Taylor v Miles
[2020] NZHC 3391
•17 December 2020
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE
CIV-2018-409-000853
[2020] NZHC 3391
BETWEEN ELIJAH RON COLENSO TAYLOR
Plaintiff
AND
IAN ROBERT JOHN MILES
Defendant
Hearing: 12 November 2020 Counsel:
W J Hamilton & L A Merrick for the Plaintiff No appearance for the Defendant
Judgment:
17 December 2020
JUDGMENT OF DOOGUE J
Introduction [1]
Mr Taylor’s claim [5]
Factual background [8]
Mr Taylor’s upbringing and early career [8]
Mr Taylor meets Mr Miles [12]
Mr Taylor’s bond with Mr Miles grows [18]
The first “Athlete and Manager Contract” [27]
The NRL Accredited Player Agent Contract [30]
Mr Taylor’s BNZ accounts are opened [39]
Mr Taylor’s father falls ill [42]
Panthers contract [47]
Mr Taylor’s Westpac accounts [51]
Mr Miles’ unauthorised transactions begin [55]
The Taylor family begins budgeting [61]
Mr Miles blames Mrs Matapo-Taylor for the spending [67]
TAYLOR v MILES [2020] NZHC 3391 [17 December 2020]
Mrs Matapo-Taylor discovers the unauthorised spending [72]
Preparing the RLPA Spreadsheet [80]
Deloitte’s analysis [83]
Application for an order under s 76(2) of the Insolvency Act 2006 [86]
Relevant law [86]
Analysis [92]
Further preliminary matters [104]
First cause of action – breach of contract [106]
Contractual matrix [108]
Breach of NRL Contract [113]
Mr Miles is not entitled to a fee [115]
Second cause of action – undue influence and unconscionable bargain [118]
Undue influence [120]
Unconscionable bargain [133]
Third cause of action – breach of fiduciary duty [137]
Claim for general damages [145]
Fourth cause of action – breach of Fair Trading Act 1986 [149]
Affirmative defences [153]
Orders sought [155]
Judgment sum [155]
Costs and disbursements [159]
Costs [159]
Disbursements [162]
Introduction
[1] The plaintiff, Mr Taylor, is a professional rugby league player. He plays in the National Rugby League (NRL) competition in Australia. He has played 186 NRL games and 11 test matches for the New Zealand national team (Kiwis). He commenced this proceeding in December 2018.
[2]The defendant, Mr Miles, was Mr Taylor’s agent and manager.
[3] Just before the hearing, Mr Miles advised through counsel that he would not be defending Mr Taylor’s claim and that he intended to apply for bankruptcy.
[4] Mr Miles was adjudicated bankrupt before the hearing. As a result, counsel for Mr Taylor made an application for leave under s 76(2) of the Insolvency Act 2006 to proceed with this claim despite Mr Miles’ bankruptcy. I address that application later in this judgment.
Mr Taylor’s claim
[5] Mr Taylor says that the Mr Miles stole money from him over a four-year period. He says that Mr Miles had access to his bank accounts in New Zealand and Australia and used this access to:
(a)transfer funds to himself (or to a bank account in the name of his company The Zone Ltd, which he controlled) without Mr Taylor’s knowledge or approval; and
(b)make unauthorised personal transactions on Mr Taylor’s credit card.
[6] Mr Taylor says that Mr Miles attempted to conceal or justify his actions by, among other things:
(a)Asking Mr Taylor in 2013 to sign an additional contract with his company, The Zone Ltd, which he later suggested gave him an entitlement to an additional fee from Mr Taylor over and above his
entitlement under the standard form NRL Accredited Player and Agent Contract.
(b)Having Mr Taylor’s bank statements sent to Mr Miles’ home in Christchurch.
(c)Telling Mr Taylor that the credit card was being used by Mr Taylor’s wife, Ms Matapo-Taylor.
[7]So Mr Taylor’s pleaded causes of action are:
(a)breach of contract;
(b)undue influence and unconscionable bargain (in respect of the 2013 contract referred to above);
(c)breach of fiduciary duty; and
(d)breach of the Fair Trading Act 1986.
Factual background
Mr Taylor’s upbringing and early career
[8] Mr Taylor was born in Hawera on 27 February 1990 and grew up Northland. He attended Kaitaia College for three years, before moving to St Paul’s College in Auckland in 2006 for his final two years of school. He was raised by his father, Ron, as a solo parent.
[9]Mr Taylor has described his childhood in his affidavit as follows:
I had a pretty hard upbringing and we never had any money. I knew that if I could become a full time NRL player I had a good chance to be able to provide for my family.
[10] Mr Taylor was identified as a promising player and was offered (and accepted) a development contract with the New Zealand Warriors NRL club as a 16-year-old in 2006.
[11] Two years later, in his first year out of school, Mr Taylor began playing for the Warriors’ under-20 team in the Toyota Cup competition.
Mr Taylor meets Mr Miles
[12] The following year, aged 19, Mr Taylor met Mr Miles (aged 58), who was providing weekly mental skills coaching sessions for the Toyota Cup team. Mr Taylor was the captain of the team and would later be named the team’s player of the year.
[13] Mr Taylor was impressed by Mr Miles and was keen to learn from him. He would often stay behind after sessions and ask questions. Mr Taylor has said that:
Ian would always give me his opinion and advice. He always seemed to have time for me and he was very kind to me. I felt like he genuinely cared about helping me.
[14] In late 2009, Mr Taylor accepted a playing contract from the Warriors, which meant that he would become a full time professional. This meant that Mr Taylor was edging closer to his goal of becoming an NRL player. At the time, Mr Taylor’s agent and manager was Mr Stan Martin.
[15] In addition to his work with the Warriors’ Toyota Cup team, Mr Miles was the CEO of the Hyundai Pinnacle Programme (the Programme), a programme aimed at mentoring promising young New Zealanders in their chosen field.1
[16] Mr Miles invited Mr Taylor to apply for the Programme; Mr Taylor was accepted in early 2010. Mr Taylor participated in the Programme throughout the year, while sitting out most of the rugby league season with an injury. He remained in frequent contact with Mr Miles, talking with him several times per week. Mr Miles would always respond quickly, which Mr Taylor appreciated.
1 Alumni of the Programme include Moss Burmester (swimming), Peter Taylor (rowing), Adam Hall (Paralympic skiing), and Debbie Hansen (triathlon).
[17] During that year, Mr Miles organised several trips for himself and Mr Taylor around New Zealand as part of the Programme. Mr Taylor also met up with Mr Miles on a number of occasions for dinner, when Mr Miles was visiting Auckland. Mr Taylor’s recollection is:
At those dinners we would talk for hours about all sorts of topics. We would talk about sport and mental skills stuff, but also about life generally and things like family and the price of fame. Ian told me about the time he had spent in Europe managing motorcycling teams. He would talk about some of the contracts he said he had negotiated and signed over there and they were for huge sums of money.
Mr Taylor’s bond with Mr Miles grows
[18] As the bond between Mr Taylor and Mr Miles strengthened, Mr Miles began to speak to Mr Taylor about becoming an accredited NRL agent. In order to be able to deal with NRL clubs on behalf of players, agents must be accredited with the NRL’s Agent Accreditation Scheme.2
[19] Early in the 2011 season, recovered from injury, Mr Taylor made his first grade NRL debut for the Warriors, aged 21. Mr Taylor played the majority of the Warriors’ games that season, including the NRL Grand Final, where he scored a try.
[20] As Mr Taylor’s career gained momentum, it seemed to him that Mr Miles’ role with the Pinnacle Programme ended.
[21] During the 2011 season, Mr Taylor was being paid a very modest (by NRL standards) base salary of $70,000, plus appearance bonuses of $2,000. During the season, the Warriors made him a new contract offer, which Mr Taylor recalls would have seen him paid around $200,000 per season, nearly three times his base salary at the time.
[22] Mr Taylor was not sure whether to accept the offer. He was advised to accept the offer by his agent, Mr Martin, and by his father. But he turned to Mr Miles for advice. Mr Taylor explains in his affidavit:
2 I discuss the scheme below at [35].
This was the first time I had really had to think about whether or not to accept a contract. It was a totally foreign situation for me and my family and I didn’t really know what to do. I didn’t have anyone in my circle that had any experience with this sort of thing.
I talked to Ian and he told me not to accept it. He said that I was worth more money and I could get a better contract elsewhere.
If I didn’t accept the new Warriors offer, I would stay contracted to them through to the end of the 2012 season. After that, the Warriors had an “option” in their favour for one extra season. That meant that the Warriors could extend my contract and keep me with them for the 2013 season.
[23] Despite the potential downside (the Warriors keeping him on a modest salary for 2012, and potentially 2013 under their option), Mr Taylor took Mr Miles’ advice, eschewing the advice of both his manager and his father. This demonstrates both the regard in which Mr Taylor held Mr Miles at the time and the degree of influence that Mr Miles had gained over Mr Taylor in a relatively short period of time.
[24] The result of this decision was that Mr Taylor remained contracted to the Warriors for the 2012 season on a base salary of $120,000, and the Warriors exercised their option to keep him for the 2013 season.
[25] From that time, Mr Taylor became keen for Mr Miles to take over from Mr Martin as his agent. He has explained that he “thought Ian would do a great job”, because:
We had become so close during my time in the Pinnacle Programme that I felt I could trust Ian 100%. He had supported and mentored me during that time and always seemed ready to help me with any issues I had on or off the field;
Ian was always responsive and reliable and made me feel like he genuinely cared for me. That is not always the case with agents in the NRL; and
Ian did not represent any other NRL players and I thought it would be a huge advantage for me to have an agent that only had me on his roster, because I knew he would be able to devote time to me and always have my best interests in mind.
[26] In late 2011, Mr Taylor was selected for the Kiwis’ end of year tour to the UK. Before he left for the tour, Mr Miles sent an email to Mr Martin, explaining that Mr Taylor no longer wanted Mr Martin to represent him. This caused some consternation and resulted in a meeting at which Mr Taylor apologised to Mr Martin, at the request of Warriors’ management. Mr Taylor has stated, in respect of that
meeting: “I liked Stan and I thought he had done a good job for me, but I was totally listening to Ian at this stage.”
The first “Athlete and Manager Contract”
[27] On his return from the tour, Mr Taylor met Mr Miles at the Stamford Plaza in Auckland and was presented with a document titled “Athlete and Manager Contract” (the First AAMC), which it appears Mr Miles had prepared. The counterparty was “The Zone Limited”, Mr Miles’ company.
[28] The document purported to have Mr Taylor appoint Mr Miles’ company as his “sole and exclusive manager”. Mr Miles has later suggested that this agreement was “superseded and replaced” with a similar document signed in 2013. Mr Taylor’s understanding at the time was: “… the effect of it was to appoint Ian as my agent, in just the same way that Stan had been my agent.”
[29] Mr Taylor says that Mr Miles did not recommend that he take legal advice before signing the document but did say that he could take advice if he wanted to. But Mr Taylor’s affidavit explains: “I didn’t think that I needed to take any advice. I completely trusted Ian, and it had always been the plan that I would sign with him.”
The NRL Accredited Player Agent Contract
[30] It appears that, either at this time or shortly after, Mr Taylor and Mr Miles also signed an NRL Accredited Player Agent Contract (the NRL Contract). This contract was in the standard form that the NRL requires players and agents to use.
[31] The NRL implemented the Accredited Player Agent Scheme in the early 2000s in an attempt to protect players and standardise the manner in which they dealt with agents. Membership of the scheme requires agents to contract with their players using the standard form NRL contract.
[32] The exact date that this contract was signed is unclear; it is variously dated 16 December 2011, 16 January 2012, and 16 December 2012. Mr Taylor cannot recall signing it but accepts that he did.
[33] Mr Taylor’s position is that to the extent that there was a valid and binding agreement between himself and the defendant, the terms of that agreement are contained in the NRL Contract. This contract states that Mr Taylor appoints Mr Miles as his “sole and exclusive agent” until 16 January 2017.
[34]Mr Miles’ obligations under the NRL Contract included:
(a)Negotiating and securing an NRL Playing Contract or Playing Agreement (cl 4(a)).
(b)Without liability or remuneration, accessing and arranging legal, financial, superannuation, taxation, insurance and other appropriate professional advice and services on the instruction of and at the cost of Mr Taylor (cl 4(c)).
(c)Keeping Mr Taylor fully informed in regard to any and all details of negotiations undertaken on his behalf (cl 4(d)).
(d)Complying in all respects with the NRL Accredited Player Agent Scheme Rules and the Code of Ethics (cl 4(f)).
(e)Maintaining his accreditation as an Accredited Player Agent (cl 4(g)).
[35] The NRL Contract incorporates by reference the NRL Accredited Player Agent Scheme Rules and Code of Ethics. Among other things, they required Mr Miles also to:
(a)Act in accordance with the law and the legitimate best interests of the player (cl 1).
(b)Deal with the players for whom they act honestly, competently, diligently and fairly, with a conscientious regard for their personal and professional welfare (cl 1).
(c)Enter into any agreement with the player in writing and clearly disclose all fees and commissions payable, and any variation to such fees or commissions must be agreed to by the player in writing (cl 4).
(d)Not enter into any agreement with the player if the player is registered to another agent (cl 5).
(e)At all times keep the player fully informed of the nature of the work the agent is doing and, wherever possible, keep the player informed in writing (cl 7).
[36]The fee payable to Mr Miles under the NRL Contract was:
(a)0% of Mr Taylor’s NRL contracted income for the first two years; and
(b)thereafter, a sum equal to 7% of all monies that became payable to Mr Taylor under his NRL Playing Contract (excluding any non-cash benefits, health insurance, education expenses, accommodation assistance, remuneration prize money or similar benefits, relocation expenses or traineeships or non-playing benefits) (cl 5(b)(i) and special condition 1.1).
[37] As Mr Sharrock (an expert sports agent) explained, an arrangement for 0% remuneration in the first year or years of a contract is not uncommon where the player’s former manager is entitled to trail commission on the player’s contract at the time when the player signs with the new manager—as was the case here, where Mr Martin was entitled to commission on Mr Taylor’s contract with the Warriors in 2012.
[38] The NRL Contract also included an entire agreement clause (cl 13), which provided that:
(a)the Contract contains all of the terms of the agreement between Mr Taylor and Mr Miles, except those incorporated by reference; and
(b)save in the case of any determination made by the NRL Appeals Committee, the Contract may only be amended in writing and signed by both parties.
Mr Taylor’s BNZ accounts are opened
[39] Mr Taylor, now a capped international player, moved into the 2012 season with the Warriors. In April, at the behest of Mr Miles, he opened two new bank accounts with BNZ: a “Personal” account and a “Business” account. Mr Miles was given access to both accounts; he had a debit card linked to the “Business” account.
[40] Mr Taylor has described the agreement he had with Mr Miles about how the accounts would be managed:
The Warriors would pay my salary into the BNZ Personal Account each month. The BNZ Business Account was to pay for expenses that Ian incurred on my behalf. I also thought that he would use it to pay things like his NRL accreditation fees. I assumed that this was normal for players and agents, but I now know it is not.
[41] Unbeknown to Mr Taylor, Mr Miles began to make unauthorised drawings on the BNZ accounts only three months later. I discuss these transactions in more detail later.
Mr Taylor’s father falls ill
[42] In early 2012, Mr Taylor discovered that his father, with whom he was very close, had terminal cancer. By August, his father was hospitalised; the family were told that he only had a few days left. Mr Taylor’s evidence explains the dilemma he faced at the time:
The Warriors had a game in Townsville, North Queensland on 11 August 2012. When the travel had been organised earlier, Ian had arranged for me to fly home from Townsville separately from the team and to go via Sydney, so that I could have a meeting with Ivan [Cleary, the coach of the Penrith Panthers NRL team] and the Panthers. Ian was going to fly over to Sydney for the meeting as well.
I didn’t want to go to Townsville as I knew Dad didn’t have much time left. The Warriors management, coaching staff and leadership group all told me to stay with Dad. But Ian told me that I had to go, so that I could go to the meeting with the Panthers on the way home.
My family wanted me to stay in Auckland as well. Dad had gone into cardiac arrest multiple times that morning and the doctors said he was only going to live for another 24 to 48 hours. I knew that if I flew to Townsville, I wouldn’t see Dad alive again.
I remember speaking to Ian on the phone and being really upset telling him I didn’t want to go. Ian told me I had to go. He talked about Charles Upham, the soldier who’d received the Victoria Cross twice, and said I had to be like that.
I took Ian’s advice and got on the flight to Townsville. This was a massive example of my trust in Ian.
[43] Again, this demonstrates the degree of trust and confidence that Mr Taylor placed in Mr Miles. He took the advice of Mr Miles over the pleas of his family, the Warriors’ management and leadership groups, and his partner, Ms Matapo-Taylor. Ms Matapo-Taylor said:
I had been at the hospital with Elijah before he left for Townsville with the Warriors. I told him not to go to Townsville, but he told me that Ian had said that he had to go. I told Elijah that it was just a game and he didn’t need to go, and that he would regret it if he did. He was upset but he did what Ian told him to do.
[44]While Mr Taylor’s plane was in the air, his father died.
[45] Mr Taylor recounts that Mr Miles attended his father’s service, which again fortified his trust in him:
This elevated my respect and trust for Ian so much. After this, I considered him to be a member of my family. I thought he was gold.
[46] Again acting on Mr Miles’ advice, Mr Taylor shunned further approaches from the Warriors during the 2012 season. This resulted in the Warriors exercising their option to keep him for 2013 but meant that, at the end of 2012, Mr Miles could approach other clubs on Mr Taylor’s behalf.
Panthers contract
[47] Mr Miles’ efforts culminated in an offer from the Penrith Panthers for the 2014, 2015 and 2016 seasons. Ivan Cleary, who had coached Mr Taylor at the Warriors and with whom Mr Taylor had a good relationship, was the Panthers coach at the time.
[48] Mr Miles presented Mr Taylor with the Panthers’ offer in early 2013; Mr Taylor accepted it without hesitation. The new salary would be nearly four times what the Warriors were paying him. He would be paid:
(a) AU$360,000 for 2014;
(b) AU$380,000 for 2015; and (c) AU$400,000 for 2016.
[49] Mr Miles also presented Mr Taylor with another “Athlete and Manager Contract” with The Zone Ltd. The document was very similar to the first version that Mr Taylor had signed back in 2011, but this time also stated that he would pay 5% of his contract income to The Zone Ltd.
[50]Mr Taylor’s recollection was:
I didn’t really look at the Second AAMC and I didn’t ask any questions about the documents. I just signed both of them straight away. Ian didn’t say anything to me about taking independent advice about the documents or anything like that.
I completely trusted Ian and the fact that I thought the terms of the Panthers Contract were so good just reinforced in my mind that he was doing a good job for me.
In 2017, Ian’s lawyers wrote to my lawyers and said that the Second AAMC meant that he was entitled to be paid an extra 5% of my salary, so that he got a total of 12% (7% under the [NRL Contract] and another 5% under the Second AAMC). This was not what I understood at the time and Ian never said anything like this to me.
I never thought that Ian was going to be paid any more than 7% of my salary at any stage after he became my agent.
I knew that the deal I had with Ian was for him to be paid nothing for the first two years of our contract, and 7% after that. I assumed that when it came time for him to be paid his 7% in January 2014, he would invoice the Panthers and they would pay him directly from my pay, the same way Stan Martin had been paid.
I knew from talking to other players that almost all of them paid their agents 7%. I wasn’t aware of anyone paying more than 7%. If Ian had told me that he wanted 12%, it might have raised some questions for me.
Mr Taylor’s Westpac accounts
[51] Mr Taylor played the 2013 season with the Warriors and was named in the Kiwis’ squad for the Rugby League World Cup in late 2013. Mr Taylor flew to Sydney for the Kiwis’ training camp, arriving a day early so that he could attend a meeting that Mr Miles had arranged with the Westpac bank.
[52] The purpose of the meeting was to finalise the opening of new bank accounts that Mr Taylor would use when he moved to Australia to start playing for the Panthers in early 2014.
[53] Mr Taylor opened “Personal” and “Professional” accounts with Westpac, as he had done with the BNZ in New Zealand, and again granted Mr Miles full access. He also opened a “Reward Saver” account and obtained an Earth Black Credit Card. All of these arrangements were made by Mr Miles in advance, including going as far as loading PINs for the cards. All Mr Taylor had to do was sign the documents.
[54] Mr Miles also arranged for Westpac to issue him with a duplicate Earth Black Credit Card, which had the same number as the card given to Mr Taylor.
Mr Miles’ unauthorised transactions begin
[55] By the end of October 2013, Mr Miles had secretly made a small number of unauthorised transactions on his BNZ accounts, amounting to a little over $5,000.
[56] But once Mr Taylor’s first pay from the Panthers was deposited on 20 November, Mr Miles began to withdraw more substantial funds from both the Westpac and BNZ accounts. He also used the Earth Black Credit Card for personal expenses without Mr Taylor’s knowledge.
[57]Over the next 35 months, Mr Miles would enter into:
(a)937 unauthorised transactions on the Westpac accounts, with a total value of over AU$340,000; and
(b)nearly 100 unauthorised transactions on the BNZ accounts, with a total value of over NZ$17,000.
[58] The drawings on the Westpac accounts began in November 2013. That month alone, these included, among other things:
(a)purchases on the Earth Black Credit Card at OPSM Christchurch, Scorpio Books Christchurch, The Pullman Hotel Auckland, Hollands Suzuki Cars Christchurch, Rodd & Gunn Riccarton, Barkers Clothing Christchurch, and Sunglass Hut Papanui; and
(b)a withdrawal of $7,000 in New South Wales.
[59] Mr Taylor and Mr Miles met up in Rarotonga in December 2013 for Mr Taylor and Ms Matapo-Taylor’s wedding, where Mr Miles and his wife were guests. Mr Miles delivered a Westpac debit and an Earth Black Credit Card to Mr Taylor. Mr Taylor did not want a credit card, but Mr Miles had convinced him to get one.
[60] After their wedding, Mr Taylor and Ms Matapo-Taylor paid for Mr and Mrs Miles to join them for a day and night on Aitutaki as a “thank you” gift. Unbeknown to Mr Taylor, Mr Miles used the Earth Black Credit Card to stay at the Muri Beach Resort for the wedding ceremony anyway.
The Taylor family begins budgeting
[61] Mr Taylor, Ms Matapo-Taylor, and their young daughter moved to Sydney in early 2014, so that Mr Taylor could start training with the Panthers.
[62] Mr Taylor received a lump sum payment from the Kiwis for the World Cup. Mr Miles encouraged him to place the funds on term deposit, with which Mr Taylor was not familiar. Mr Miles drafted an email for Mr Taylor to send to the BNZ in New Zealand authorising them to deal with Mr Miles to arrange this.
[63] In January 2014, Mr Miles either failed to renew or cancelled his accreditation as an Accredited Agent under the NRL’s Scheme. He did not tell Mr Taylor about this
at the time. When Mr Taylor asked about it, Mr Miles told him that at this point him being accredited was pointless.
[64] Mr Taylor decided, in consultation with Mr Miles, that his family would have a budget of $5,000 per month (including rent) to live on. Mr Taylor had the Panthers split his pay so that $5,000 would be paid into the Westpac Personal account for him and his family to use, with the remainder building up in the Westpac Professional account—or so he thought. Mr Taylor’s plan was to build up his savings so that he could buy a property.
[65] Mr Taylor and his family, with very few exceptions, adhered strictly to that budget over the next three years.
[66] But during this time, Mr Miles spent Mr Taylor’s money at will: AU$78,011.64 in 2014, AU$141,797.15 in 2015, and AU$111,927.39 in 2016, using the Westpac accounts.
Mr Miles blames Mrs Matapo-Taylor for the spending
[67] Mr Miles tried to cover up his spending by telling Mr Taylor on numerous occasions between 2014 and 2016 that Ms Matapo-Taylor was spending with the card.
[68] Mr Taylor did not receive statements for the Earth Black Credit Card or the Westpac Professional account—they were sent directly to Mr Miles in Christchurch. Mr Taylor was wholly reliant on whatever information about the accounts that Mr Miles decided to give him.
[69] Mr Taylor described how Mr Miles would blame Mrs Matapo-Taylor for the spending but insist that the Earth Black credit card remain uncanceled:
Ian and I had a number of conversations during the two and a half years I was at the Panthers where he would tell me that Poko was spending “a lot” on our Earth Black credit card. These conversations would be over lunch or, more often, coffee at the Nepean River Coffee Club in Penrith.
I didn’t get the statements for the Earth Black card – they were sent to Ian in Christchurch. When we had these discussions about Poko’s spending, Ian never showed me the statements. He would always just have numbers written
down on pieces of paper which he would talk to me about. The numbers were large – I remember him telling me once that she had spent $7,000 in one month. Another time he told me it was $6,000 in the previous month.
Straight away, I told Ian to cancel the card. I said this to him quite a few times when we talked about the Poko’s spending. I would say to him just to cancel the credit card so we didn’t have to worry about it. I never used it and didn’t think we needed it. I thought we could get by fine on the $5,000 per month budget.
Every time I said that we should cancel the card, Ian would talk me out of it. He would say that it was important to have the card for emergencies and booking flights, things like that.
I would go home from these meetings with Ian and have big arguments with Poko about her spending. She would tell me that she wasn’t spending a lot on the Earth Black card, nothing like what Ian was saying. I never believed her and we had some really big arguments about it.
Ian would keep bringing the issue up at our meetings.
The talks about Poko’s spending really stressed me. Apart from the problems it was causing our relationship, I felt like I was letting Ian down. I had told him we would stick to the budget but (I thought) we weren’t.
[70] Mrs Matapo-Taylor explained that the arguments Mr Miles caused had nearly ended their marriage:
I would tell him that I hadn’t spent that much money and ask him where it had been spent. Elijah would never have the statements and he would just say things like “nah, Ian said”.
I would tell Elijah to call Ian and get the internet banking details so that we could log in and look at the transactions on the credit card, but Elijah would never do it. He was just trusting what Ian said and wouldn’t believe me.
These arguments happened so many times. I couldn’t understand why Ian was telling Elijah I had spent so much money when I hadn’t. It was really disappointing and mentally draining to me that Elijah was believing Ian and not me. Elijah and I were really close to splitting up over these arguments. I was going to move back to Rarotonga.”
[71] Around this time, ANZ Bank in Rarotonga had expressed concerns about the fact that Mr Miles was dealing with them on Mr Taylor’s behalf in relation to the purchase of a property. Mr Miles told the bank, among other things:3
In Elijah’s case, he is from an extremely unsophisticated background which provided him with zero understanding of the ‘business’ side. That leaves him continually vulnerable. You will understand that I have agreed to handle that
3 Emphasis added.
part on his behalf, as his Manager. I am also his Mind Coach, a separate role which I also provide to other rugby league players, rugby union players, and others from a wide range of sports. Elijah is the only athlete for whom I provide total management.
From the bank’s point of view, am I ripping Elijah off and will the bank be exposed as party to a huge cash grab? Well ultimately it’s Elijah’s decision, so the bank is covered. But just for your own comfort let me outline that I have worked for Elijah for eight years, the first five years totally without financial reward or return even though we paid others nominally to carry out some of the functions which in fact I handled (weird but true). My commitment to Elijah is not only career-long but lifelong, and has been peer-reviewed on his behalf.”
Mrs Matapo-Taylor discovers the unauthorised spending
[72] The Panthers dropped Mr Taylor early in the 2016 season. He instructed Mr Miles to find him a new club. Mr Miles eventually procured a deal from the Wests Tigers for the rest of the season, but the salary was only a little over half of the Panthers salary.
[73] Mr Taylor accepted the contract and signed it in early May 2016. At the time he signed, it appears that Mr Miles was on holiday in Fiji, spending several thousand dollars on Mr Taylor’s Earth Black Credit Card at the Sheraton Hotel and the Nadi Golf and Racquet Club.
[74] Ms Matapo-Taylor around this time had suggested to Mr Taylor that he probably paid for Mr Miles’ Fijian holiday. Mr Taylor laughed and replied that there was “no way”.
[75] Ms Matapo-Taylor remained suspicious. In late 2016 she found the details for Mr Taylor’s internet banking and changed the address for the statements from Mr Miles’ PO Box in Christchurch to the Taylors’ address in Sydney.
[76] The statements began to trickle in, and Ms Matapo-Taylor showed Mr Taylor evidence of transfers that Mr Miles had made to himself from the accounts. But Mr Taylor still refused to believe that anything was wrong. He explained:
Still, I basically ignored what Poko was telling me. I trusted Ian so much that I didn’t even entertain the thought that he would be doing anything suspicious.
I just assumed that wherever he was putting the money, it would be for my benefit…
[77] Ms Matapo-Taylor was eventually able to convince Mr Taylor to suspend Mr Miles from the accounts. She then dragged him to a meeting with his personal banker at Westpac on 27 December, where the extent of Mr Miles’ actions was revealed. Mr Taylor recalled:
We were there for at least two hours. We sat in a meeting room with Viresh and went through all the accounts. Viresh would turn the screen around and show Poko and I the transactions.
I couldn’t believe what I was reading when Viresh showed me all the payments to “The Zone” and all of the transactions on the Earth Black credit card that I knew Poko hadn’t made. There were hundreds of thousands of dollars gone.
When Viresh showed me all of the transactions it really started to sink in what had happened. I couldn’t believe it. I felt totally gutted and betrayed. It wasn’t even the amount of money as much as the trust.
The next thing I felt was guilty for arguing with Poko about money so many times over the last three years. I apologised to her straight away. We both started crying and she told me that she forgave me.
[78] After his access to the Westpac accounts was prohibited, Mr Miles sent a text to Mr Taylor, asking whether he had changed the password. Mr Taylor did not reply. Ms Matapo-Taylor sent a photograph of one of the accounts showing the missing money. She received a notification that Mr Miles had opened the message, but he did not reply.
[79] Mr Miles made no further attempts to contact the Taylors. He made no attempt whatsoever to explain or justify his actions to them.
Preparing the RLPA Spreadsheet
[80] Mr Taylor and Ms Matapo-Taylor described in their evidence the difficult process of reviewing four years of bank statements for the Westpac and BNZ accounts and the Earth Black Credit Card, in order to prepare what is described as “the RLPA Spreadsheet.”
[81] The RLPA Spreadsheet is a list of all of the unauthorised transactions and transfers by Mr Miles from Mr Taylor’s accounts. Mr Taylor reviewed the RLPA Spreadsheet on several occasions in the course of preparing this claim.
[82] His revisions included highlighting a number of transactions that he originally considered were unauthorised but that, on review, he determined he could not be certain were made by Mr Miles. Those transactions were not included in the claim and are referred to as the “highlighted transactions” in the Deloitte analysis. This analysis was undertaken by Mr Michael Oliver, an Associate Director of Deloitte who leads Deloitte’s South Island forensic and risk analysis practice.
Deloitte’s analysis
[83] During the course of this proceeding, Mr Miles provided discovery of a set of SBS Bank statements for himself and The Zone Ltd. He has stated that those are the only accounts he operated during the relevant time.
[84] Mr Oliver explained the process that was followed in preparing Deloitte’s Banking Transactions analysis Essentially, Deloitte:
(a)received all of Mr Taylor’s bank statements for the relevant period;
(b)compared the data in those statements to the RLPA Spreadsheet and noted some minor discrepancies in the RLPA Spreadsheet, with a total value of AU$2,533.64 plus NZ$0.20 (judgment is not sought for those amounts);
(c)compared the data in Mr Taylor’s bank statements to the statements provided by Mr Miles to confirm the receipt of transfers out of Mr Taylor’s accounts into Mr Miles’ accounts; and
(d)produced a Banking Transactions Workbook using the Tableau software, which summarises the unauthorised transactions.
[85] In summary, the Deloitte Banking Transactions Workbook lists unauthorised transactions in the sum of:
(a)AU $342,646.53 from the Westpac accounts; and
(b)NZ $39,227.30 from the BNZ accounts.
Application for an order under s 76(2) of the Insolvency Act 2006
Relevant law
[86]Section 76 of the Act states:
76 Effect of adjudication on Court proceedings
(1)On adjudication, all proceedings to recover any debt provable in the bankruptcy are halted.
(2)However, on the application by any creditor or other person interested in the bankruptcy, the Court may allow proceedings that had already begun before the date of adjudication to continue on the terms and conditions that the Court thinks appropriate.
[87] The key principles applicable are those set out in Saimei v McKay & Ors, as restated more recently in FE Investments Ltd v Klisser:4
a)The Court has a discretion to do what is right and fair according to the circumstances of the case;
b)When a person is adjudicated bankrupt, his assets are to be administered in an orderly fashion for the benefit of all his creditors and a particular creditor should not be able to obtain an advantage by bringing proceedings against him. There should thus be no prejudice to other creditors or to the ordinary administration of the bankruptcy if the action were to proceed;
c)The claim should not be clearly unsustainable but the Court will not investigate the merits of the claim;
d)The claim should normally be of a type which is more suitably determined by action rather than by lodging a proof of debt in the bankruptcy. If the claim could just as easily be dealt with in the bankruptcy, leave is not likely to be granted;
4 FE Investments Ltd v Klisser [2010] 2 NZLR 217 at [17], citing Saimei v McKay (1998) 6 NZBLC 102,611.
e)Leave is more likely to be granted where there is an insurance company standing behind the defendant to pay any judgment debts the plaintiff might obtain, because if it is successful, such an action is unlikely to prejudice the creditors of the defendant;
f)It may be desirable to impose a condition that the plaintiff will not enforce any judgment against the defendant without the leave of the Court to ensure that the Official Assignee retains ultimate control;
g)Mere delay itself in applying for leave will not prevent leave being granted. Leave is not to be withheld simply and solely as punishment; and
h)Leave may be granted after the expiry of the relevant period of limitation to continue an action commenced within the limitation period without the leave of the Court.
[88] In several later decisions under s 76(2) (and its predecessor, s 32 Insolvency Act 1967), the Courts have considered s 304(2)(a),5 which provides that, on discharge, a bankrupt will not be released from liability in respect of “any debt or liability incurred by fraud or fraudulent breach of trust to which the bankrupt was a party”.
[89] In Navix Line (NZ) Ltd v Milo,6 the High Court granted an application under s 32 where the bankrupt defendant had misappropriated funds from his former employer. Morris J stated:
[22] The factor that I find most convincing, as did Paterson J in Jelicich, is that on the evidence before this Court, more specifically his guilty pleas, Mr Milo may well have misappropriated the funds now in question. It is, therefore, a matter of some public interest that the allegations of fraud be resolved by the Court. I should add that the fact a fraud may have been committed is a very relevant consideration, as confirmed by s 114 of the Act which survives every stage of bankruptcy proceedings in cases where fraud is alleged.
[90] More recently in FE Investments, the Court confirmed that the term “fraud” as it appears in s 304 includes equitable fraud, which encompasses breach of fiduciary duty.7 Stevens J stated in that case:
[51] It is noteworthy that, when the legislature originally determined the extent of the exception, it was based upon the general concept of fraud. The legislation did not choose to refer to the technical forms of action. Had that
5 As well as s 114 Insolvency Act 1967, the predecessor to s 304.
6 Navix Line (NZ) Ltd v Milo HC Auckland CP261-SD99, 5 December 2002.
7 FE Investments, above n 4, at [48].
been the case, reference would undoubtedly have been made to deceit, which was a common way of pleading fraud.
[91] A further gloss was provided in the later decision of Fogarty J in The Fish Man Ltd (in liq) v Hadfield, where the judge suggested that s 304(2)(a) was confined to cases of fraud involving actual dishonesty.8
Analysis
[92] Mr Hamilton for Mr Taylor submitted that an order under s 76(2) is appropriate in this case, for the reasons set out below.
[93] First, he said that no other creditors will be adversely affected. It does not appear that there are any other known creditors of Mr Miles. He has previously sworn an affidavit in this proceeding attesting to that fact. His Insolvency Summary Report provided last week states his reason for bankruptcy as “adverse legal action”; it lists only Mr Taylor’s claim in the “Summary of Claims” section.
[94] Second, he said that the claim is not “clearly unsustainable”—he submits that Mr Taylor’s claim has some merit. Even before abandoning his defence, Mr Miles admitted making the transfers from Mr Taylor’s accounts (although he had maintained that he was justified in having done so). It is submitted that, for the reasons set out in the plaintiff’s submissions seeking judgment on formal proof, the claim has merit.
[95] Third, Mr Hamilton said that the claim involves allegations of dishonesty that should be resolved. He submits that the claim against Mr Miles contains allegations of equitable fraud that relate to dishonesty, including:
(a)Misappropriating funds from Mr Taylor’s bank accounts without his knowledge;
(b)Using Mr Taylor’s credit card for unauthorised expenditure without his knowledge;
8 The Fish Man Ltd (in liq) v Hadfield [2016] NZHC 1750, [2016] NZAR 1198 at [38].
(c)Attempting to conceal his actions referred to above from Mr Taylor, including by falsely suggesting to Mr Taylor that Mr Taylor’s wife was responsible for the credit card spending; and
(d)Failing to maintain his accreditation as an agent with the NRL and later suggesting to Mr Taylor that there was no need for him to be accredited.
[96] Mr Hamilton said that if these allegations are substantiated, then s 304(2)(a) of the Act may apply. So, given that possibility, it is sensible to allow Mr Taylor to seek judgment by way of formal proof. There is also public interest in having allegations of fraud resolved by the Courts.
[97] Fourth, Mr Hamilton says that this case, like Navix Line, involves a substantial amount of money that has been misappropriated from Mr Taylor but has not been located. Mr Miles’ disclosures in correspondence during the course of this proceeding confirm that the funds he transferred from Mr Taylor’s accounts into his company bank account were then applied or transferred to:
(a)reduce a loan facility;
(b)repay finance on a vehicle;
(c)repay a mortgage on a property owned by a trust;
(d)Mr Miles’ wife; and
(e)various other third parties to pay invoices.
[98] In Navix Line, Morris J found the misappropriation of substantial funds to be the “most convincing” factor in favour of granting the application to allow the claim to proceed.
[99] In addition, the Rugby League Players’ Association (the representative body of elite rugby league players in Australia) has an interest in the outcome of this proceeding, given the obvious impact of these matters on Mr Taylor’s financial and
personal welfare, and Mr Miles’ participation in the NRL’s Accredited Agent Scheme. Mr Hamilton therefore submits that it is right and fair for the order to be made.
[100] Finally, it is noted that Mr Taylor has a strong desire to have this matter determined. He has explained in his affidavit both the delay that occurred as a result of Mr Miles’ application to adjourn the trial, and his disappointment at learning of Mr Miles’ intention to declare himself bankrupt.
[101] Mr Taylor explained the effect that Mr Miles’ actions have had on him, and he hopes that this proceeding may bring him some closure. He does not “want the case just to go away because [Mr Miles] said he was going to go bankrupt”, and he wants to hold Mr Miles to account. His hope is that the case will educate other professional sportspeople about the dangers of ending up in such a situation.
[102] Mr Moss, counsel for Mr Miles, submitted that there are none of the usual public policy reasons to justifying the continuance of the proceeding.
[103] I disagree. The overarching consideration is that the Court has discretion to do what is right and fair according to the circumstances of the case.9 As the above summary of Mr Miles’ conduct makes clear, it is right and fair that leave be granted for the proceeding to continue. Particularly in the absence of adversely affected creditors, it is both just and in the public interest that the allegations of dishonesty and fraud be resolved. I accept the submissions of Mr Hamilton, and I therefore find that an order under s 76(2) is appropriate for this case.
Further preliminary matters
[104] Despite the defence not being pursued, Mr Moss submitted that careful consideration must be given to the pleadings. In particular:
(a)fraud had not been pleaded and yet was the subject of Mr Hamilton’s submissions;
9 Adventure Hobson Ltd v Cockery [2020] NZHC 675 at [42].
(b)the two contracts were genuine and entered onto on proper commercial terms;
(c)the characterisation of Mr Taylor not understanding or being unduly influenced into entering into the Athlete and Manager contract is to do injustice to Mr Taylor’s intelligence;
(d)the manager contract was not dissimilar to other management contracts in elite sport; and
(e)the claims are brought out of time.
[105]I deal with each of these matters at the relevant parts of my judgment below.
First cause of action – breach of contract
[106]Mr Taylor’s case is that:
(a)to the extent that there was a valid and binding contract between him and Mr Miles, it was the NRL Contract; and
(b)Mr Miles breached that contract, causing Mr Taylor to suffer loss.
[107] Before outlining what the plaintiff says are the defendant’s breaches of that contract, a brief overview of the contractual matrix is required.
Contractual matrix
[108]As set out above, Mr Taylor signed three contracts:
(a)the First AAMC with The Zone Ltd in December 2011;
(b)the NRL Contract with Mr Miles in either late 2011 or early 2012; and
(c)the Second AAMC with The Zone Ltd in March 2013.
[109] I find that the First AAMC does not give The Zone Ltd any entitlement to a fee above and beyond the NRL Contract. The First AAMC states that The Zone Ltd’s remuneration would be “a sum or sums of money, from time to time, as mutually agreed between the two parties”. But there is no suggestion that any such agreement was reached (save for the NRL Contract), and Mr Miles has said in his statement of defence that the First AAMC was “superseded and replaced” by the Second AAMC.
[110] I also find that the Second AAMC is not a valid and enforceable contract because Mr Miles had by that point acquired a measure of ascendancy over Mr Taylor and took unfair advantage of that in asking Mr Taylor to sign the Second AAMC. The Second AAMC thus constitutes an unconscionable bargain.10
[111] I am fortified in that view because even if the Second AAMC was deemed to be a valid and enforceable contract, it did not give Mr Miles any entitlement to collect a further fee in addition to that payable under the NRL Contract on behalf of The Zone Ltd, because:
(a)the NRL Contract contains an entire agreement clause;
(b)the services purported to be provided by The Zone Ltd are substantially the same as those provided by Mr Miles under the NRL Contract;11
(c)the Second AAMC does not amount to a variation of the NRL Contract; and
(d)there is no evidence of any additional services having been provided under the Second AAMC that would justify an additional fee.
[112] Accordingly, the only valid and binding contract between Mr Taylor and Mr Miles is the NRL Contract.
10 I address this further, below.
11 This view was supported by the evidence of Mr Sharrock, an athlete manager and an accredited player agent of the NRL.
Breach of NRL Contract
I find that Mr Miles breached the following terms of the NRL Contract:
(a)Clauses 1 and 4(i) – failing to provide services in accordance with generally accepted standards in the field of sports management with due care, skill and diligence, and to at all times act in accordance with the best interests of the Mr Taylor, by:
misappropriating funds from Mr Taylor’s bank accounts;
(ii)failing to account to Mr Taylor for funds taken from his bank accounts;
(iii)using Mr Taylor’s Earth Black Credit Card for unauthorised expenditure;
failing to account to Mr Taylor for such expenditure; and
(v)failing to negotiate a release payment from the Panthers to Mr Taylor when the Panthers released Mr Taylor in the middle of the 2016 NRL season.
(b)Clause 4(d) – failing to keep Mr Taylor fully informed of, or seeking Mr Taylor’s approval for, his dealings and negotiations with other NRL clubs during the 2015 season.
(c)Clause 4(g) – failing to maintain his accreditation as an Accredited Player Agent.
(d)Clause 4(f) – failing to comply in all respects with the NRL Accredited Player Agent Rules and Code of Ethics. The specific rules (contained in the Code of Ethics) that Mr Miles breached were:
(i)Clause 1 – failing to act at all times in accordance with the law and the legitimate best interests of Mr Taylor;
(ii)Clause 1 – failing to deal with Mr Taylor honestly, competently, diligently and fairly with a conscientious regard for his personal and professional welfare;
(iii)Clause 4 – failing to clearly disclose all fees and commissions (said to be) payable by Mr Taylor;
(iv)Clause 5 – entering into an agreement with Mr Taylor while Mr Taylor was registered to another agent, Mr Martin; and
(v)Clause 7 – failing to keep Mr Taylor fully informed of the nature of any work he was doing.
[114] As a result of Mr Miles’ breaches, Mr Taylor has suffered loss, those being the funds misappropriated from his accounts and the funds spent on his Earth Black Credit Card by Mr Miles.
Mr Miles is not entitled to a fee
[115] Before abandoning his defence, Mr Miles had suggested that he was entitled to a fee under the NRL Contract of 7% of all monies paid to Mr Taylor under not only the contract that Mr Taylor signed with the Panthers, but also two subsequent contracts with the Wests Tigers (which Mr Taylor negotiated himself at a time when Mr Miles was not accredited).
[116]I find that Mr Miles is not entitled to any fee under the NRL Contract, because:
(a)he owed fiduciary duties to Mr Taylor that he has breached, and a breach by a fiduciary disentitles the fiduciary to compensation; and
(b)he engaged in misleading and deceptive conduct, and the NRL Contract should, as a result, be declared void from 22 January 2014 onwards.12
[117] Even if I were wrong and Mr Miles was entitled to a fee under the NRL Contract, the total fee payable would be at most AU$60,560.54, on the basis that:
(a)The only contract that Mr Miles secured for Mr Taylor was the three- year contract with the Panthers.
(b)The term of the Panthers contract was 5 November 2013 to 5 November 2016 and the annual salary payable for each year was AU$360,000, AU$380,000 and AU$400,000, respectively.
(c)Mr Miles was not entitled to any fee at all until 16 January 2014, pursuant to the “0% for the first two years” agreement recorded in clause 5 of the NRL Contract.
(d)For the first year of the Panthers contract, Mr Miles was therefore entitled to 7% of all monies payable by the Panthers to Mr Taylor between 16 January 2014 and 5 November 2014, being:
Gross salary per annum / 365 days
AU$986.30 / day
16 January to 5 November 2014
293 days
Total monies payable
AU$288,986.29
7% of total monies payable
AU$20,229.04
(e)For the second year of the contract, 7% of Mr Taylor’s AU$380,000 salary, being AU$26,600.
12 This being the time when Mr Miles allowed his accreditation to expire, without informing Mr Taylor. I address this in more detail below, at [149]–[152].
(f)And in the third year of the contract, when his gross salary was AU$400,000, Mr Taylor was only contracted to the Panthers from 5 November 2015 to 2 May 2016, when he was released to the Tigers. Therefore, Mr Miles’ entitlement was:
Gross salary per annum / 365 days
AU$1,095.89 / day
5 November 2015 to 2 May 2016
179 days
Total monies payable
AU$196,164.38
7% of total monies payable
AU$13,731.50
Second cause of action – undue influence and unconscionable bargain
[118] The second cause of action relates to the Second AAMC. Mr Miles has suggested that the Second AAMC gave him an entitlement to an additional fee of 5% of Mr Taylor’s contracted income over and above the 7% provided for in the NRL Contract.
[119] Mr Taylor seeks a declaration that the Second AAMC is void and of no legal effect, on the grounds that Mr Miles took unfair advantage over Mr Taylor in asking him to sign the Second AAMC, and that the Second AAMC represents an unconscionable bargain.
Undue influence
[120]The leading New Zealand authority of Contractors Bonding Ltd v Snee
confirms that:13
There are two categories of undue influence. One is where actual undue influence is proved. The other is where the relationship is such that undue influence is presumed, e.g. solicitor and client.
13 Contractors Bonding Ltd v Snee [1992] 2 NZLR 157 (CA) at 166.
[121] But that distinction was suggested to be more probative than substantive in the more recent decision of the House of Lords in Royal Bank of Scotland v Etridge (No 2).14 In commenting on what is now required to be proved, the learned authors of Equity & Trusts in New Zealand state:15
In effect the wronged party has the burden of establishing:
(a)Proof that the complainant placed trust and confidence in the other party in relation to the management of the complainant’s financial affairs; and
(b)A transaction that calls for explanation.
[122] I find Mr Taylor and Mr Miles were in a qualifying relationship at the time the Second AAMC was signed in March 2013 because Mr Taylor had placed trust and confidence in Mr Miles to manage his financial affairs.
[123] By March 2013, Mr Taylor had already granted Mr Miles access to his BNZ bank accounts and, although he did not know it at the time, Mr Miles had begun to siphon funds from him.
[124] I find that, by March 2013 when the Second AAMC was presented to him, Mr Miles had the capacity to influence Mr Taylor—and he had done so on previous occasions.
[125] Mr Taylor had already taken Mr Miles’ advice in relation to a major financial matter: whether to accept the Warriors’ contract offer in 2011. Mr Taylor took Mr Miles’ advice over the advice of both his family and his contracted professional advisor, Mr Martin. Mr Taylor had also taken Mr Miles’ advice in relation to a significant personal matter as well: when he followed Mr Miles’ exhortations to travel to Townsville when his father was dying in hospital.
[126] I accept that, by late 2011 when he terminated his relationship with Mr Martin, Mr Taylor was “totally listening to Ian”. I also accept that, when he signed the
14 Royal Bank of Scotland v Etridge (No 2) [2002] 2 AC 773 (HL).
15 Andrew Butler Equity and Trusts in New Zealand (2nd ed, 2009, Wellington) at 22.5.2.
First AAMC in 2011, Mr Taylor felt he did not need to take any independent advice about it because he “completely trusted Ian”.
[127] I find that Mr Miles exercised undue influence over Mr Taylor in presenting him with the second AAMC at the same time as presenting the offer from the Panthers, which represented a significant step forward in the career of Mr Taylor, who at the time had just turned 23 years old (while Mr Miles was 62).
[128] Mr Miles expressed to Mr Taylor that he was happy with the offer from the Panthers. He presented the Second AAMC to him at the same meeting, but after he tabled the Panthers offer. Unlike when he presented the First AAMC in 2011, Mr Miles did not on this occasion offer Mr Taylor any option of taking legal advice about the documents.
[129]Mr Taylor has said that he:
(a)“did not really look at the Second AAMC”;
(b)did not ask Mr Miles any questions about the documents and signed both documents straight away;
(c)“completely trusted Ian and the fact that I thought the terms of the Panthers Contract were so good just reinforced in my mind that he was doing a good job for me”; and
(d)did not understand what Mr Miles later suggested was the contractual effect of the Second AAMC—that Mr Miles was entitled to a further 5% of Mr Taylor’s contracted earnings, plus expenses.
[130] Mr Taylor’s evidence was clear that he never thought that Mr Miles would be paid any more than 7% of his salary from January 2014 onwards. Mr Taylor also stated that if Mr Miles had explained to him that he intended to take 12% of his earnings at the time, it “might have raised some questions” for him, because he knew that other players only paid their agents 7%.
[131]Mr Sharrock said that:
(a)It is not normal for an agent or manager to be paid a fee of more than 7%, and he would consider a manager charging more than 7% “very questionable and unfavourable to the player”;
(b)It is not normal for managers to be paid expenses on top of their fee; and
(c)He did not consider that any of the obligations of The Zone Ltd set out in the First AAMC and the Second AAMC go any further than, or fall outside, the generally accepted role of a manager under the standard form NRL contract.
[132] Mr Sharrock’s evidence refutes Mr Miles’ contentions (above at [104]) that the contracts were on proper commercial terms and similar to other manager contracts.
Unconscionable bargain
[133]The Court of Appeal in the Contractors Bonding held that: 16
An unconscionability inquiry involves an assessment of all the circumstances of the particular case. Whether the complainants were under a special disadvantage or disability; whether they had independent advice; whether the terms of the contract were significantly more favourable to one party than the other; whether any special disadvantage or disability of one party was known or ought to have been known by the other and whether one applied unfair means or pressure to obtain the other’s assent, are obvious matters for inquiry.
[134]Those key factors are all present in this case. They include:
(a)Mr Taylor’s background, education and lack of experience in financial matters, which placed him at a disadvantage to Mr Miles;
16 Contractors Bonding, above n 13, at 174.
(b)Mr Miles had knowledge of the above, as evidenced by his statement in the email to ANZ Bank in Rarotonga that Mr Taylor’s background “leaves him continually vulnerable”17;
(c)The respective ages of Mr Taylor and Mr Miles (at the time the Second AAMC was presented to Mr Taylor, he had just turned 23, whereas Mr Miles was 62); and
(d)Mr Taylor did not take, and was not offered or recommended, independent advice.
[135] For completeness, and to address Mr Miles’ point that fraud was not pleaded, I note that unconscionable bargain itself encompasses equitable fraud. As stated by Somers J in Moffat v Moffat:18
The species of equitable fraud comprehended by the label unconscionable bargain does not lend itself to exhaustive definition. But it is at least a necessary element that an equity be raised against the party receiving or retaining the bargain or advantage – that is to say that the receipt or retention is unconscientious. …
[136] For the reasons set out above, I find the Second AAMC should be declared void and of no legal effect.
Third cause of action – breach of fiduciary duty
[137] I find that, in all of the circumstances, Mr Taylor and Mr Miles were in a fiduciary relationship.
[138] The nature of their relationship confirms this. A number of cases have acknowledged the existence of a fiduciary relationship where the relationship between two parties was one of agency. Agency is listed as one of the particular categories of
17 This also undercuts Mr Miles’ suggestion that it would do injustice to Mr Taylor’s intelligence to suggest that he was unduly influenced—it was Mr Miles himself who belittled Mr Taylor in his email to ANZ.
18 Moffat v Moffat [1984] 1 NZLR 600 (CA) at 606.
fiduciary relationships by the authors of Equity and Trusts in New Zealand, who state:19
An agency relationship exists where one person has the authority or capacity to create legal relations between another person and a third party. It is also used, in the fiduciary environment at least, to describe someone who, though having no power to create legal relations between two parties, represents the interests of one person in dealings with another.
[139] In this case, the relationship was contractually controlled (at least in part) by the terms of the NRL Contract. These include specific fiduciary duties to:20
… act in accordance with the law and the legitimate best interests of [Mr Taylor, and to] deal with [him] honestly competently, diligently and fairly with a conscientious regard for [his] personal and professional welfare.
[140]In addition to the above, Mr Miles has acknowledged that:
(a)he was responsible for managing Mr Taylor’s financial affairs and had full access to the BNZ Accounts and the Westpac Accounts to allow him to do so; and
(b)Mr Taylor placed trust and confidence in him to manage his financial affairs.
[141] In those circumstances I find that Mr Miles owed Mr Taylor fiduciary duties to:
(a)act with the utmost good faith and undivided loyalty in relation to all his dealings with Mr Taylor;
(b)ensure that his own interests did not conflict with Mr Taylor’s;
(c)manage Mr Taylor’s bank accounts and financial affairs prudently and effectively;
(d)only draw funds from the bank accounts when authorised;
19 Butler, above n 15, at 17.3.5, citing Reading v Attorney-General [1949] 2 KB 232 (CA).
20 See above at [35].
(e)account to Mr Taylor for all funds drawn from the bank accounts;
(f)not draw funds from the bank accounts for his own benefit; and
(g)disclose all material information related to his dealings with Mr Taylor’s financial affairs, and his status as an Accredited Player Agent, to Mr Taylor.
[142] I find that Mr Miles breached those duties. The damages sought are the amount of funds misappropriated by Mr Miles, as set out below.
[143] Mr Miles, as a fiduciary, should be disqualified from any remuneration under the NRL Contract as a fiduciary because in breaching his obligations he has disentitled himself to any remuneration.21
[144] For completeness, I also again address Mr Miles’ contention that fraud was not pleaded and yet was the subject of Mr Hamilton’s submissions. Equitable fraud also encompasses breach of fiduciary duties. I refer once again to FE Investments, which I have cited above:22
The Court has interpreted “fraud” as used in other legislation to include equitable fraud which encompasses breach of fiduciary duty. … there is no reason why “fraud” as used in the Insolvency Act 2006 should be interpreted any differently.
Claim for general damages
[145] In addition to the above, Mr Taylor also seeks $25,000 general damages under the third cause of action. The evidence of Mr Taylor and Ms Matapo-Taylor demonstrates the profound effect that Mr Miles’ breaches of trust had on Mr Taylor.
[146] The roots of Mr Miles’ manipulation bored so deep as to allow him to turn Mr Taylor against his wife. To cover his tracks, Mr Miles abused Mr Taylor’s trust again and again, attacking his other strong relationship. I refer again to the evidence of Mr Taylor:
21 Butler, above n 15, at 17.6.1.
22 FE Investments, above n 4, at [48].
Ian and I had a number of conversations during the two and a half years I was at the Panthers where he would tell me that Poko was spending “a lot” on our Earth Black credit card.
…
I would go home from these meetings with Ian and have big arguments with Poko about her spending. She would tell me that she wasn’t spending a lot on the Earth Black card, nothing like what Ian was saying. I never believed her and we had some really big arguments about it.
Ian would keep bringing the issue up at our meetings.
The talks about Poko’s spending really stressed me. Apart from the problems it was causing our relationship, I felt like I was letting Ian down.
[147]And I repeat the evidence of Ms Matapo-Taylor:
… Ian would tell Elijah that I was spending thousands of dollars a month on the Earth Black credit card.
Elijah would come home from these meetings and we would have massive arguments about money. The amount of money he would accuse me of spending was up to $6,000 or $7,000 in one month.
I would tell him that I hadn’t spent that much money and ask him where it had been spent. Elijah would never have the statements and he would just say things like “nah, Ian said”.
… He was just trusting what Ian said and wouldn’t believe me.
These arguments happened so many times. I couldn’t understand why Ian was telling Elijah I had spent so much money when I hadn’t. It was really disappointed and mentally draining to me that Elijah was believing Ian and not me. Elijah and I were really close to splitting up over these arguments. I was going to move back to Rarotonga.
[148] I find that Mr Taylor should receive general damages in the amount of $25,000. This reflects the insidiously inflicted damage to Mr Taylor’s relationship with Ms Matapo-Taylor and the chronic distress suffered as a result.
Fourth cause of action – breach of Fair Trading Act 1986
[149] The final claim advanced is for breach of s 9 of the Fair Trading Act 1986. That section prohibits anyone in trade from engaging in conduct that is misleading, deceptive, or likely to mislead or deceive.
[150] In addition to seeking damages, Mr Taylor seeks an order under s 43(3)(a) of the Fair Trading Act declaring the NRL Contract void from 22 January 2014 (the date the Mr Miles cancelled or allowed his accreditation to lapse without telling Mr Taylor).
[151] It is clear to me that Mr Miles (who admits that he was in trade) engaged in misleading and deceptive conduct by:
(a)drawing the funds from Mr Taylor’s accounts referred to at [55]–[57] above;
(b)failing to disclose or account to Mr Taylor for those drawings;
(c)failing to maintain his accreditation as an accredited player agent; and
(d)misleading Mr Taylor to the effect that there was “no point” in him continuing to be registered because NRL Clubs would deal with accredited agents regardless (this statement proved to be untrue because the Wests Tigers refused to deal with Mr Miles in 2016, on the basis that he was not accredited).
[152]I am therefore satisfied that the s 43(3)(a) order is appropriate.
Affirmative defences
[153] Mr Miles’ statement of defence contains two affirmative limitation defences, under the Limitation Act 2010 and the Fair Trading Act 1986.
[154] I consider that neither affirmative defence had any reasonable prospect of success, because:
(a)This proceeding was filed on 21 December 2018. As such, all breaches (transactions) by Mr Miles from 21 December 2012 onwards fall within the claim’s primary period.
(b)In relation to the small number of breaches that Mr Miles committed before 21 December 2012, the late knowledge provisions apply because Mr Taylor only gained knowledge of all of Mr Miles’ breaches in relation to the Westpac accounts on 27 December 2016, and in relation to the New Zealand BNZ accounts in February 2017.
(c)The claim under the Fair Trading Act 1986 is in time because it was brought within two years of the date that Mr Miles’ breaches were discovered by Mr Taylor (being at the meeting with Westpac on 27 December 2016).
Orders sought
Judgment sum
[155] The Deloitte Banking Transactions Workbook, which is based on the RLPA Spreadsheet, lists unauthorised transactions in the sum of:
(a)AU$342,646.53 from the Westpac accounts; and
(b)NZ$39,227.30 from the BNZ accounts.
[156] But, in accordance with Mr Taylor’s instructions, judgment is sought for slightly lesser sums of:
(a)AU$340,112.89 in respect of the Westpac accounts; and
(b)NZ$17,909.54 in respect of the BNZ accounts.
[157]Mr Taylor has arrived at those figures by:
(a)deducting a series of transactions from the BNZ accounts that relate to travel to Australia at a time when Mr Taylor’s Panthers Contract was being negotiated, and when he met with Mr Miles to discuss the development of a personal website; and
(b)deducting the sum of AU$2,533.64 identified by Mr Oliver as the total sum of the errors in the RLPA Spreadsheet from the Westpac accounts figure.
[158]On that basis, the orders sought are:
(a)judgment in the sum of AU$340,112.89 plus NZ$17,909.54 in respect of the first, third and fourth causes of action;
(b)an award of general damages in the sum of $25,000 in respect of the third cause of action;
(c)an order under s 43(3)(a) of the Fair Trading Act that the NRL Contract is void from 22 January 2014 in respect of the fourth cause of action;
(d)a declaration that the Athlete and Manager Contract between The Zone Ltd and Mr Taylor dated 14 March 2013 is void and of no legal effect;
(e)interest on the judgment sums set out above pursuant to s 10 of the Interest on Money Claims Act 2016 from 27 December 2016 down to the date of payment. As at 12 November 2020, the total amount of interest accrued will be:
(i) AU$44,098.90; plus
(ii) NZ$2,322.14; and
(f)Costs and disbursements as set out below.
Costs and disbursements
Costs
[159] This proceeding is properly categorised as 2B. In the ordinary course, that would see an award to Mr Taylor of costs of at least $36,402.
[160] But counsel reached an agreement with Mr Taylor at the outset of this proceeding that the total fee invoiced for all matters associated with the proceeding would be $25,000 plus GST and disbursements.
[161]Accordingly, an award of costs of $28,750 including GST is sought.
Disbursements
[162] The experts called by Mr Taylor kindly donated their time and have not charged him a fee.
[163] On that basis, the only disbursements that are sought are filing, service, and hearing fees. At the time of writing, Mr Taylor has paid the full hearing fee for the 4- day trial (being the sum of $11,200), but he has been advised by the Registry that this will be refunded.
[164] Counsel advised they would discuss with the Registry the fees payable for setting down the proceeding, and the formal proof hearing, once the refund has been processed.
[165] Counsel therefore submitted that any award of disbursements be expressed as being “as fixed by the Registrar”, and the correct sum will be included in the order for sealing, once it is known.
Result
[166]I make the following orders in favour of the plaintiff;
(a)An order under s 76(2) of the Insolvency Act 2006 that the proceedings continue.
(b)Judgment in the sum of AU$340,112.89 plus NZ$17,909.54.
(c)General damages on the third cause of action in the sum of $25,000.
(d)Under s 43(3)(a) of the Fair Trading Act 1986, the NRL Contract between Mr Taylor and Mr Miles is void from 22 January 2014.
(e)Interest on the judgment sums pursuant to s 10 of the Money Claims Act 2016 from 27 December 2016 down to the date of payment.
(f)Legal costs of $28,750.
(g)Disbursements as fixed by the registrar.
[167]I make the following declaration:
(a)The Athlete and Manager Contract between The Zone Ltd and Mr Taylor dated 14 March 2013 is void and of no legal effect.
Doogue J
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