared a schedule of those assets removed by Mr Tira but not returned to Turners Auctions.
[19] The Companies also claimed against a second defendant, Shotcrete & Rock (NZ) Limited (Shotcrete & Rock). As noted above, the claims against Shotcrete & Rock and counterclaims against the plaintiffs have been resolved and
discontinued. None of the terms of that settlement have any bearing on the remaining claims by the Companies against Mr Tira.
[20] The claim pleaded against Mr Tira is that, without authority, he removed assets belonging to Shotcrete and/or Watertite or retained other assets of Shotcrete and/or Watertite, and refused to return all the assets despite numerous requests.
[21] In addition to retaining the assets, the Companies plead that Mr Tira had use of the assets for his benefit and wilfully interfered with the use and possession of those assets without justification, converting them for his personal benefit.
[22] In Mr Tira’s statement of defence, he admitted taking “certain” assets but not all assets. He pleaded that he did so to complete pre-existing contractual obligations of Shotcrete. He did not deny the various requests for return, that he offered to purchase some of the assets or that Shotcrete & Rock used some of the assets without authority. He pleaded that the assets taken had been delivered to Turners Auctions by end of November 2020 and denied that he had wilfully interfered with the use or possession of the assets without justification. He did not plead to the allegation in the statement of claim that the Companies had suffered a loss equivalent to market value of the assets. This may have been an oversight, but r 5.48(3) of the High Court Rules 2016 expressly provides that an allegation not denied is treated as being admitted.
[23] The Companies filed an amended statement of claim. This was served on the solicitors then acting for Mr Tira.3
Determination
[24] The essential feature of a tort of conversion is denial by a defendant of the possessory interest or title of a claimant in goods.4 There are three essential features of the tort:5
3 The amended statement of claim was served on 10 November 2023 on Mr Tira’s then solicitors. His solicitors ceased to act on 12 December 2023.
4 Cynthia Hawes “Interference with Goods” in Stephen Todd (ed) Todd on Torts (9th ed, Thomson Reuters, Wellington, 2023) 681 at [11.3.1].
5 At [11.3.1].
(a)the defendant’s conduct is inconsistent with the rights of the owner or other person entitled to possession;
(b)the conduct is deliberate; and
(c)the conduct is so extensive an encroachment on the rights of the owner or other person as to exclude him or her from use and possession of the goods.
[25] I am satisfied by the material before the Court — including the statement of defence originally filed on behalf of Mr Tira, the affidavit of Mr Reynolds and the affidavit of Mr McLay — that not all the assets removed by Mr Tira were returned to Turners Auctions and that conversion is established. I am further satisfied that there is no reason not to enter judgment by way of formal proof.
[26] The remedy in respect of conversion is an award of damages. The orthodox approach is an award of damages representing the market value of goods. However, that assessment is flexible and depends on the facts and circumstances of each case.6 The overarching objective is that the plaintiff should recover his or her “true loss”. I am satisfied that a fair assessment of that true loss by the first plaintiff is represented by the book value of the unreturned assets in view of the liquidation.
[27] While the claim originally included GST, Mr Pamatatau properly withdrew this aspect of the claim on the instructions of the liquidator.
Result
[28] Accordingly, I enter judgment against Mr Tira in favour of Shotcrete (as the owner of those assets not returned) in the sum of $130,454.
6 Kuwait Airways Corp v Iraqi Airways Co (Nos 4 and 5) [2002] UKHL 19, [2002] 2 AC 883.
[29] Shotcrete is entitled to 2B costs against Mr Tira in respect of the steps in the proceeding taken against Mr Tira, together with disbursements to be fixed by the Registrar.
............................................................
Walker J
0
0
1