The Vintage Aviator Ltd v DeMarco
[2021] NZHC 847
•21 April 2021
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE
CIV-2017-485-1027
[2021] NZHC 847
BETWEEN THE VINTAGE AVIATOR LIMITED
First Plaintiff/First Counterclaim Defendant
PETER ROBERT JACKSON, FRANCES ROSEMARY WALSH and
PHILIPPA JANE BOYENS as trustees of the Film Property Trust
Second Plaintiffs/Second Counterclaim DefendantsOLIVER WULFF
Third Counterclaim defendant
THE CIVIL AVIATION AUTHORITY OF NEW ZEALAND
Fourth Counterclaim DefendantPETER ROBERT JACKSON
Fifth Counterclaim DefendantAND
EUGENE DEMARCO including as trustee of the Airflight Trust
First Defendant/First Counterclaim Plaintiff
THE OLD STICK & RUDDER CO LIMITED
Second Defendant/Second Counterclaim Plaintiff
CIV-2018-485-417 BETWEEN
OLIVER WULFF
PlaintiffAND
EUGENE JOHN DEMARCO
First Defendant
THE VINTAGE AVIATOR LIMITED v DEMARCO [2021] NZHC 847 [21 April 2021]
THE OLD STICK & RUDDER CO LIMITED
Second Defendant
Hearing: 4 March 2021 Appearances:
B Scott and J Henderson for The Vintage Aviator Ltd, the trustees of the Film Property Trust and Sir Peter Jackson
D Ballinger for Mr Oliver Wulff
G Davis for the Civil Aviation Authority of New Zealand S Fraser for Mr Eugene DeMarco and The Old Stick & Rudder Co Ltd
Judgment:
21 April 2021
JUDGMENT OF ASSOCIATE JUDGE JOHNSTON
TABLE OF CONTENTS
Introduction [1]
Background [3]
Legal principles relating to applications [11]
The three applications [17]
The applications in relation to The Old Stick & Rudder Co’s defences [19]
The application relating to pleadings said to contradict the jury’s verdict in the
criminal proceeding [23]
Third amended statement of claim dated 28 August 2020 – paragraph 14 [37] Statement of claim – paragraph 17 [41]
Statement of claim – paragraph 18 [45]
Statement of claim – paragraph 19 [49]
Statement of claim – paragraph 20 [53]
Statement of claim – paragraph 27 [57]
Statement of claim – paragraph 28 [61]
Statement of claim – paragraph 32 [65]
Statement of claim – paragraph 33 [69]
Statement of claim – paragraph 35 [73]
Statement of claim – paragraph 36 [77]
Counterclaim – paragraph 10 [81]
Counterclaim – paragraph 15 [84]
Counterclaim – paragraph 16 [87]
Counterclaim – paragraph 47 [90]
Counterclaim – paragraph 49 [93]
Application by The Vintage Aviator, the trustees and Sir Peter Jackson for an order striking out Mr DeMarco’s counterclaim against the trustees on the ground that no
relief is claimed against them [96]
Application by The Vintage Aviator, the trustees and Sir Peter Jackson for an order
striking out the counterclaims founded on economic torts [99]
The first counterclaim — inducement to breach of contract [103] The third, fourth and fifth counterclaims — causing loss by unlawful means [107] The sixth counterclaim — unlawful means conspiracy [113] Conclusion in relation to first, third, fourth, fifth and sixth counterclaims [121] Application in relation to Mr DeMarco’s second counterclaim [125]
The applications by Mr Wulff and the Civil Aviation Authority for an order striking
out Mr DeMarco’s sixth counterclaim [133]
Mr Wulff’s application in the 417 proceeding for an order striking out the statement
of defence [135]
Outstanding interlocutory matters [137]
Summary of conclusions [139]
Introduction
[1] These two proceedings are being managed together for administrative purposes. Although not formally consolidated they are also set down to be heard together. The trial is scheduled to commence on 5 July 2021. It is set down for a month. There is therefore some urgency associated with these interlocutory applications which concern the pleadings and thus the scope of the case.
[2]Before the Court for determination are interlocutory applications:
(a)by The Vintage Aviator, the trustees of the Film Property Trust and Sir Peter Jackson in the 1027 proceeding for orders:
(i)striking out aspects of Mr DeMarco and The Old Stick & Rudder Co’s statement of defence and Mr DeMarco’s counterclaims on the grounds that they are inconsistent with the jury’s verdicts in related criminal proceedings;
(ii)striking out The Old Stick & Rudder Co’s defence in its entirety on the grounds that the company did not have solicitors or counsel acting for it at the time that the defence was entered;
(iii)striking out the trustees as second counterclaim defendants to Mr DeMarco’s counterclaim on the grounds that no relief is claimed against them and they should not therefore have been cited as parties;
(iv)striking out Mr DeMarco’s first, third, fourth, fifth and sixth counterclaims on the grounds that they do not disclose arguable causes of action;
(v)entering summary judgment against Mr DeMarco in relation to his second counterclaim;
(b)by Mr Wulff in the 417 proceeding for an order striking out Mr DeMarco and The Old Stick & Rudder Co’s defences on the grounds that they have failed to comply with an order made on 13 August 2020 that all parties provide standard discovery by 23 October 2020;
(c)by Mr Wulff in the 1027 proceeding for an order striking out Mr DeMarco’s sixth counterclaim insofar as it concerns him on the grounds that the pleading does not disclose an arguable cause of action;
(d)by the Civil Aviation Authority in the 1027 proceeding for an order striking out Mr DeMarco’s sixth counterclaim against it on the grounds that the pleading does not disclose an arguable cause of action.
Background
[3]The background to the two proceedings is, for the most part, uncontroversial.
[4] The principal parties are or were all connected with the film production business of Sir Peter Jackson and Dame Frances Walsh, generally referred to as “Wingnut”.
[5] With respect to the 1027 proceeding, Mr Scott outlined the factual background in these terms:
23The facts on which the plaintiffs rely are relatively straightforward and are set out in the amended statement of claim. The nature of the fraud that flowed from those facts is also summarised in the trial judge’s sentencing decision. A chronology of material facts is set out in Schedule 1. Essentially however:
23.1TVAL restores and manufactures vintage aircraft. Mr DeMarco was the Production Manager and senior and trusted employee of the company.
23.2Mr DeMarco’s company, OSCR became liable for a loan to the FPT (the FPT Loan) and by early 2016 it was significantly in default (with over $1 million owing) and the FPT required repayment.
23.3At this time, Mr DeMarco arranged the sale of the three TVAL aircraft to Warbirds between April and June 2016. However, rather than selling them to Warbirds at TVAL’s list price, Mr DeMarco falsely represented to Warbirds that TVAL’s prices were significantly higher than TVAL’s agreed list prices. Mr DeMarco simultaneously falsely represented to TVAL that Warbirds wanted to pay more than TVAL’s list prices in order to help Mr DeMarco financially.
24.4 Thepurpose of these false representations was to enable Mr DeMarco to keep the difference between TVAL’s list prices and DeMarco/OSRC’s inflated prices charged to Warbirds (which would have been a total of $621,770.50 had all three sales been completed).
23.5Mr DeMarco/OSRC was paid $2,105,879.50 by Warbirds as part-payment for the three TVAL aircrafts and later delivered possession of one of them to Warbirds (the Be2) before the criminal conduct was discovered by Sir Peter in July 2017. None of these monies were ever paid to TVAL, rather Mr DeMarco used part of the funds to repay the FPT Loan.
23.6Much later, after the fraud had been discovered and the delivery of the other two aircraft had been stopped, Mr DeMarco repaid Warbirds the deposits they paid for the
Sopwith Camel and the Albatross, which had not been delivered to Warbirds. However, he has never paid to TVAL any part of the funds he/OSRC received from Warbirds for the Be2, being $937,250. Nor has he accounted for the benefit he obtained from the $2,105,879.50 while it was in his possession.
23.7The plaintiffs’ first four causes of action relate to these transactions and seek judgment for the proceeds of sale and an accounting for the benefit obtained from the funds (causes of action one and two) and seek to be able to enforce that judgment against another plane (the Corsair) which was used as security for the FPT Loan, which in part had been discharged using the funds received by Mr DeMarco from Warbirds (the third and fourth causes of action).
[Footnotes omitted]
[6] As to the 417 proceeding, Mr Ballinger’s summary of the background was as follows:
5.The background to Mr DeMarco’s counterclaim and Mr Wulff’s application to strike out is set out in the affidavits of:
(a)Dominic Shaheen (7 March 2018);
(b)Oliver Wulff (3 April 2018);
(c)James Corke (20 November 2020);
(d)David Harrison (21 January 2021).
The affidavits of Mr Shaheen and Mr Wulff were filed in a separate but related proceeding between the same parties. Leave is sought to refer to those affidavits to the extent necessary.
6.In essence, the background is a dispute between Mr Wulff and Mr DeMarco about the legal ownership of two vintage aircraft: a Goodyear Corsair FG-1D, and a Curtiss P40.
7.In March 2012, Mr DeMarco and Mr Wulff signed documents recording an agreement that included:
(a)Mr Wulff was to take a shareholding in The Old Stick & Rudder Co Ltd (OSRC);
(b)Mr Wulff was to own the P40 aircraft, and Mr DeMarco was to own the Corsair aircraft;
(c)Mr Wulff was to pay USD500,000 for his shareholding and ownership of the P40; and
(d)No loans were to be made against the aircraft without consent from both Mr Wulff and Mr DeMarco.
8.Mr Wulff paid the sum of USD500,000 in accordance with the agreement by March 2012. But he was never registered as a shareholder in OSRC.
9.On 7 June 2016, Mr DeMarco borrowed $250,000 from BNZ and purported to grant a security interest over the P40 aircraft in relation to that lending. Mr Wulff did not consent to that security interest being granted.
10.Mr DeMarco has subsequently been convicted by a jury in the Wellington High Court in September 2019 on a charge of theft in a special relationship, on the basis that he used the P40 as security for the bank loan with knowledge that this breached the terms of his agreement with Mr Wulff.
11.Mr Wulff was understandably concerned about the status of the P40 when he learned of Mr DeMarco’s behaviour. He commenced a proceeding in this Court in 2018 against … Mr De Marco, seeking declarations that the effect of his 2012 agreement with Mr DeMarco was that either:
(a)he is the sole legal owner of the P40; or
(b)in the alternative, that OSRC is the legal owner of the P40, and Mr Wulff was to be registered as a 50 per cent shareholder in OSRC.
12.This proceeding is CIV-2018-485-417, and is set down for trial commencing in July this year.
13.Mr Wulff also took steps in January 2018 to file with the Civil Aviation Authority (CAA) a “Change of Possession” form for the P40 aircraft. The Change of Possession form effected a change in the New Zealand Register of Aircraft in the registered person for the P40 from OSRC to Mr Wulff, on the basis that Mr Wulff had an ownership interest in the aircraft.
14.A Change of Possession form is not a certificate of title or registration of a change of legal ownership, but rather is registration of a person who is entitled to possession of the aircraft for a period of 28 days or longer. It does not affect the legal or equitable ownership interests and rights in an aircraft.
[Footnotes omitted]
[7] For the Civil Aviation Authority, Mr Davis was content to adopt the summaries provided by Messrs Scott and Ballinger as a basis for his submissions.
[8] For Mr DeMarco and The Old Stick & Rudder Co, Mr Fraser did not challenge the core facts as described in Mr Scott and Mr Ballinger’s outlines of these, though it goes without saying that Mr DeMarco and The Old Stick & Rudder Co would not
characterise the events in this same way as is done on behalf of the other parties, or accept that they should lead to the same outcomes.
[9] In mid-2017 The Vintage Aviator’s board of directors lodged a complaint with the Serious Fraud Office. Ultimately, the Serious Fraud Office laid six charges against Mr DeMarco concerning the same factual circumstances as are pleaded in these two proceedings.
[10] The criminal proceedings came on for trial in this Court before Clark J and a jury in September 2019 and on 13 September 2019 Mr DeMarco was convicted on all six charges. Attached to this judgment is a schedule that sets out the six charges laid against Mr DeMarco, and, in relation to each of those charges, the question trail provided by Clark J to the jury.
Legal principles relating to applications
[11] The three applications before the Court are primarily for orders striking out aspects of the pleadings.
[12] Such applications are made pursuant to r 15.1 of the High Court Rules 2016, which provides:
15.1 Dismissing or staying all or part of proceeding
(1)The court may strike out all or part of a pleading if it—
(a)discloses no reasonably arguable cause of action, defence, or case appropriate to the nature of the pleading; or
(b)is likely to cause prejudice or delay; or
(c)is frivolous or vexatious; or
(d)is otherwise an abuse of the process of the court.
[13] The established criteria for striking out were summarised by the Court of Appeal in Attorney-General v Prince:1
1 Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA) at 267 (cited approvingly by Elias CJ and Anderson J in Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33]).
(a)Pleaded facts, whether or not admitted, are assumed to be true. This does not extend to pleaded allegations which are entirely speculative and without foundation.
(b)The cause of action or defence must be clearly untenable the court is certain they cannot succeed.
(c)The jurisdiction is to be exercised sparingly, and only in clear cases. This reflects the Court’s reluctance to terminate a claim or defence short of trial.
(d)The jurisdiction is not excluded by the need to decide difficult questions of law.
(e)The Court should be particularly slow to strike out a claim in any developing or confused area of the law.
[14] The Vintage Aviator, the trustees and Sir Peter also move for summary judgment in respect of Mr DeMarco’s second counterclaim.
[15] Summary judgment is available pursuant to r 12.2 of the High Court Rules, which provides:
12.2 Judgment when there is no defence or when no cause of action can succeed
(1)The court may give judgment against a defendant if the plaintiff satisfies the court that the defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.
(2)The court may give judgment against a plaintiff if the defendant satisfies the court that none of the causes of action in the plaintiff’s statement of claim can succeed.
[16] The leading case is Krukziener v Hanover Finance Ltd where the Court of Appeal said:2
2 Krukziener v Hanover Finance Ltd [2008] NZCA 187 at [26]–[27].
The principles are well settled. The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 at 3 (CA). The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11 PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence or assess the credibility of deponents. But it need not accept uncritically evidence that is inherently lacking in credibility, as for example where the evidence is not consistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng Mee Yong v Letchumanan [1980] AC 331 at 341 (PC). In the end the Court’s assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).
Under r 141A the defendant need not file a statement of defence. The onus remains on the plaintiff, and summary judgment will be denied if on the hearing of the application it appears that there is an issue worthy of trial.
The three applications
[17]That brings me to the applications themselves.
[18]I propose to deal with these in a different order from that adopted by counsel.
The applications in relation to The Old Stick & Rudder Co’s defences
[19] The Vintage Aviator, the trustees, Sir Peter and Mr Wulff move to strike out the statements of defence in both proceedings insofar as these articulate The Old Stick & Rudder Co’s defence because, at the time that these were filed and served, the company was not represented by solicitors or counsel.
[20] The legal position is clear. A natural person may elect to act for him or herself, or engage solicitors and counsel. An artificial person, such as an incorporated company, on the other hand, may only act through solicitors and counsel.3
3 See for example Re G J Mannix Ltd [1984] 1 NZLR 309 at [4] where Cooke J said”… a corporation is not a natural person and so cannot appear in person; and that, apart from statutory exceptions, no one has a right to present a case in any court unless in person or by a qualified lawyer.” And Commissioner of Inland Revenue v Chesterfields Preschools Limited [2013] NZCA 53, [2013] 2 NZLR 679 at [33].
[21] Technically, then, the statements of defence filed and served by Mr DeMarco purportedly on his own behalf and on behalf of The Old Stick & Rudder Co are nullities — or at best irregular — insofar as they relate to the company’s position.
[22] However, since those statements of defence were filed and served The Old Stick & Rudder Co has engaged solicitors and counsel — John Miller & Co and Mr Fraser respectively. As I see the position, John Miller & Co have effectively adopted the existing pleadings by going on record for both parties. That, in my judgment, is where the matter should be left to lie. I decline to make an order striking out The Old Stick & Rudder Co’s defences in either proceeding on this basis.
The application relating to pleadings said to contradict the jury’s verdict in the criminal proceeding
[23] The Vintage Aviator, the trustees and Sir Peter apply to strike out aspects of both Mr DeMarco and The Old Stick & Rudder Co’s statement of defence in the 1027 proceeding, and aspects of Mr DeMarco’s counterclaims in the same proceeding, on the grounds that they contradict the jury’s verdicts in the criminal proceeding.
[24]The basis for these applications is s 47 of the Evidence Act 2006, which
provides: 47
Conviction as evidence in civil proceedings
(1)
When the fact that a person has committed an offence is relevant to an issue in a civil proceeding, proof that the person has been convicted of that offence is conclusive proof that the person committed the offence.
(2)
Despite subsection (1), if the conviction of a person is proved under that subsection, the Judge may, in exceptional circumstances,—
(a) permit a party to the proceeding to offer evidence tending to prove that the person convicted did not commit the offence for which the person was convicted; and
(b) if satisfied that it is appropriate to do so, direct that the issue whether the person committed the offence be determined without reference to that subsection.
(3)
This section applies—
(a)whether or not the person convicted is a party to the proceeding; and
(b)whether or not the person was convicted on a guilty plea.
(4)This section—
(a)is subject to section 48; and
(b)does not affect a provision in any other enactment to the effect that a conviction or a finding of fact in a criminal proceeding is to constitute conclusive evidence for the purposes of any other proceeding.
[25] This section was intended to clarify the common law position that was confused and varied between different common law jurisdictions.4 One difficult issue that existed both prior to, and has persisted since, the enactment of s 47 of the Evidence Act, is just how far the rule goes. Obviously, a conviction is evidence that the party in question was convicted of the relevant offence. But, to what extent is a conviction evidence that someone committed the offence, and the core elements — mental (mens rea) and physical (actus reus) — whatever they might be?
[26] This Court in Commissioner of Police v Filer has said that a conviction is evidence of the commission of the offence and the factual findings that are implicit in the jury’s verdicts.5 As a general statement of the position, that, it seems to me, must be correct.
[27] Thus, broadly, for s 47 to operate as a bar to a party in subsequent civil proceedings advancing a particular assertion, the assertion must either be as to the conviction itself or some essential element of the offence. The dividing line, or controversial issue, in any case is likely to be between essential elements of the offence and particulars that may vary from case to case.
[28] In cases where the criminal conviction was entered following trial by a judge and jury, the question trail provided by the Judge to the jury will clarify the precise scope of the jury’s factual determinations.
4 See Jorgenson v News Media (Auckland) Ltd [1969] NZLR 961 (CA).
5 Commissioner of Police v Filer [2013] NZHC 3111 at [25].
[29] In this case, Clark J provided the jury with a very clear question trail in relation to each change. This of course was so structured that, in relation to each charge, only if the jury concluded every question sequentially against Mr DeMarco, could they convict. Accordingly, from the questions contained in Clark J’s question trail, it is possible to know, in relation to each charge, exactly what conclusions the jury reached as to the factual background. Moreover, it appears to me that in formulating the questions for the jury, Clark J ensured the questions focus only on the core elements of the change to which they relate. Accordingly, the view I have reached in this case is that any pleaded position that directly contradicts a verdict or any of the necessary determination the jury must have made to reach a verdict on any of the six charges in the criminal proceeding falls within s 47(1) of the Evidence Act.
[30] In the course of his submissions in relation to s 47, Mr Fraser for Mr DeMarco and The Old Stick & Rudder Co emphasised that subs (2) of that provision confers on the Court “in exceptional circumstances” a discretion to allow a party in civil proceedings to offer evidence that the person convicted of an offence did not commit the offence.
[31] Mr Fraser submitted that having regard to that provision, the Court should not strike out any component of the defence or counterclaim on an interlocutory application because at trial the evidence might provide a foundation for such an application.
[32] That, in my view, is not the correct approach. On any application for an order striking out pleadings it might be said by the respondent party that circumstances might arise in which it could prove or disapprove a matter. That is not a proper basis on which to invite the Court to refrain from exercising its strike out jurisdiction. A party inviting the Court to do so must at very least be able to point to some foundation for a contention. In the case of an application based on s 47(1), it seems to me that a respondent would need to be able to point to at least some arguable foundation for an application under subs (2) of that provision.6
6 See Matthew Downs (ed) Cross on Evidence (online ed, LexisNexis) at [EVA47.5] where it is noted that although it is difficult to predict what criteria will be applied when determining that exceptional circumstances exist under s 47(2), two possibilities may be envisaged: the court might be persuaded that the quality and composition of the way in which the underlying conviction was obtained is such that the conclusive approach is unjust, or the conviction may have been for a
[33]Mr Fraser did not suggest that he was able to do so.
[34] A further issue raised by Mr Fraser during the course of argument was whether s 47(1) operates so as to prevent not only Mr DeMarco from denying the commission of the offences in question, but also his company, The Old Stick & Rudder Co.
[35] In my view, s 47(1) does not operate in a way that is akin to res judicata estoppel in personam (where the parties must be the same in the original and subsequent proceeding for an estoppel to arise) but to a res judicata estoppel in rem (which concerns judgments that bind the world).7 It seems to me that the language of the provision allows of no other interpretation. Indeed, it would at least in part frustrate the purpose of the section if that were so.
[36] That brings me to the specific pleadings challenged by The Vintage Aviator, the trustees and Sir Peter. In analysing these I will refer to the Schedule.
Third amended statement of claim dated 28 August 2020 – paragraph 14
[37]In paragraph 14 of the statement of claim the plaintiffs plead:
In arranging the sales:
14.1Mr DeMarco was acting in his capacity as TVAL’s employee; and
14.2he and OSRC were TVAL’s agents and owed TVAL fiduciary duties in that capacity.
[38]In paragraph 14 of their defence the defendants plead:
14.1They deny paragraph 14.1 and say the first defendant was acting on behalf of OSRC.
14.2They deny paragraph 14.2 of the amended statement of claim and say they were acting on behalf of OSRC.
[39] In my view, the positive assertions of representation directly contradict the jury’s answers to questions 2 and 3 relating to charges 3 and 4.
minor offence but the consequences of treating that conviction as conclusive proof in later civil proceedings are so severe that to treat (say) the uncontested, or not strenuously contested, conviction as conclusive would invest it with undue importance and cause injustice.
7 See generally KR Handley (ed) Spencer, Bower and Handley Res Judicata (5th ed, LexisNexis, 2019) at [10.01].
[40]I make an order striking out paragraphs 14.1 and 14.2 of the defence.
Statement of claim – paragraph 17
[41]In paragraph 17 of the third amended statement of claim the plaintiffs plead:
In arranging the sales, Mr DeMarco falsely represented to Warbirds and The Kittyhawk Partnership that TVAL’s prices for the sale of the TVAL aircraft were significantly higher than the List Prices, namely:
17.1$815,000 plus GST for the BE2e;
17.2$990,670 plus GST for the TVAL Albatros; and
17.3 $585,000 plus GST for the Sopwith Pup, (the Inflated Prices).
[42]In paragraph 17 of the defence the defendants plead:
They deny paragraph 17.1–17.3 of the amended statement of claim and say that these were OSRC prices for the aircraft.
17.1They deny paragraph 17.1 of the amended statement of claim.
17.2They deny paragraph 17.2 of the amended statement of claim.
17.3They deny paragraph 17.3 of the amended statement of claim.
[43] In my view, the denials as to the false representations and the fraudulent underpinning of the same are inconsistent with the jury’s answer to question 2 relating to charge 1.
[44]I make an order striking out paragraph 17 of the defence.
Statement of claim – paragraph 18
[45]In paragraph 18 of the statement of claim the plaintiffs plead:
When Mr DeMarco informed TVAL of the arrangements for the sale of the TVAL Aircraft, he falsely represented to TVAL that:
18.1the person funding Warbirds’ purchase, Reg Field, wished to pay more than TVAL’s list prices with the amount above the list prices to be paid to Mr De Marco to help him financially.
18.2it was a condition of the purchase that the additional money would go to Mr De Marco.
(The False Representations)
[46]In paragraph 18 of their defence the defendants plead:
The first defendant denies paragraph 18 of the amended statement of claim and says it was an agreement between OSRC and TVAL.
[47] In my view the denial of the representations contradicts the jury’s answer to question 2 of the question trial relating to charge 1.
[48]I make an order striking out paragraph 18 of the defence.
Statement of claim – paragraph 19
[49]In paragraph 19 of the plaintiffs’ statement of claim they plead:
TVAL consented to the sales in reliance on Mr De Marco’s False Representations.
[50]In paragraph 19 of their statement of defence the defendants plead:
They Deny paragraph 19 of the amended statement of claim and say there is no evidence to support this. The agreement was between OSR and Kittyhawk partnership.
[51] Question 3 in relation to charge 1 asked the jury whether it was sure that the fraudulent stratagem played a material part in Mr DeMarco’s obtaining possession or control of the $2,105,879.50. The jury’s answer was in the affirmative. However, the alignment between the question and answer on the one hand and the allegation and denial on the other hand is not a complete one. The jury may have concluded that the fraudulent stratagem implemented by Mr DeMarco played a material part in his securing the money concerned without necessarily concluding that TVAL consented to the sales of aircraft in reliance on Mr DeMarco’s false representations to it.
[52]I decline to strike out paragraph 19 of the defence.
Statement of claim – paragraph 20
[53]In paragraph 20 of their statement of claim the plaintiffs’ plead:
TVAL would not have authorised the sales of the TVAL Aircraft if it had known that the representations, as described in paragraph 18, were false.
[54]In paragraph 20 of their statement of defence the defendants plead:
They have no knowledge of and therefore deny paragraph 20 of the amended statement of claim.
[55] Again, it appears to me that the question and answer and allegation and reply do not align entirely. The jury may have concluded that the fraudulent stratagem played a material part in Mr DeMarco securing the money without necessarily concluding that TVAL would not have authorised the sales of the TVAL aircraft if it had known that the representations, as described in paragraph 18, were false. The question focussed the jury’s attention on Mr DeMarco’s acts not TVAL’s.
[56]I decline to strike out paragraph 20 of the defence.
Statement of claim – paragraph 27
[57]In paragraph 27 of their statement of claim the plaintiffs plead:
OSRC and Mr DeMarco failed to account to TVAL for any of the money paid by Warbirds or the Kittyhawk Partnership to OSRC for the TVAL Aircraft, which payments totalled $2,105,879 (the Warbirds and Kittyhawk Payments).
[58]In paragraph 27 of their statement of defence the defendants plead:
They deny paragraph 27 of the amended statement of claim and say OSR owed no duty of care to TVAL.
[59] In my view, the denial contradicts the jury’s answer to questions 1, 3 and 4 relating to charge 3, and 1, 3 and 4 relating to charge 4.
[60]I make an order striking out paragraph 27 of the defence.
Statement of claim – paragraph 28
[61]At paragraph 28 of the statement of claim the plaintiffs plead:
On or about 16 November 2016, without TVAL’s knowledge or consent, Mr DeMarco arranged for the BE2e to be delivered to Warbirds’ premises at Ardmore, Papakura, Auckland.
[62]At paragraph 28 of the statement of defence the defendants plead:
They deny paragraph 28 of the amended statement of claim.
[63] The defendants’ denial is directly contradictory to the jury’s answers to questions 2, 3, 4 and 5 relating to charge 2.
[64]I make an order striking out paragraph 28 of the defence.
Statement of claim – paragraph 32
[65]At paragraph 32 of their statement of claim the plaintiffs allege:
OSRC did not refund the payments made by Warbirds for the purchase of the BE2e, but rather asserted that possession and title to the BE2e had passed to Warbirds and Warbirds has since retained possession of the BE2e.
[66]At paragraph 32 of their statement of defence the defendants reply:
They admit paragraph 26.2 of the amended statement of claim but deny any wrongdoing or responsibility.
[67]I am not satisfied that the defendants’ admission relating back to paragraph
26.2 of the statement of claim together with their denial of any wrongdoing is necessarily inconsistent with the jury’s conviction of Mr DeMarco on charge 2 or their answers to questions 3 and 4 relating to charge 3.
[68] I decline to make an order striking out all or any part of paragraph 32 of the defence.
Statement of claim – paragraph 33
[69]In paragraph 33 of their statement of claim the plaintiffs’ plead:
Mr DeMarco and/or OSRC retained the use and benefit of TVAL funds received by way of the Warbirds and Kittyhawk Payments, and for which they were required to account to TVAL, namely:
33.1the List Price for the BE2e, namely $741,750;
33.2the Secret Commission for the BE2e, namely $195,000; and
33.3the use of the Refunded Deposits from the time those deposits were paid until the time they were refunded.
[70]In paragraph 33 of their statement of defence the defendants plead:
They deny paragraph 33 and say Mr De Marco and/or OSRC was not required to account to TVAL.
33.1They deny paragraph 33.1 of the amended statement of claim and say they have no knbowledge [sic] of a “List Price”
33.2They deny paragraph 33.2 of the amended statement of claim.
33.3They deny paragraph 33.3 of the amended statement of claim.
[71] The defendants’ denial of their obligation to account is directly contradictory of the jury’s conviction of Mr DeMarco on charge 3, the jury’s answers to questions 3 and 4 relating to charge 3, their conviction of Mr DeMarco on charge 4 and their answers to questions 3 and 4 relating to charge 4.
[72]I make an order striking out paragraph 33 of the defence.
Statement of claim – paragraph 35
[73]In paragraph 35 of their statement of claim the plaintiffs allege:
The Charges relevantly included that:
35.1between 3 March 2016 and 22 July 2017, by deception, and without claim of right, Mr DeMarco, did obtain possession of, or control over property, namely funds totalling $2,105,879.50 paid over by Frank Parker and Warbirds (Charge 1), being the Warbirds and Kittyhawk Payments;
35.2between 3 March 2016 and 22 July 2017, Mr DeMarco, had control over property, namely a Royal Aircraft Factory BE2 aircraft (the BE2e) the property of TVAL, in circumstances that he knew required him to deal with the property in accordance with requirements of TVAL and intentionally failed to deal with the property in accordance with those requirements (Charge 2);
35.3between 1 July 2016 and 22 July 2017, Mr DeMarco did receive property, namely monies totalling $1,905,879.50, in circumstances that he knew required him to deal with the property in accordance with the requirements of Warbirds and intentionally failed to deal with the property in accordance with those requirements (Charge 3); and
35.4between 25 July 2016 and 22 July 2017, Mr DeMarco, did receive property, namely monies totalling $200,000.00, in circumstances that he knew required him to deal with the property in accordance with the requirements of Frank Parker and intentionally failed to deal with the property in accordance with those requirements (Charge 4).
[74]In paragraph 35 of their statement of defence the defendants plead:
35.1They deny paragraph 35.1 of the amended statement of claim and say Mr De Marco acted with a claim of right.
35.2They deny paragraph 35.2 of the amended statement of claim and say it was a valid contractual agreement between OSR & Kittyhawk.
35.3They deny paragrapg [sic] 35.3 of the amended statement of claim and say OSR received the money as per its contractual agreement with Kittyhawk.
35.3 They deny paragraph 35.4 of the amended statement of claim and say OSR received the money and owed no fiduciary duty to TVAL.
[75] Paragraph 35 of the statement of claim is effectively a recitation of the charges laid against Mr DeMarco. In their response the defendants effectively deny the charges. The defendants’ pleading directly contradicts the jury’s conviction of Mr DeMarco on all charges.
[76]I make an order striking out paragraph 35 of the defence.
Statement of claim – paragraph 36
[77]At paragraph 36 of the statement of claim the plaintiffs allege:
The particulars of the Charges, given by the Serious Fraud Office, included that:
36.1in relation to Charge 1, Mr DeMarco did use a fraudulent stratagem in relation to the sale of aircraft from TVAL to Warbirds and Frank Parker, with intent to deceive Frank Parker, Warbirds and TVAL;
36.2in relation to Charge 3, Mr DeMarco received $1,905,879.50, knowing that he was required by Warbirds to give over all of those monies to TVAL and intentionally failed to do so; and
36.3in relation to Charge 4, Mr DeMarco received $200,000.00, knowing that he was required by Frank Parker to give over all of those monies to TVAL, and intentionally failed to do so.
[78]At paragraph 36 of their statement of defence the defendants plead:
They can neither confirm nor deny paragraph 36 of the amended statement of claim.
36.1They can neither confirm nor deny paragraph 36.1 of the amended statement of claim.
36.2They deny paragraph 36.2 of the amended statement of claim and say the agreement was between OSR and Kittyhawk.
36.3They deny paragraph 36.3 of the amended statement of claim and say the paragraph is irrelevant.
[79] Paragraph 36 of the statement of claim sets out the particulars of the charges given by the Serious Fraud Office. In sub-paragraphs 36.1–36.3 of the statement of defence the defendants respond. They say that they “can neither confirm nor deny paragraph 36 of the amended statement of claim”. Then they go on to deny at least paragraphs 36.2 and 36.3. In my view, these denials are inconsistent with the jury’s conviction of Mr DeMarco on all charges.
[80]I make an order striking out paragraph 36.2 and 36.3 of the defence.
Counterclaim – paragraph 10
[81] In paragraph 10 of his counterclaim dated 22 February 2021 Mr DeMarco alleges:
In arranging the sale, OSRC acted as an independent agent, working for a commission, able to set its own prices, as long as the TVAL “List Price” was returned to TVAL.
[82] That allegation directly contradicts the jury’s answers to questions 2 and 3 relating to charges 3 and 4.
[83]I make an order striking out paragraph 10 of the counterclaim.
Counterclaim – paragraph 15
[84]At paragraph 15 of his counterclaim Mr DeMarco alleges:
As OSRC had ultimate and independent control of the sales arrangement, TVAL was entitled to only the prearranged “List Price” and nothing further.
[85] That allegation is directly contradicted by the jury’s answers to questions 2 and 3 relating to charges 3 and 4.
[86]I make an order striking out paragraph 15 of the counterclaim.
Counterclaim – paragraph 16
[87]At paragraph 16 of his counterclaim Mr DeMarco alleges:
Fifth counterclaim defendant, who was not a shareholder, nor a director of TVAL at that time, deliberately interfered with the bonafide [sic] contractual arrangement between TVAL and OSRC, and falsely claimed that TVAL was ultimately entitled to any proceeds of sale of the three TVAL aircraft.
[88] In my view, that allegation is directly contradicted by the jury’s conviction of Mr DeMarco on charge 1 and its answer to question 2 relating to charge 1.
[89]I make an order striking out paragraph 16 of the counterclaim.
Counterclaim – paragraph 47
[90]At paragraph 47 of his counterclaim Mr DeMarco alleges:
There was no evidence that Oliver was ever a director or share holder [sic] in OSRC and had no authorisation to interfere in OSRC’s business.
[91] In my view, that allegation is directly contradicted by the jury’s answer to question 4 relating to charge 5, the conviction of Mr DeMarco on charge 6, and their answers to questions 2 and 3 relating to charge 6.
[92]I make an order striking out paragraph 47 of the counterclaim.
Counterclaim – paragraph 49
[93]At paragraph 49 of his counterclaim Mr DeMarco alleges:
Subsequent communications with Oliver has made him admit he had no authority to change the registered owner status into his name and now has vacated his position on this matter.
[94] In my view, that allegation is directly contradicted by the jury’s answer to question 4 relating to charge 5, the conviction of Mr DeMarco on charge 6 and their answers to questions 2 and 3 relating to charge 6.
[95]I make an order striking out paragraph 49 of the counterclaim.
Application by The Vintage Aviator, the trustees and Sir Peter Jackson for an order striking out Mr DeMarco’s counterclaim against the trustees on the ground that no relief is claimed against them
[96] The 28 August 2020 counterclaim does not contain any claim for relief against the trustees of the Film Property Trust.
[97] However, this appears to be in the nature of an oversight that could be corrected.
[98] Were it not for my determination on other bases that none of the causes of action pleaded in the counterclaim can proceed, I would have given Mr DeMarco an opportunity to replead.
Application by The Vintage Aviator, the trustees and Sir Peter Jackson for an order striking out the counterclaims founded on economic torts
[99] In his counterclaim, Mr DeMarco pleads six causes of action. Five of these — the first, third, fourth, fifth and sixth —allege economic torts.
[100] The economic torts are a group of closely related torts that may be viewed as the common law’s attempt to set the parameters of acceptable commercial conduct — prototype competition law.
[101]Todd on Torts groups the economic torts into three broad categories:8
(a)inducement to breach of contract;
(b)causing loss by unlawful means; and
8 Stephen Todd (ed) Todd on Torts (8th ed, Thompson Reuters, Wellington, 2019) at [13.1].
(c)conspiracy, which itself comes in two forms:
(i)conspiracy to injure; and
(ii)unlawful means conspiracy.
[102] Terminology has caused much confusion in this area of the law, and I will adopt Todd’s labels in the hope of not adding to this.
The first counterclaim — inducement to breach of contract
[103] Following the House of Lords judgment in OBG Ltd v Allen it is clear that there are four key components to this tort:9
(a)there must be a legally enforceable contract in existence;
(b)the defendant must have engaged in conduct which in fact induced a breach of the contract;
(c)the defendant must have known that his or her conduct would induce the breach;10
(d)the defendant’s conduct inducing the breach must have caused loss or damage to the plaintiff;
[104] The cause of action is of course only available to a plaintiff who is a party to the contract which is alleged to have been breached.11
[105] Considering the core requirements of the tort, as Mr Scott submitted, Mr DeMarco’s pleading in his first counterclaim is problematic. It is necessary only to record that:
9 OBG Ltd v Allen [2007] UKHL 21, [2008] 1 AC 1. These elements have been accepted in New Zealand. See for example Philip Moore & Co Ltd v Surridge [2018] NZHC 562 at [203].
10 As an intentional tort, the plaintiff must be able to show that the defendant’s actions were deliberate and that he, she or it knew that they would bring about a breach of contract (and at the very least in this sense intended that outcome).
11 Bell v Tindall HC Auckland CIV-2010-404-544, 15 September 2010 at [36].
(a)the pleaded contract was between The Vintage Aviator and The Old Stick & Rudder Co. Mr DeMarco was not a party;
(b)this is a counterclaim bought by Mr DeMarco. Yet essential components of the alleged claim depend upon pleadings as to the position of The Old Stick & Rudder Co. Mr DeMarco has no legal standing to make assertions on behalf of that company. He is neither a director nor other officer;
(c)it is not at all obvious on the pleadings that Sir Peter Jackson, against whom the claim is pleaded, took any action on his own behalf, as opposed to on behalf of The Vintage Aviator, in relation to the determination of any arrangement between that company and The Old Stick & Rudder Co, other than to assert The Vintage Aviator’s rights;
(d)there is no particularisation of the steps alleged to have been taken by Sir Peter;12
(e)there is no prayer for relief, let alone any particularisation of loss to support the same.
[106] In my view, Mr DeMarco’s pleading of his first counterclaim discloses no reasonably arguable claim.
The third, fourth and fifth counterclaims — causing loss by unlawful means
[107] Following OBG v Allen in order to succeed in a claim for causing loss by unlawful means a plaintiff must demonstrate that the defendant resorted to unlawful conduct deliberately targeted at a third party with the intention of causing the plaintiff loss.13
[108]Accordingly, the plaintiff must be able to establish:
12 Unsurprisingly, inducing a breach of contract needs to be adequately particularised; allegations of general interference will not suffice.
13 OBG Ltd v Allen, above n 9, at [141]–[167].
(a)that the defendant interfered unlawfully in relation to a third party (the test of unlawfulness is whether the third party had a cause of action against the defendant);
(b)the defendant acted with the predominant intention of causing loss to the claimant;
(c)there must be a causative link between the defendant’s actions and recoverable loss.
[109] Mr DeMarco’s third, fourth and fifth counterclaims all concern negotiations in which he — either on his own behalf or on behalf of The Old Stick & Rudder Co — was involved with third parties abroad (most notably the King of Jordan) which did not come to fruition because, Mr DeMarco asserts, Sir Peter interfered with the negotiations.
[110] Having regard to the core components of this tort, Mr DeMarco’s pleading of all three causes of action is inadequate.
[111]To focus on the most obvious flaws (which apply to all three counterclaims):
(a)there is no pleading that the actions of Sir Peter about which Mr DeMarco complains were independently unlawful in a way which may have given rise to a claim against him by any third party (such as the King of Jordan in the case of the third counterclaim);
(b)there is no pleading or particularisation as to an intention on Sir Peter’s part to cause loss to Mr DeMarco, let alone it being Sir Peter’s predominant intention;
(c)on his pleading, in each case, Mr DeMarco would appear to have been acting in his capacity for and on behalf of The Old Stick & Rudder Co in these negotiations, so that any loss would have accrued to that company not to Mr DeMarco personally;
(d)in any event, there is no adequate pleading or particularisation of loss.
[112] These flaws in Mr DeMarco’s pleading in his third, fourth and fifth counterclaims are fundamental. In my view, they lead inexorably to the conclusion that those claims do not give rise to reasonably arguable causes of action.
The sixth counterclaim — unlawful means conspiracy
[113] Mr DeMarco’s sixth counterclaim, in which he makes claims against Sir Peter, Mr Wulff and the Civil Aviation Authority, involves an allegation of conspiracy, in particular unlawful means conspiracy.
[114]There are four essential elements of the tort:14
(a)there must be an agreement between two or more people;
(b)the agreement must involve one or more of the parties using unlawful means against the plaintiff;
(c)there must be an element of joint enterprise in the sense that the conspirators must by reaching agreement intend to cause injury to the plaintiff;
(d)there must be a causal link between the unlawful means and the injury to the plaintiff;
[115]As always, the plaintiff must be able to prove loss.
[116] Mr DeMarco pleads in effect that, between them, Sir Peter and Mr Wulff conspired to procure the Civil Aviation Authority to sanction a transfer of the certificate of registration for an aircraft from the name of The Old Stick & Rudder Co into the name of Mr Wulff. This, Mr DeMarco says, was effected by Sir Peter employing “… guile and using fraudulent documentation”. This is alleged to have been “… fraud on [the Civil Aviation Authority].”
14 Wagner v Gill [2014] NZCA 336, [2015] 3 NZLR 157 at [50].
[117] Then it is said that the actions of Sir Peter and Mr Wulff constituted an unlawful conspiracy (perhaps with others), and, finally, it is said that the action of the Civil Aviation Authority in sanctioning the transfer was negligent. There are claims against Sir Peter for $100,000, Mr Wulff for an unspecified amount and the Civil Aviation Authority for $10,000 (presumably for its alleged negligence).
[118] This pleading too appears to me to be fundamentally flawed. In this case, the primary inadequacies are as follows:
(a)there is no express pleading of the existence of an agreement between Sir Peter, Mr Wulff and any other alleged conspirators, much less any particularisation of the terms of that agreement;
(b)there is no pleading as to the unlawful means that the conspirators are alleged to have agreed that one or more of them will take;
(c)there is no pleading as to any intent on the part of any alleged conspirators to injure Mr DeMarco;
(d)there is no express pleading as to whether Mr DeMarco (or anybody else) has been injured;
(e)there is no pleading or particularisation of loss.
[119] As Mr Scott, Mr Ballinger and Mr Davis all submitted, in any event, this cause of action is based on a fundamental misunderstanding of the relevant provisions of the Civil Aviation Act. It appears to proceed on the basis that the transfer of a certificate of registration takes effect as a transfer of property. The legislation and the evidence
— particularly that of Mr Harrison, the Civil Aviation Authority’s Manager Certifications/Acting Manager Licensing & Standards — demonstrates that it does no such thing. All such a certificate does is authorise a party to be in possession of an aircraft.
[120] For those reasons, the view I take is that Mr DeMarco’s sixth cause of action discloses no reasonably arguable cause of action as it stands.
Conclusion in relation to first, third, fourth, fifth and sixth counterclaims
[121] Given the conclusions I have reached in relation to the first, third, fourth and fifth counterclaims, the question reduces itself to whether I should strike these out or give Mr DeMarco an opportunity to re-plead them. Mr Scott urged me not to take the latter course. His submission, supported by Mr Ballinger and Mr Davis, was that:
33.None of the counterclaims come close to adequately pleading the elements of any of the potentially relevant economic torts, namely the torts of inducing breach of contract, unlawful interference with business relation or unlawful means conspiracy.
34.This is not a case that can be remedied by giving the defendant another opportunity to re-plead (particularly given this has already occurred with the new draft pleading for which initial disclosure have never been provided) — the facts cannot be made to fit the torts. As such, the pleading is beyond repair and none of the counterclaims can disclose any reasonably arguable cause of action.
[122] Had this counterclaim been a product of Mr DeMarco’s pleading, filed and served during a period during which he did not have solicitors and counsel acting for him and therefore without assistance, I would have been inclined to give Mr DeMarco’s recently appointed new solicitors and counsel a further opportunity — if they thought there was any serious prospect of achieving this — of recasting the pleading.
[123] However, as Mr Scott points out, the most recent iteration of the counterclaim, dated 23 February 2021, was filed and served by John Miller & Co and it is therefore apparent that Mr DeMarco has had the assistance of his new solicitors and counsel.
[124] In those circumstances, and bearing in mind also that this matter is set down for trial to commence on 5 July 2021, the view I have reached is that the proper course is to strike out the first, third, fourth. fifth and sixth counterclaims.
Application in relation to Mr DeMarco’s second counterclaim
[125] The Vintage Aviator and the trustees apply for summary judgment in relation to Mr DeMarco’s second cause of action.
[126] The counterclaim is for breach of contract. Mr DeMarco alleges the existence of a contract pursuant to which The Vintage Aviator would pay for his carrying out test flights of aircraft. He says that this was negotiated by the company’s CEO, Mr James Corke, and himself. And he says that Sir Peter refused to honour the contract.
[127]Mr DeMarco seeks “compensation” at a rate of $10,000 per aircraft, and claims
$90,000 for various test flights. There is no evidence supporting the $10,000 per aircraft figure, or particulars as to the test flights involved.
[128] The Vintage Aviator’s summary judgment application is supported by an affidavit sworn by Mr Corke. Mr Corke’s evidence is that Mr DeMarco’s employment contract with The Vintage Aviator (then, Wairarapa Aviation Ltd) dated 7 September 2006 saw him employed as the Production Manager, as Mr DeMarco says, but with a range of responsibilities that expressly included test flying aircraft, and that, over the years, Mr DeMarco conducted numerous test flights.
[129] Mr Corke says that in 2015 The Vintage Aviator underwent restructuring, the purpose of which was to reduce costs. A feature of this restructuring was that all non-budgeted expenses over $1,000 had to be approved in advance by Sir Peter and Dame Fran.
[130] Mr Corke’s evidence goes on to describe how Mr DeMarco initiated discussions with him in late 2015 as to whether the company would pay for test flying aircraft. Mr Corke says that he was reluctant to reach any agreement because of the internal policy requiring expenditure to be approved. However, for the purpose of obtaining the approval of Sir Peter and Dame Fran, Mr Corke and Mr DeMarco prepared a draft agreement. On 28 January 2016 an agreement was entered into by The Vintage Aviator and a company called Dairy Air Ltd, pursuant to which The Vintage Aviator would pay Dairy Air $3,500 for each test flight. Mr Corke says that he made it clear to Mr DeMarco that this agreement was conditional upon approval by Sir Peter and Dame Fran, and that this was recorded in TVAL’s board minutes of a meeting dated 3 February 2016. The minutes confirm this. Mr DeMarco was present at that meeting, and is not recorded as having raised any objection. Apparently,
Dairy Air rendered two invoices for test flights. When these invoices were submitted for approval, Sir Peter and Dame Fran refused to approve them and they were never paid.
[131] Whatever view the Court may take of Mr Corke’s unanswered evidence, there are two barriers standing in Mr DeMarco’s way in relation to this claim:
(a)first, it is pleaded as a claim pursuant to an employment arrangement. In terms of ss 161 and 187 of the Employment Relations Act 2000 the employment institutions have exclusive jurisdiction in relation to such contracts and the employment relationship. It is not at all obvious to me that this Court would have jurisdiction to deal with such a claim;
(b)second, all the evidence suggests that to the extent that there were any negotiations as to payment for test flights, any such arrangements, tentative or otherwise, proceeded on the basis that payment would be made to Dairy Air. If that is so, then if any party has a claim against The Vintage Aviator in relation to such matters it is Dairy Air (not Mr DeMarco). Dairy Air is not a party to either of these proceedings.
[132] On those bases, I am left in no doubt that Mr DeMarco’s second counterclaim cannot succeed and I therefore propose to enter summary judgment in favour of The Vintage Aviator in relation to the same.
The applications by Mr Wulff and the Civil Aviation Authority for an order striking out Mr DeMarco’s sixth counterclaim
[133] On the application of The Vintage Aviator, the trustees and Sir Peter, I have already concluded that Mr DeMarco’s sixth counterclaim based on conspiracy by unlawful means against Sir Peter, Mr Wulff and the Civil Aviation Authority does not disclose a reasonably arguable cause of action, essentially because the critical components of such a cause of action are not pleaded. Accordingly, it is unnecessary to repeat the analysis for the purposes of dealing with the corresponding applications by Mr Wulff and the Civil Aviation Authority.
[134] For the same reasons, I would make the orders sought by those parties in relation to Mr DeMarco’s sixth counterclaim.
Mr Wulff’s application in the 417 proceeding for an order striking out the statement of defence
[135] In the 417 proceeding Mr Wulff applies for an order striking out the defence on the basis that Mr DeMarco and The Old Stick & Rudder Co have not complied with their discovery obligations.
[136] There is no doubt that it is quite correct to say that they have not. Nor is there any real doubt as to the legitimacy of Mr Wulff’s application in this regard. However, at the conclusion of this judgment I will need to deal with outstanding interlocutory matters, and I propose to make orders in that regard that include the provision of discovery by Mr DeMarco and The Old Stick & Rudder Co. In response to this application by Mr Wulff for an order striking out the statement of defence I am not prepared to make such an order at this stage, but will make an unless order in the course of timetabling the disposal of outstanding interlocutory matters.
Outstanding interlocutory matters
[137] That brings me to the question of timetabling orders for the disposal of outstanding interlocutory matters and pre-trial steps, something that was touched on
— admittedly relatively briefly — by counsel at the conclusion of the hearing.
[138] For The Vintage Aviator, the trustees and Sir Peter, Mr Scott proposed a timetable applying only to the 1027 proceeding. There seems to be no objection to Mr Scott’s timetable from counsel for any other party, and nor do I see why that timetable should not apply to both proceedings. By consent, then, I make the following directions:
(a)the only outstanding interlocutory matter would appear to be discovery by Mr DeMarco and The Old Stick & Rudder Co in both the 1027 and the 417 proceedings. I direct that by 30 April 2021, Mr DeMarco and The Old Stick & Rudder Co provide sworn lists of documents in both proceedings. I direct that if they do not provide discovery by that date,
or such other date as the Court may allow on their application, they will only be entitled to defend these proceedings with leave of the Court;
(b)by 7 May 2021 the plaintiffs in both proceedings are to serve their evidence, draft lists of documents for inclusion in the trail bundle and draft chronologies;
(c)by 28 May 2021 the defendants are to serve their evidence and lists for additional documentation to be included in the trial bundle and any proposed changes to the chronology;
(d)by 7 June 2021 the plaintiffs are to serve their evidence strictly in reply and lists of documents referred to;
(e)by 14 June 2021 the index to a trial bundle is to be completed;
(f)by 23 June 2021 the trial bundle is to be filed and served. One hard copy of the trial bundle is to be filed with the Court together with an electronic version;
(g)by 30 June 2021 the plaintiffs are to file and serve their synopsis of their openings.
Summary of conclusions
[139]For those reasons:
(a) Paragraphs 14.1, 14.2, 17, 18, 27, 28, 3, 35, 36.2 and 36.3 of the third amended statement of defence dated 28 August 2020 filed and served by the defendants in the 1027 proceeding are struck out;
(b)Paragraphs 10, 15, 16, 47 and 49 of the counterclaim dated 22 February 2021 filed and served by the first defendant in the 1027 proceeding are struck out;
(c)The first, third, fifth and sixth causes of action pleaded by the first defendant in the 1027 proceeding, respectively, paragraphs [9] – [16], [34]-[38], [42]-[44] and [45]-[57] of his counterclaim dated 22 February 2021 are struck out;
(d)Summary judgment is entered in favour of the plaintiffs against the first defendant on the latter’s second cause of action pleaded between paragraphs [17] and [33] in his counterclaim dated 22 February 2021.
(e)I make the orders or directions set out at paragraph [139] above.
[140] As to costs, I reserve these, not having heard from counsel. If counsel are unable to resolve costs, they may file memoranda in the usual way.
Associate Judge Johnston
Solicitors:
Chapman Tripp, Wellington for The Vintage Aviator, the trustees of the Film Property Trust and Sir Peter Jackson
Finn Collins, Wellington for Oliver Wulff Civil Aviation Authority, Wellington
John Miller Law, Wellington for Eugene DeMarco and The Old Stick & Rudder Co Ltd
SCHEDULE
Criminal Proceeding Charges and Question Trail
CHARGE 1
Obtaining by deception
Between 3 March 2016 and 22 July 2017, at Wellington, by deception, and without claim of right, did obtain possession of, or control over, property, namely funds totalling $2,105,879.50 paid over by Frank Parker and New Zealand Warbirds Association Incorporated.
Particulars: did use a fraudulent stratagem in relation to the sale of aircraft from The Vintage Aviator Limited to New Zealand Warbirds Association Incorporated and Frank Parker, with intent to deceive Frank Parker, New Zealand Warbirds Association Incorporated, and The Vintage Aviator Limited.
Question 1 Are you sure Mr DeMarco obtained possession or control
of the $2,105,879.50 paid by Mr Parker and New Zealand Warbirds?
If Yes, go to Question 2.
If No, find Mr DeMarco Not Guilty on Charge 1
Question 2 Are you sure Mr DeMarco used a fraudulent stratagem;
that is, are you sure Mr DeMarco falsely represented to Mr Corke that the purchaser wished to pay more than TVAL’s asking price for the planes so he could gift the extra to Mr DeMarco and that he falsely represented to Mr Parker and New Zealand Warbirds that they were paying the TVAL asking price for the planes?
If Yes go to Question 3.
If No, find Mr DeMarco Not Guilty on Charge 1.
Question 3 Are you sure the fraudulent stratagem played a material
part in Mr DeMarco obtaining possession or control of the $2,105,879.50?
If Yes, go to Question 4.
If No, find Mr DeMarco Not Guilty on Charge 1.
Question 4
Are you sure that when Mr DeMarco obtained possession or control of the $2,105,879.50, he intended to deceive Mr Parker, New Zealand Warbirds and The Vintage Aviator?
If Yes, go to Question 5.
If No, find Mr DeMarco Not Guilty on Charge 1.
Question 5
Are you sure Mr DeMarco obtained possession or control of the $2,105,879.50 without claim of right?
Claim of right means, a belief at the time of the act, in a proprietary or possessory right in property in relation to which the offence is alleged to have been committed, although that belief may be based on ignorance or mistake of fact or of any matter of law.
If Yes, find Mr DeMarco Guilty on Charge 1.
If No, find Mr DeMarco Not Guilty on Charge 1.
CHARGE 2
Theft in a special Relationship (TVAL)
Between 3 March 2016 and 22 July 2017, at Wellington, had control over property, namely a Royal Aircraft Factory BE2 aircraft the property of the Vintage Aviator Limited, in circumstances that he knew required him to deal with the property in accordance with the requirements of The Vintage Aviator Limited and intentionally failed to deal with the property in accordance with those requirements.
Question 1 Are you sure Mr DeMarco had control over the BE2?
If Yes, go to Question 2.
If No, find Mr DeMarco Not Guilty on Charge 2.
Question 2 Are you sure there was a requirement by The Vintage
Aviator that Mr DeMarco would obtain approval from The Vintage Aviator before delivering the BE2 to New Zealand Warbirds?
If Yes, go to Question 3.
If No, find Mr DeMarco Not Guilty on Charge 2.
Question 3 Are you sure Mr DeMarco knew he was required to
obtain approval from The Vintage Aviator before delivering the BE2 to New Zealand Warbirds?
If Yes, go to Question 4.
If No, find Mr DeMarco Not Guilty on Charge 2.
Question 4 Are you sure Mr DeMarco arranged the delivery of the
BE2 to New Zealand Warbirds? If Yes, go to Question 5.
If No, find Mr DeMarco Not Guilty on Charge 2.
Question 5
Are you sure that when Mr DeMarco arranged the delivery of the BE2 to New Zealand Warbirds, he intentionally did so without obtaining approval from The Vintage Aviator?
If Yes, find Mr DeMarco Guilty on Charge 2.
If No, find Mr DeMarco Not Guilty on Charge 2.
CHARGE 3
Theft in a special Relationship (Warbirds)
Between 1 July 2016 and 22 July 2017, at Wellington, did receive property, namely monies totalling $1,905,879.50, in circumstances that he knew required him to deal with the property in accordance with the requirements of New Zealand Warbirds Association Incorporated and intentionally failed to deal with the property in accordance with those requirements.
Particulars: received $1,905,879.50, knowing that he was required by New Zealand Warbirds Association Incorporated to give over all of those monies to The Vintage Aviator Limited, and intentionally failed to do so.
Question 1 Are you sure Mr DeMarco received $1,905,879.50 from
New Zealand Warbirds through The Old Stick and Rudder Company?
If Yes, go to Question 2.
If No, find Mr DeMarco Not Guilty on Charge 3.
Question 2 Are you sure that it was from The Vintage Aviator Limited
that New Zealand Warbirds agreed with Mr DeMarco to purchase the BE2 and the Albatross?
If Yes, go to Question 3.
If No, find Mr DeMarco Not Guilty on Charge 3.
Question 3 Are you sure that when Mr DeMarco agreed to sell the
BE2 and the Albatross to New Zealand Warbirds, he knew he was doing so on behalf of The Vintage Aviator Limited?
If Yes, go to Question 4.
If No, find Mr DeMarco Not Guilty on Charge 3.
Question 4
Are you sure that Mr DeMarco intentionally did not give
$1,905,879.50 to The Vintage Aviator for the planes? If Yes, find Mr DeMarco Guilty on Charge 3.
If No, find Mr DeMarco Not Guilty on Charge 3.
CHARGE 4
Theft in a special Relationship (Frank Parker)
Between 25 July 2016 and 22 July 2017, at Wellington, did receive property, namely monies totalling
$200,000.00, in circumstances that he knew required him to deal with the property in accordance with the requirements of Frank Parker and intentionally failed to deal with the property in accordance with those requirements.
Particulars: received $200,000.00, knowing that he was required by Frank Parker to give over all of those monies to The Vintage Aviator Limited, and intentionally failed to do so.
Question 1 Are you sure Mr DeMarco received $200,000 from
Mr Parker through The Old Stick and Rudder Company? If Yes, go to Question 2.
If No, find Mr DeMarco Not Guilty on Charge 4.
Question 2 Are you sure that it was from The Vintage Aviator Limited
that Mr Parker agreed with Mr DeMarco to purchase the Sopwith Pup?
If Yes, go to Question 3.
If No, find Mr DeMarco Not Guilty on Charge 4.
Question 3Are you sure that when Mr DeMarco agreed to sell the Sopwith Pup to Mr Parker, he knew he was doing so on behalf of The Vintage Aviator Limited?
If Yes, go to Question 4.
If No, find Mr DeMarco Not Guilty on Charge 4.
Question 4 Are you sure that Mr DeMarco intentionally did not give
the $200,000 to The Vintage Aviator Limited? If Yes, find Mr DeMarco Guilty on Charge 4.
If No, find Mr DeMarco Not Guilty on Charge 4.
CHARGE 5
Obtaining by deception (BNZ)
Between 17 April 2016 and 2 July 2016, at Wellington, by deception and without claim of right, did obtain a loan from the Bank of New Zealand totalling $250,000.
Particulars: made false representations concerning the ownership of a Curtiss Model P-40E aircraft and/or his employment agreement with the Vintage Aviator Limited.
Question 1 Are you sure Mr DeMarco obtained a loan of $250,000
from the Bank of New Zealand? If Yes, go to Question 2.
If No, find Mr DeMarco Not Guilty on Charge 5.
Question 2 Are you sure Mr DeMarco falsely represented to the
Bank of New Zealand that he was entitled to earn commissions on the sale of planes for The Vintage Aviator?
If Yes, go to Question 3. If No, go to Question 4.
Question 3Are you sure the representation that Mr DeMarco was entitled to earn commissions played a material part in Mr DeMarco obtaining the loan from the Bank of New Zealand?
If Yes, go to Question 6. If No, go to Question 4.
Question 4Are you sure Mr DeMarco falsely represented to the Bank of New Zealand that he had unqualified authority to offer the P-40 as security for a loan?
If Yes, go to Question 5.
If No, find Mr DeMarco Not Guilty on Charge 5.
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CHARGE 6
Theft in a special Relationship (Oliver Wulff)
On or about 7 June 2016, at Wellington, did have control over property, namely a Curtiss Model P-40E aircraft with registration ZK-RMH, in circumstances that he knew required him to deal with the property in accordance with the requirements of Oliver Wulff, and intentionally failed to deal with the property in accordance with those requirements.
Particulars: used the aircraft as security for a bank loan, knowing that this breached the terms of his Shareholders Agreement with Oliver Wulff dated 15 March 2013.
Question 1 Are you sure Mr DeMarco had control over the P-40?
If Yes, go to Question 2.
If No, find Mr DeMarco Not Guilty on Charge 6.
Question 2Are you sure Mr DeMarco knew he was required not to arrange a charge or loan against the P-40 without Mr Wulff’s consent?
If Yes, go to Question 3
If No, find Mr DeMarco Not Guilty on Charge 6.
Question 3Are you sure Mr DeMarco intentionally arranged the P-40 as a security for a loan with the Bank of New Zealand without Mr Wulff’s consent?
If Yes, find Mr DeMarco Guilty on Charge 6.
If No, find Mr DeMarco Not Guilty on Charge 6.
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