IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-404-005789 [2013] NZHC 1733

BETWEEN	AARON ROBERT YOUNG First Plaintiff	

AND	
STOREPRO SOLUTIONS LIMITED Second Plaintiff	

AND	
STEPHEN ANDREW YOUNG Third Plaintiff	

AND	
SANJAY KUMAR JOSHI Defendant	

Hearing:	10 July 2013	

Appearances:	
E Grove for Plaintiffs
A W Johnson for Defendant	

Judgment:	
10 July 2013	

ORAL JUDGMENT OF VENNING J

Solicitors:	Gibbs Mills Livingston Lawyers, Auckland
Martelli, McKegg, Auckland
Swarbrick Beck Mackinnon, Auckland
Copy to:	C T Patterson/E Grove, Auckland
P Wicks, Auckland

YOUNG v STOREPRO SOLUTIONS LIMITED [2013] NZHC 1733 [10 July 2013]

Introduction

[1]       The  plaintiffs’  claims  against  the  defendant  arise  out  of  a  relationship between the first plaintiff and the defendant.  The proceeding was allocated a formal proof this morning.  At the commencement of the hearing Mr Johnson entered an appearance on behalf of the defendant.  The defendant has not filed any defence to the claim. The matter has been called before the Court on a number of occasions and although appearances have been entered on behalf of the defendant no formal steps have been taken.  His former solicitors and counsel sought leave to withdraw by application of 23 April 2013.  Leave is formally granted to them to withdraw.

[2]       Mr Johnson indicated that he had only received instructions within the last day or so from the defendant.  He sought to have this hearing adjourned for a week. His instructions from the defendant, brief though they be, are that there is money in America, that the defendant expects that money to be available within four to six days and in those circumstances there would be no need for the matter to proceed to judgment.

[3]       Mr Grove for the plaintiffs opposed any further adjournment of this formal proof hearing.  He made the point that that was not the first communication or promise on behalf of the defendant that payment would be forthcoming.   The plaintiffs seek the security of a judgment.

[4]       Given the history to this case and the way it has evolved I am satisfied that it is not in the interests of justice to adjourn this formal proof hearing.  I declined the application for adjournment.

[5]       Mr  Johnson  then  asked  that,  if  judgment  was  to  be  entered  against  the defendant following the formal proof hearing the judgment lie in Court for seven days to enable the settlement on the basis of the funds the defendant expected to come from the United States.  Mr Grove’s position is he was not able to consent to that as he did not have formal instructions on it.  Given that there are freezing orders in existence in relation to the defendant’s bank accounts in New Zealand and that counsel understands the defendant is not able to leave New Zealand because of enquiries by other agencies, I cannot see that leaving any judgment to lie in Court for

seven days would prejudice the plaintiffs.  For that reason I propose to accede to that request on behalf of the defendant.

Background

[6]       The plaintiff is a successful company director and businessman.   He is the sole director of the second plaintiff.  He and his family trust hold all the shares in the second plaintiff.  The third plaintiff is an engineer and is the first plaintiff’s brother. The defendant is a company director and businessman.  At all material times he was and remains the sole director and shareholder of Automotive Direct Distributors NZ Limited (ADD).

[7]       The first plaintiff, Mr Young, and the defendant had been close friends for a number of years.  During 2011 the defendant represented to Mr Young that ADD had an exclusive licence to distribute “Champion” brand automotive products in Asia- Pacific and Europe, that he the defendant was an experienced and licensed importer and dealer in motor vehicles, and that there was considerable scope for expansion of ADD’s business and joint profit if the first plaintiff personally and/or through his companies, was willing to advance funds to ADD to fund the expansion.   He suggested that if the first plaintiff personally or through his companies was prepared to assist the defendant with the costs of acquiring and importing second-hand cars, primarily from Japan, for on-sale by the defendant, then both parties would share in the profit.

[8]       In or about September 2011 Mr Young orally agreed with the defendant to undertake a joint venture on terms the defendant would locate the cars overseas and domestically for purchase and on-sale;  that he would provide the defendant with funding of up to 50 per cent of the costs associated with the purchase and that upon sale the defendant would pay Mr Young 50 per cent of the proceeds.  In addition Mr Young agreed to buy a number of cars from the defendant for himself and/or his businesses.

[9]       The second plaintiff company Storepro Solutions Ltd (Storepro) also agreed to purchase cars and related equipment from the defendant.  The third plaintiff, Mr Young’s brother, also agreed to purchase cars from the defendant.

The claims/no defence

[10]     The plaintiffs’ claims are that the defendant has failed to account to them, in the case of the plaintiff Mr Young in terms of the joint venture.  The other plaintiffs say the defendant has breached his agreement to supply cars and equipment.  He has either failed to supply them at all or they have been subject to charges.

[11]     ADD has now been liquidated on the basis of a separate and unrelated debt. The plaintiffs have continued to pursue the defendant.  On a number of occasions the defendant has responded in terms which do not deny liability to the plaintiffs but rather make promises of payment or settlement in due course.

[12]     I refer to the following by way of example.   In August 2012 the plaintiff demanded to see the cars, equipment and a yacht he had paid for.  The defendant replied not disputing liability but noting he would action matters.  He did not do so. There were further exchanges of texts in August 2012 when in response to the plaintiff’s demands, the defendant text “Understand that.   You’ll c it’s legit” and then, when the plaintiff pressed in terms of:

So show me what’s where here then in terms of cash, cheques cards and boat.  You give me something back that you’ve promised and it’s sorted. Where exactly is everything here then???  Like right this minute

the defendant replied:

Well ur boat in city.  Cars in shed.  Papers [I’ll] resend once back at hotel. I’m clutching at straws here trying to make every[one] happy.

[13]     There was a further incident of the defendant providing a bank cheque in a substantial  sum  from  Wells  Fargo  bank  account  which  did  not  subsequently eventuate in payment.  When the cheque was not pursued, the defendant suggested wire transfers were sent but the plaintiffs never received anything that they could action to provide any money.

[14]    The defendant’s position seems to be maintained in the instructions to Mr Johnson.  Mr Johnson’s instructions at least as outlined to the Court this morning do not extend to any form of denial of liability but rather seek time to make payment.  I

am satisfied that it is appropriate for the plaintiffs to have judgment against the defendant on the basis of the pleadings which are unanswered and the affidavit evidence before the Court.

Quantum

[15]     The issue then is the quantum claimed. The first cause of action relates to the joint venture referred to above.  Pursuant to that joint venture Mr Young, the first plaintiff, paid the defendant a total of $223,000 to assist in the purchase and importation of 11 vehicles.  He also provided Mr Joshi with a new Holden HSV for Mr Joshi to sell to help fund the freight costs.  Mr Young’s 50 per cent profit share from the sales of the vehicles, based on the sales figures of the vehicles advised by the defendant to Mr Young, totals $462,750 in accordance with schedule attached to this judgment.  Mr Joshi has made payments to Mr Young and given a credit towards the purchase of a yacht totalling $97,000, thereby reducing the amount due under the profit share to $365,750.

[16]     There is judgment for the first plaintiff in the sum of $365,750 on the first cause of action together with interest from 31 August 2012 to today’s date at 5 per cent per annum totalling $15,732.26.  I note that the statement of claim refers to interest at 5 per cent pursuant to the District Courts Act 1947.  The same rate applies under the Judicature Act 1908. There is no prejudice arising from that error.

[17]     I turn to the second cause of action.  The second cause of action is based on the sums Mr Young paid for cars, either for himself or the various entities he is related to.   It relates to moneys paid by Mr Young without performance of the contract or agreement by Mr Joshi. They are as follows.

[18]     First, there is the 2010 Black Range Rover Sport 3.0 diesel. The first plaintiff paid $62,823 for this.  The vehicle was, however, on-sold with Mr Young’s consent on the basis Mr Young would receive a 50 per cent profit share.  The 50 per cent profit share on the basis of the sale price advised by the defendant to Mr Young is
$23,213.  In total, therefore, in relation to that vehicle, Mr Young claims $86,036.

[19]     Then there are the 2010 Grey Porsche 911 Turbo, 2010 Silver Audi Avant S4 and the 2010 Blue BMW X5 4.4 Twin Turbo vehicles.  The purchase price of those vehicles, again in accordance with the attached schedule, total $155,000.

[20]     Next is a 2005 Hanse 400 Yacht that the plaintiff agreed to purchase from the defendant for $102,000.  The plaintiff paid $60,000 and the parties agreed $42,000, the balance of the purchase price, would be offset from the profits due to the plaintiff from the joint venture.  As noted the profits have not been paid out.  Nevertheless in the statement of claim the plaintiff only maintains a claim for the $60,000 and does not pursue the balance figure.

[21]     There are then four other vehicles:   a Holden HSV Clubsport Automatic

$41,800;   a black Holden HSV GTS VF for $51,733;   a 2010 Toyota Dyna commercial van $8,923.96 and a 2008 black Ford Territory for which the plaintiff paid $7,200.

[22]     The total figure then in relation to the above vehicles and the $60,000 relating to the boat is $410,692.96.

[23]     In addition to that, however, there were two vehicles which were paid for by the plaintiff that Mr Joshi, the defendant, actually supplied.  Unfortunately, however, those vehicles were supplied subject to security interests.   Mr Young was able to negotiate with the finance company to release the securities.  In relation to those two vehicles the plaintiff seeks the sum required to be paid by him to release the vehicles from the finance companies.  In the case of a 2010 BMW X5 it was $72,000 and in the case of a 2012 Holden Commodore SSV Sportwagon it was $45,938.32, in total
$117,938.32.

[24]     Again on the information before the Court I am satisfied that the claims brought by Mr Young in relation to the second cause of action are made out.  He is to have judgment in the sums of $410,692.96 and $117,938.32 together with interest from 31 August 2012 totalling $17,655.42 on the $410,692.96 and $3,877.41 on the figure of $117,938.32.  That has been calculated from 13 November 2012 being the date of the release of the vehicles.

[25]     I turn to the next cause of action, which is the second plaintiff’s first cause of action.  Storepro claims for moneys it paid to the defendant to purchase a number of vehicles, three sets of alloy wheels and Bosch tool sets.   In this case none of the vehicles, with the exception of a Nissan Navara were delivered.  The Nissan Navara was delivered but subject to a security interest and of the three sets of alloy wheels referred to in the schedule attached, only two sets were delivered.  I am satisfied on the evidence before the Court that in relation to these vehicles, wheels, and tool sets, that the second plaintiff is entitled to judgment in the sum of $88,305.  In addition there is the Nissan Navara, which, although supplied, was supplied subject to a security interest.  It cost the second plaintiff $27,500 to retrieve or pay off that security  interest.    When  added  to  the  sum  of  $88,304.63  that  totals  a  loss  of
$115,804.63.

[26]     In addition interest is sought from 31 August on the $88,304.63.  That sum is

$3,798.31.  Interest is also sought from 25 January 2013, the date of the release of the security on the Nissan Navara.  Interest on that totals $666.78 as at today’s date. Judgment accordingly again in accordance with the schedule.

[27]     The last claim is the third plaintiff’s cause of action.  That claim is in relation to a breach of the sales contracts.  The third plaintiff paid the defendant for two vehicles neither of which have been delivered.  The first is a white Toyota Prado in the sum of $21,000.  The second is a 2010 black BMW X5.  The third plaintiff paid Mr Joshi $25,000 for that vehicle.  It was never delivered.  However, Mr Joshi advised the plaintiff it had been on-sold to a third party for $60,000.  He offered, and the third plaintiff was prepared to accept, payment of $45,000 plus a second-hand ute instead of the delivery of the BMW.  The second-hand ute has been handed over but the $45,000 has not.  However, rather than sue for the balance due of $45,000 the third plaintiff only claims $25,000 being the sum actually paid to Mr Joshi for the vehicle.  I accept in the circumstances that that is less than the sum on the evidence the plaintiff would be entitled to pursue the defendant for.

[28]     The third plaintiff is to have judgment against the defendant in the sum of

$46,000 plus interest from 31 August 2012, a total of $1,978.63 as at today’s date.

Judgment

[29]	In total then the judgment is as follows:

First plaintiff’s first cause of action	
$365,750.00 plus interest	
$15,732.26	

First plaintiff’s second cause of action	
$410,692.96 plus interest
$117,938.32 plus interest	
$21,532.83	

Second Plaintiff’s cause of action	
$115,804.63 plus interest	
$4,465.09	

Third Plaintiff’s cause of action	
$46,000.00 plus interest	
$1,978.63	

Total	
$1,056,185.91	
$43,708.81	

[30]	The judgment sums, including interest to the date of judgment are:

First Plaintiff	
$931,646.37	

Second Plaintiff	
$120,269.72	

Third Plaintiff	
$47,978.63	
	
$1,099,894.72	

Costs

[31]	The plaintiffs are also entitled to costs against the defendant of which I fix on a2B basis together with disbursements as fixed by the Registrar.

Judgment to lie

[32]	For the reasons set out above, this judgment is to lie in Court until 4.00 pm on 17 July 2013.

Venning J

FIRST PLAINTIFF’S FIRST CAUSE OF ACTION:  BREACH OF CONTRACT:

Car	First Plaintiff advanced to Defendant	JV Share	

2009 Navy BMX X5 4.8 M-Sport	
$19,500	
$42,500	

2010 Black Mercedes Benz C68 AMG	
$24,000	
$45,000	

2011 White Range Rover Sport 5.0 v8	
$28,000	
$47,500	

2009 Black Audi S4 Avant 3.0SC	
$14,000	
$35,000	

2009 Black BMW X5 4.8 M-Sport	
$17,000	
$40,000	

2009 White BMX X5 4.8 M-Sport	
$17,000	
$40,000	

2010 Black BMW X6 M 4.4TT	
$26,000	
$50,000	

2010 Black Range Rover Sport 5.0 V8
SC	
$21,000	
$50,000	

2010 Black BMW X6 3.0 Xdrive 35i	
$11,500	
$25,250	

New (2012) Black Prado Landcruiser
2.7	
$10,000	
$32,500	

2011 Black Audi Q7 3.0	
$20,000	
$55,000	
		
$462,750	
	
Defendant Paid First
Plaintiff		
	
$30,000

$15,000

$10,000		

Credit towards purchase from defendant of 2005 Hanse 400 Yacht	
$42,000	
$97,000	

Total:		
$365,750	

FIRST PLAINTIFF’S SECOND CAUSE OF ACTION:	BREACH OF SALES CONTRACTS

Car
First Plaintiff agreed to purchase	First Plaintiff
paid defendant	Defendant to pay
First Plaintiff	

2010 Black Range Rover Sport 3.0 diesel	
$50,000 & )
$12,823	)	
$86,036.00 (including the
$62,823)	

2010 Grey Porsche 911 Turbo

2010 Silver audi Avant S4

2010 Blue BMW X5 4.4 Twin Turbo	
$68,500 )

$24,500 )

$24,500 )	
$155,000.00	

2005 Hanse 400 Yacht	
$102,000 less credit of
$42,000	
$60,000.00	

New Black Holden HSV Clubsport
Automatic

New Black Holden HSV GTS VF

2010 Toyota Dyna Commercial Van

2008 Black Ford Territory	
$41,800

$51,733

$5,000 &
$3,923.96

$7,200	
$109,656.96	
		
$410,692.96	

2010 BMW X5	
$23,000

Car delivered but paid
$72,000 to release the
security interest	

$72,000	

2012 Holden Commodore SSV Sportwagon (Alto grey) GFN706	
$45,000

Car delivered but paid
$45,938.32 to
release the security	

$45,938.32	
		
$117,938.32	

Total:		
$528,631.28	

SECOND PLAINTIFF’S FIRST CAUSE OF ACTION:	BREACH OF SALES
CONTRACTS

Car
Second Plaintiff agreed to purchase	Second Plaintiff
paid defendant	Defendant to pay
Second Plaintiff	

Four new black Nissan Navara
Utes	
$72,028	
$72,028	

New Great wall Diesel Ute	
$6,777	
$6,777	

Crown Reachtruck forklift	
$5,000	
$5,000	

Three sets of alloy wheels	
$3,307.91	
(only two sets delivered)

$1,102.63 owing	

Three sets of Bosch tools – PCE Kits	
$3,397	
$3,397	

Total owing:		
$88,304.63	

2011 Nissan Nava (GFN701)	
$19,376	
Car delivered but paid
$27,500 to clear the security interest	

Total:		
$115,804.63	

THIRD  PLAINTIFF’S  FIRST  CAUSE  OF  ACTION:	BREACH  OF  SALES CONTRACTS

Car
Third  Plaintiff agreed to purchase	Third Plaintiff
paid defendant	Defendant to pay
Third Plaintiff	

2010 Black BMW X5 3.0 Xdrive	
$25,000	
$25,000	

New 2012 White Toyota Prado
Landcruiser	
$21,000	
$25,000	

Total:		
$46,000.00