Tyre Collection Services Limited v Le Roy - [2016] NZHC 1268

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

CIV-2016-409-000060 [2016] NZHC 1268

BETWEEN
TYRE COLLECTION SERVICES

LIMITED Plaintiff

AND

MICHAEL BENNY LE ROY First Defendant

JAMISON INVESTMENTS LIMITED Second Defendant

TYRE RECYCLING SERVICES NEW ZEALAND LIMITED

Third Defendant

Hearing: 30 May 2016

Appearances:

G A Biggs for Plaintiff
D J Ballantyne for First, Second and Third Defendants

Judgment:

13 June 2016

JUDGMENT OF ASSOCIATE JUDGE MATTHEWS

[1] Tyre Collection Services Limited (TCSL) is a tyre collection and recycling company based in Rolleston, Canterbury.

[2] Michael Le Roy is the sole director and shareholder of Jamison Investments Ltd (Mr Le Roy and JIL) which was engaged by TCSL to collect used tyres on its behalf. Tyre Recycling Services New Zealand Limited (TRS) is also engaged in the business of collecting used tyres, and its sole director and shareholder is Mr Le Roy’s stepdaughter.

[3] TCSL collects “end of life” tyres from various suppliers throughout the South

Island. It arranges for them to be brought to a processing and storage yard in

Rolleston from which they are then exported or sold to other end users.

TYRE COLLECTION SERVICES LTD v LE ROY & ORS [2016] NZHC 1268 [13 June 2016]

[4] In early 2014 TCSL entered a short term contract with JIL by which the latter would collect tyres on behalf of TCSL and bring them to Rolleston, or take them direct to purchasers in the Canterbury area. The arrangement was JIL would lease TCSL’s truck, but would have an option to buy it for a certain price and if it did so a new three year contract would be entered. JIL did subsequently buy TCSL’s truck and a new contract was entered on 26 July 2014. Both contracts were drafted by Mr Shackleton, director of TCSL, without legal advice or assistance.

[5] Later in 2015 Mr Le Roy arranged for a new business to be set up in competition with TCSL, and for TRS to be incorporated. This led to TCSL terminating its contract with JIL and issuing this proceeding. It applied for an interim injunction to prevent JIL and Mr Le Roy carrying on business as they had,
which was granted after a defended hearing before Dunningham J.1

[6] The facts put before the Court on the application for an interim injunction are comprehensively summarised by Dunningham J in paragraphs [4] – [30] of her Honour’s judgment, and need not be repeated here. On 16 March 2016 all the defendants filed a statement of defence, and JIL filed a counterclaim. After pleading to the allegations in the statement of claim, Mr Le Roy and JIL plead five positive defences. Unusually, at the conclusion of each pleading of a positive defence, they set out a prayer for relief.

[7] TCSL applies for an order directing both Mr Le Roy and JIL to give security for costs under r 5.45 of the High Court Rules. Although the portion of the statement of defence and counterclaim which is described as a counterclaim…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2016] NZHC 1268
Decision Date: 13 June 2016

CaseChat Overview and Summary

Tyre Collection Services Limited (TCSL) is a tyre collection and recycling company based in Rolleston, Canterbury. TCSL is engaged in collecting "end of life" tyres from various suppliers throughout the South Island and arranges for them to be brought to a processing and storage yard in Rolleston from which they are then exported or sold to other end users. TCSL entered a contract with Jamison Investments Ltd (JIL), of which Michael Benny Le Roy is the sole director and shareholder, by which JIL would collect tyres on behalf of TCSL and bring them to Rolleston, or take them direct to purchasers in the Canterbury area. JIL subsequently bought TCSL’s truck and a new contract was entered on 26 July 2014. TCSL terminated its contract with JIL and issued proceedings. It applied for an interim injunction to prevent JIL and Mr Le Roy carrying on business as they had, which was granted after a defended hearing before Dunningham J. TCSL applied for an order directing both Mr Le Roy and JIL to give security for costs under r 5.45 of the High Court Rules. The issues to be decided were: (a) Is there reason to believe that JIL will be unable to pay the costs of TCSL if unsuccessful in its claim? (b) If the answer to the first issue is yes, is it just in all the circumstances to order the giving of security for costs? (c) If so, what sum should be required to be given? The Court was satisfied that there was reason to believe that JIL will be unable to pay the costs of TCSL if unsuccessful in its claim. The Court found that ordering security for costs would not be oppressive to JIL and may not deprive it of the ability to advance its counterclaim. The Court awarded security in an amount which was appropriate in the interests of justice taking into account all relevant factors. TCSL has succeeded on this application and is entitled to costs against JIL accordingly. TCSL is also entitled to costs against Mr Le Roy.

Orders