Superthrill Jet Sprint Limited v Coggan - [2019] NZHC 494

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-2840

[2019] NZHC 494

BETWEEN
SUPERTHRILLER JET SPRINT LIMITED

Plaintiff

AND

MARK REGINALD COGGAN

Defendant

On the papers

Appearances:

AF Drake and DJ Pine for the Plaintiff/Applicant

MR Coggan representing himself as Defendant/Respondent

Judgment:

21 March 2019

JUDGMENT OF TOOGOOD J

This judgment was delivered by me on 21 March 2019 at 11.00 am Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

SUPERTHRILLER JET SPRINT LIMITED v COGGAN [2019] NZHC 494 [21 March 2019]

Introduction

[1] Superthriller Jet Sprint Limited (Superthriller or the Company) operates a drive-yourself jet boating experience located on a purpose-built lake at Colin Dale Motorsport Park in Wiri, Auckland. When it was founded in 1981, as Coggan & Williams Limited, it specialised in the manufacturing of jet units for jet boat engines. The defendant/respondent, Mr Mark Coggan, appears on the pleadings to have been the sole shareholder and director of that company. It is alleged that Coggan & Williams designed and arranged for the third-party manufacture of 100 horsepower jet sprint boats using the Coggan & Williams jet units. In 2006, Mr Coggan sold one- third of the shares in Coggan & Williams to each of Ms Teresa Farac-Ciprian and Mr Danny Chan, while retaining one-third of the shares himself.

[2] In 2016 Coggan & Williams changed its name to Superthriller and designed and constructed the purpose-built race circuit where individuals or teams can race the Superthriller jet boats.

[3] It is alleged that the key aspects of the shareholder agreement between the purchasers, Ms Farac-Ciprian and Mr Chan, and Mr Coggan were that:

(a)Ms Farac-Ciprian and Mr Chan would each contribute $300,000 to the Company as a loan for working capital;

(b)Mr Coggan would assign $591,750 as capital to the Company in consideration for the value of intellectual property and a restraint of trade;

(c)Mr Coggan would assign a capital loan of $300,000 on the terms that it was unsecured, non-interest bearing and had no rights for call up by the lender (loan A); and

(d)Mr Coggan assigned a further capital loan of $291,750 on the terms that it was unsecured, non-interest bearing and had no rights for call up by the lender (loan B).

[4] Subsequently, Superthriller agreed to pay Mr Coggan $4,500 per month in lieu of salary against the value of loan B, to the terminal value of $250,000 although it is pleaded without explanation that a total of $41,750 was to be paid.

[5] The plaintiffs allege that prior to Ms Farac-Ciprian and Mr Chan becoming shareholders, Mr Coggan informed them that the first four jet boats manufactured for the business would use a General Motors motor that had already been purchased, but that further boats would require a new engine. Mr Coggan is alleged to have informed Ms Farac-Ciprian and Mr Chan that he had already identified a new engine, the Moller Engine that could be “marinized” (which I assume means…

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: [2019] NZHC 494
Decision Date: 21 March 2019

CaseChat Overview and Summary

Superthriller Jet Sprint Limited, a company operating a jet boat experience in Wiri, Auckland, sued Mark Reginald Coggan, the former shareholder and director, for conversion and misrepresentation. Superthriller claimed that Coggan had retained company property, including vital spare parts and manuals, and had misrepresented the costs associated with developing the Moller engine and other business aspects. Coggan, who had been under medical care for severe anxiety and depression, did not attend the hearing, citing his health and financial situation. Despite this, he had filed multiple affidavits addressing issues unrelated to the relief sought in the interlocutory proceeding. The court was required to determine whether Superthriller had established a serious question to be tried, whether the balance of convenience favoured granting the injunction, and whether overall justice supported the plaintiffs.

The court found that Superthriller had demonstrated a good arguable case for conversion, as Coggan was in possession of the company property despite multiple requests to return it. Coggan's possession of the property was inconsistent with Superthriller's rights, intentional, and extensive enough to exclude the company from exercising its proprietary rights. The balance of convenience clearly favoured Superthriller, as the forced return of the property to the plaintiff might not cause Coggan significant loss, whereas refusing the relief would add to the financial strain the company was already under. Therefore, the court found that overall justice was in favour of the plaintiffs.

The court ordered Coggan to surrender the specified company property to Superthriller's director immediately upon demand and not to destroy, use, copy, transmit, transfer, alter, delete, or deface any of the property prior to its delivery. The plaintiff, having succeeded in its claim for interim relief, was entitled to costs. The primary rule was that Superthriller was entitled to costs, and any application for costs would be made by memorandum filed and served not later than 19 April 2019. Any reply memorandum would be filed and served not later than 10 May 2019. Costs would be determined on the papers unless the court directed otherwise.

Orders