Worldclear Limited v TI Holdings Limited (in liquidation)

[2018] NZHC 2803

IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY

I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE

CIV-2018-419-189

[2018] NZHC 2803

BETWEEN

WORLDCLEAR LIMITED

Plaintiff

AND

TI HOLDINGS LIMITED (IN LIQUIDATION)

First Defendant

RICHARD JAMES WITHHAM
Second Defendant

RETAIL GURU LIMITED

Third Defendant

Hearing:

On the papers

Appearances:

T Braun for Plaintiff

No appearance for Defendants

Judgment:

30 October 2018

JUDGMENT OF LANG J

[on application for judgment by formal proof]

This judgment was delivered by me on 30 October 2018 at 3.30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

WORLDCLEAR LTD v TI HOLDINGS LTD (IN LIQUIDATION) [2018] NZHC 2803 [30 October 2018]

[1]                   In this proceeding the plaintiff, Worldclear Limited (Worldclear), seeks judgment against TI Holdings Limited (“TI”), Mr Whitham and Retail Guru Limited in relation to funds those parties allegedly fraudulently converted to their own use knowing they belonged to Worldclear.

[2]                   The proceeding was served on all three defendants between 1 and 22 August 2018 but none has taken steps to defend it. Worldclear now seeks judgment by way of formal proof against TI and Retail Guru in relation to specific sums it alleges they have received. Evidence in support of the application consists of affidavits filed by Mr David Hillary, the plaintiff’s managing director.

Background

[3]                   Mr  Hillary  deposes  that  Worldclear  employed   the   second   defendant, Mr Whitham, to develop relationships with New Zealand and international banking institutions. This required him to set up a bank account for Worldclear’s use in processing international currency transactions. Mr Whitham signed an employment agreement with Worldclear on 14 August 2017.

[4]                   The parties subsequently agreed that Mr Whitham would incorporate the first defendant, TI Holdings Ltd. Mr Whitham was to be the sole director and shareholder of that company. In his capacity as director of TI, Mr Whitham would open bank accounts in the name of the company and conduct financial transactions through the company’s bank account acting on Worldclear’s instructions. The arrangement between the plaintiff and TI was formalised in a written agreement dated 18 January 2018.

[5]                   In accordance with this arrangement Worldclear subsequently deposited substantial sums into TI’s bank accounts. It then provided Mr Whitham with instructions as  to  how  those  funds  were  to  be  disbursed.  During  this  period  Mr Whitham was receiving remuneration from Worldclear by way of salary as an employee and by way of director’s fees paid to him for the work carried out through TI. In addition, Mr Whitham was paid a bonus for every banking relationship he established.

[6]                   On 17 May 2018 Mr Whitham left Worldclear’s offices on the pretext that he needed to go home early to look after a sick child. He said he did not expect to be in the office the next day, but would endeavour to be available to assist with the processing of payments that day from his home.

[7]                   On 18 May 2018 a payment of approximately US$1.2 million was scheduled to be made from one of TI’s bank accounts. Mr Hillary says he asked Mr Whitham to ensure this payment would be made before Mr Whitham left the office on 17 May 2018. Mr Whitham sent an email on 18 May to confirm the transaction was proceeding. Later that day, however, the funds in question were diverted to an account in the name of TI in Singapore.

[8]                   On 18 May Mr Hillary sent Mr Whitham a text message advising him that two large transactions needed  to  be  completed  that  morning,  and  enquiring  as  to  Mr Whitham’s availability. Mr Whitham replied that he was currently seeing the doctor, but hoped to be back at his house soon. Later that day, however, Worldclear’s employees discovered they were unable to access TI’s internet banking platforms.  Mr Hillary sent a text message to Mr Whitham querying this and Mr Whitham’s response was “that is weird”.

[9]                   Worldclear then contacted the banks with whom the accounts were held. It then learned that Mr Whitham had deleted Worldclear’s staff as users of the accounts. Furthermore, one of the banks advised Worldclear that Mr Whitham had ordered the transfer of almost all of the available funds in TI’s account to his personal account at ASB Bank Ltd.

[10]               Shortly thereafter, Mr Hillary went to Mr Whitham’s residential address only to discover that Mr Whitham and his family had moved out some weeks earlier. At this point Worldclear contacted the police. They ascertained Mr Whitham and his family had already left the country and travelled to Singapore.

[11]               On the afternoon of 18 May 2018, Mr Hillary also noticed computer files being deleted from folders. It transpired that someone in Singapore had logged into the computer system using Mr Whitham’s password. This person was systematically

deleting files from Mr Whitham’s employment and project folders. These included documents relating to the bank accounts Mr Whitham had set up in TI’s name.

[12]               Mr Hillary subsequently learned that Mr Whitham’s wife had sold the family’s household furniture. All of the evidence pointed to the likelihood that Mr Whitham and his family would not be returning to New Zealand in the near future.

[13]               On 22 May 2018, the plaintiff obtained freezing orders on a without notice basis over the New Zealand bank accounts and assets of Mr Whitham, TI and the third defendant, Retail Guru Ltd (Retail Guru). That company was also incorporated by Mr Whitham.

[14]               On 28 May 2018, the plaintiff obtained an order appointing interim liquidators to TI. The interim liquidators advise that to date a total sum of approximately NZ

$3.458 million has either been recovered or frozen under the orders made by the Court.

[15]               Worldclear has now discovered that, amongst other unauthorised transactions, TI transferred NZ$50,000 of Worldclear’s funds to Retail Guru’s BNZ account on   16 May 2018. It has also discovered that on the same date the sum of US$250,000 (NZ$382,965.68) was transferred from TI’s bank account into an account in the name of Retail Guru. It now seeks judgment against Retail Guru for those amounts.

Decision

[16]               The material provided by Worldclear in support of its application for judgment by formal proof satisfies me that all three defendants have acted in concert to convert funds belonging to Worldclear to their own use. This has ultimately resulted in Retail Guru receiving the sums of NZ$50,000 andUS$250,000 (NZ$382,965.68).

[17]               I therefore enter judgment against Retail Guru under the two causes of action pleaded against it for the sums of NZ$50,000 and US$250,000 ($NZ382,965.68).

[18]               Leave is reserved to the plaintiff to apply further to enter judgment against the three defendants in relation to other sums it may ascertain have been converted by them.

Costs

[19]               Worldwide is entitled to costs against Retail Guru on a category 2B basis together with disbursements as fixed by the Registrar.

Lang J

Solicitors:
Braun Bond & Lomas Ltd, Hamilton