Blair Wright Limited v Robertson DC Wellington CIV-2008-085-1515 [2011] NZDC 1197 (14 July 2011)

Last Updated: 9 January 2020

IN THE DISTRICT COURT AT WELLINGTON

CIV-2008-085-1515

BETWEEN BLAIR WRIGHT LIMITED Plaintiff

AND ADAM ROBERTSON First Defendant

AND DAYTONA 5 SYSTEMS LIMITED Second Defendant

Hearing: 28 and 29 March 2011

Appearances: Mr G E Davenport for plaintiff Mr S R Mitchell for defendants

Judgment: 14 July 2011

JUDGMENT OF JUDGE T J BROADMORE

Introduction

[1] The plaintiff, Blair Wright, is a well known Wellington company which operates a panelbeating business conducted through a head office and three operating sites in the city. In 2006, it purchased a computer software package from a company called Quote Plus New Zealand Limited1. Mr Robertson, who is a panelbeater by trade and who operates a panelbeating business in Auckland, was previously the sole director of QPNZL. Later, he established Daytona 5 Systems Limited.

[2] Blair Wright became dissatisfied with the performance of the software purchased from QPNZL, and sought to invoke a guarantee included in the agreement for the sale and purchase of the software. Eventually, it applied for summary judgment for $47,634 against QPNZL. In a judgment of Judge Harrop dated 17 March 2008, this Court granted the application for summary judgment. However, it

1 I will refer to the software package as Quote Plus and the company as QPNZL

BLAIR WRIGHT LIMITED V ADAM ROBERTSON DC WN CIV-2008-085-1515 [14 July 2011]

turned out that QPNZL was insolvent. Blair Wright gained nothing from its judgment.

[3] Undeterred, Blair Wright commenced this proceeding against Mr Robertson and Daytona 5. The claim proceeded on the following basis:

1. Mr Robertson is personally guilty of misleading and deceptive conduct breaching s 10 of the Fair Trading Act, and, pursuant to s 43 of that Act as applied in authoritative cases under the Act, is personally liable for the consequences of such conduct.
   
2. Mr Robertson is personally liable under s 13 of the Act for making false or misleading representations in relation to the software.
   
3. Mr Robertson is personally liable under s 13 of the Act for making false and misleading representation as to the standard and quality of the services to be provided to Blair Wright under the contract for the supply of the Quote Plus software package.
   
5. Mr Robertson is personally liable under s 9 of the Act for misleading and deceptive conduct after the delivery of Judge Harrop’s judgment by making false representations as to the financial position of QPNZL, its intentions concerning an appeal against the judgment, and by continuing to sell the Quote Plus package through Daytona 5.
   
6. Entirely separately from causes of action arising under the Fair Trading Act, Blair Wright alleges that Mr Robertson was a party a collateral contract with Blair Wright, the basic content of which was that if Blair Wright would agree to purchase the software from QPNZL, Mr Robertson would guarantee the software’s performance.
   
7. Blair Wright is entitled to relief under s 348 of the Property Law Act (compensation for disposition intended to prejudice a creditor, or without receiving reasonably equivalent value in exchange). The

basis of this claim is that assets of QPNZL were improperly transferred to either Mr Robertson or Daytona 5 without QPNZL receiving any countervailing benefit.

Issue

[4] It will be seen that the core factual inquiry to be made concerns Mr Robertson’s personal role in Blair Wright’s purchase of the software, and the core legal inquiry concerns the existence of personal liability on his part under the Fair Trading Act.

Agreement

[5] At the stage of Judge Harrop’s judgment, the major issue between the parties concerned the wording of a guarantee included in the QPNZL quotation. Blair Wright contended that the guarantee was in the terms included in a facsimile of 23 March 2006 from QPNZL reading as follows:

If after 6 months BWG is not satisfied with Quote Plus – the software will be uninstalled and 100% refund on the software.

[6] QPNZL argued that the guarantee was conditional upon several matters, including that QPNZL should have had the opportunity to and have exhausted all opportunities to resolve any issues. The conditions for which QPNZL had contended had been set out in an earlier quotation. In his judgment, Judge Harrop concluded that the contract between the parties included only the unconditional guarantee. That was the basis on which he found QPNZL liable, because after six months Blair Wright was legitimately dissatisfied with the software.

[7] The effect of the contract, and the outcome of the summary judgment proceedings against QPNZL, is not challenged in this proceeding.

Credibility

[8] At the hearing, Mr Davenport, counsel for Blair Wright, launched a detailed attack on Mr Robertson’s credibility, and followed this up in his closing submissions

with a detailed analysis of Mr Robertson’s evidence and relevant documents. Based on this evidence and analysis, Mr Davenport submitted that Mrs Wright’s evidence was clearly to be preferred to that of Mr Robertson.

[9] Although Mr Davenport was entitled to explore the issue of credibility vigorously, which he did most effectively, I am bound to say that the direct accusations of perjury on Mr Robertson’s part, which he made from time to time, were not permissible in my view. That is because counsel was impliedly, and more than once expressly, requiring the witness to admit in the course of his evidence that he had committed the crime of perjury. But Mr Robertson, like anyone, was entitled to the benefit of the common law privilege against self-incrimination and/or the statutory privilege contained in s 60 of the Evidence Act. In either case, under s 62 of the Act, Mr Robertson was entitled to advice about the privilege; and under s 85 I had the power to direct that Mr Robertson was not obliged to answer on the grounds of impropriety or unfairness. Drawing attention to the inconsistencies in Mr Robertson’s evidence, or between his evidence and documents before the Court, would have been sufficient for counsel’s purposes.

[10] Notwithstanding those observations, Mr Davenport’s cross-examination and submissions left me in no doubt but that there were significant inconsistencies in Mr Robertson’s evidence, so that major elements of it were unreliable at best, misleading in many respects, and arguably untruthful as to certain matters. I do not need to analyse the position further, because I am left in no doubt, also, that, wherever there are discrepancies between Mr Robertson’s evidence and other evidence (principally from Mrs Wright), I should prefer that other evidence.

Mr Robertson’s role

[11] Mr Robertson had become acquainted with Quote Plus by chance. As the operator of a panelbeating business in Auckland called Accidento Limited, he had been looking for an up-to-date estimate, accounting, and body shop management system. He came across Quote Plus, which had been developed by a Melbourne company, DNS Technology Pty Ltd. It had been developed exclusively for the panelbeating industry. After purchasing the software and using it in Accidento, he

was so impressed with it that he obtained the New Zealand agency from DNS and began to market it to the panelbeating industry in this country.

[12] Mr Robertson marketed the software through two companies successively – QPNZL and Daytona 5. In addition, he continued to operate the Accidento business. Apart from him, the QPNZL /Daytona 5 business did not employ anybody else. He was the sole director and shareholder, and neither company maintained an office. It seems that from time to time QPNZL received administrative help from Accidento staff.

[13] It seems that the business had a fair measure of success: there is no reason to doubt Mr Robertson’s assertion that by the time Blair Wright purchased its software, he had already sold the Quote Plus package to 45 companies in New Zealand. Nevertheless, I infer that a sale to Blair Wright would have been significant for QPNZL, because it was a long established and significant player in the Wellington market.

Pre-contractual dealings

[14] Against that background, it is now necessary to review the evidence of oral and written dealings between Blair Wright and Mr Robertson. So far as Blair Wright is concerned, those dealings essentially involved Margaret Wright, the managing director. Mrs Wright was the daughter of Mr Harold Blair, who founded the business in 1976, and is the wife of Tom Wright, who also works in the business. At almost every level, the accounts given by Mrs Wright and Mr Robertson are in conflict.

[15] In essence, Mrs Wright says that she got to know of the Quote Plus system through other panel shop owners. She contacted Mr Robertson in 2004 to make inquiries about the system. Mr Robertson maintains that he first met Mrs Wright in 2002 at a trade show. I do not think anything turns on this. I accept that it is quite possible that Mrs Wright and Mr Robertson did meet at that time, but nothing evolved from it.

[16] At all events, over the next couple of years, the parties were in frequent contact about the prospect of Blair Wright purchasing Quote Plus.

[17] The style of their communications is of interest.

[18] Despite Mr Robertson’s assertions to the contrary, I accept that e-mails from Mr Robertson’s side were indifferently from several e-mail addresses – [e-mail], [e-mail] and [e-mail]. Mr Robertson maintained that the address [e-mail] was used only to send Mrs Wright actual reports from Accidento’s own systems, and that he might have used the address [e-mail] by mistake. But a review of the e-mail exchanges between the parties shows, as I have said, the use of all three addresses. (There were very few examples produced of emails from the QuotePlus address.) I do not think that Mr Robertson paid any particular heed to the address from which he was sending e-mails – as he said in his witness statement, he had several addresses running from his laptop. I think that he simply used whatever address came up, or what he was using at the time, without any thought to its significance.

[19] There is nothing in the e-mail exchanges viewed in isolation that indicated that Mr Robertson was intending to act on behalf of anyone other than himself, and in particular on behalf of a company called QPNZL – or indeed any company at all. At no stage did Mr Robertson seek to correct any impression given by use of the Accidento e-mail addresses, or advise Mrs Wright that he had used them by mistake.

[20] Similarly as to telephone numbers, Mr Robertson asserted that he had never made his personal telephone number available to clients; but I accept Mrs Wright’s evidence that she contacted Mr Robertson on the cellphone number printed on his Accidento business card; and that she had also used that number to contact Mr Robertson when he was on holiday with his family.

[21] Faxes carried a header labelled “Accidento”

[22] In my opinion this evidence supports the view that Mr Robertson did not regard as significant the distinction between his own interests and those of the (at

least) two companies he controlled. It seems that he had accounts prepared for his various entities, and no doubt treated them separately for tax purposes. But he simply was not concerned to distinguish their separate identities in his day-to-day dealings.

[23] As with all small private companies, that is understandable. I have already noted that, in relation to QPNZL, Mr Robertson was a one-man band. In that situation, it is quite customary, in conversation, not to distinguish between the proprietor and the business. I expect that many small business people in New Zealand would regard it as confusing and unnecessarily formalistic for a small business proprietor to keep on talking about “the company” rather than him or herself; but the legal implications of that cannot be overlooked. In particular, when it comes to a question of untangling contractual arrangements, it is necessary to scrutinise them closely to see who it is that is undertaking an obligation in the particular circumstances.

[24] I accept, as Mr Mitchell put it in his closing submissions, that people set up limited liability companies for a reason – self evidently, to limit their liability. But to gain and retain that privilege, they must ensure that their companies operate as separate legal entities, at arm’s length from them. One of the purposes of the Companies Act 1993, as stated in its long title, is

To define the relationships between companies and their directors, shareholders, and creditors

Section 25 provides for personal liability on the part of any person who signs a document on behalf of a company if the company’s name is incorrectly stated and the company fails to meet the obligation. Section 194 requires companies to keep proper accounting records.

[25] All of these provisions, and no doubt others, emphasise that those who allow the boundaries between their personal interests and those of the companies they control to become indistinct do so at their peril.

[26] Further, as I shall discuss below, the Fair Trading Act can impose personal liability on individuals connected with companies even when the company is unequivocally the contracting party.

[27] I accept also that Mr Robertson has asserted that, when he met Mrs Wright at a trade association conference in 2004, he was manning a stand displaying Quote Plus advertising material and information pack. But it is not clear whether these information packs spelt out the corporate structure of QPNZL, or that Mrs Wright took one away with her. An example of the information packs was not produced. Mrs Wright asserts, but Mr Robertson denies, that the existence of the limited liability company did not come to light until “well into the negotiations”. Mrs Wright’s view is supported by the written material in the Agreed Bundle – see immediately below.

The approach to the agreement

[28] The e-mail exchanges between the parties record a slow build up towards a formal agreement. It is not clear to me that all e-mails between the parties are included in the agreed bundle, but I have no doubt but that any e-mails expressly from QPNZL would have been included because of their significance. Even up until 15 November 2005, when Mr Robertson forwarded a pricing option described as “Option 2”, the e-mail address used by Mr Robertson was the Accidento one and there was no mention of QPNZL or any other company. The first mention I can see of QPNZL is in a variation of Option 2 sent to Mrs Wright (again from [e-mail]) on 7 December 2005. That proposal, which I have already referred to in [6] above, refers to QPNZL having the opportunity to put right any shortcomings and to the company being involved in other conditions pertaining to the transaction. But an alternative proposal (“Option 2 ammended.doc”) sent on the same day – which seems to have evolved into the one adopted as the contract in March 2006 - does not refer to QPNZL by name2.

2. At first sight, it appears from the structure of the Agreed Bundle that Option 2 was sent to Mrs Wright at 2.08 pm, after Option 2 amended was sent at 12.45 pm. That is inconsistent both with the word “ammended” and with Mrs Wright’s evidence (see [49] below). But the 2.08 pm email is captioned “Option 1: software and hardware only”. So that email likely covered a further option not before the Court.

[29] In fact it was not until the contract was concluded in March 2006 that there is any unequivocal written reference to QPNZL. This is in the quotation dated 23 March which was accepted by Blair Wright. It relevantly reflects the “Option 2 ammended.doc” just referred to. The quotation is on QPNZL letterhead (but transmitted from Accidento’s facsimile) and refers several times to Quote Plus. But it is not until the signature that Mr Robertson signs as a director of “Quote Plus New Zealand Limited”: all other references in the quotation, including the letterhead logo, omit the word “Limited”. Mr Robertson narrowly avoided a breach of s 25 of the Companies Act and personal liability on that basis alone.

[30] In a sense, these exchanges, culminating in the agreement to which I have just referred, reflect a pattern of dealing which would be typical of a one-man company. The negotiation, marketing and the like, carried on informally through oral and e-mail exchanges, would be conducted using “I” and “me” language – to continually refer in such exchanges to the company and what it could do would sound odd in that context. But it would be a normal expectation that, when it came to the point of formality, the deal would be struck through a company if there was one and that the financial aspects of the transaction would go through the books of the company rather than the person fronting it.

[31] I do not think that anyone dealing regularly with small businesses would expect anything different. Mrs Wright’s own language in the e-mails leading up to the agreement similarly uses “I” or “we” language. I very much doubt that Mrs Wright would have been surprised to find a company name popping up at the last moment when the final quote came in. She already knew from Mr Robertson’s business card that he was the “director” of the Accidento business, granted that the card does not describe Accidento as a limited company, so that, had she given thought to the issue at the time, she might reasonably have concluded that, whatever business developed between her and Mr Robertson, a limited liability company would have been involved.

[32] (Equally, however, as matters stood at all times up until 23 March, it would have been no surprise if Mr Robertson had turned out to be a sole trader trading as Quote Plus New Zealand.)

[33] What is striking about this case, as I discuss below, is the extent to which Mr Robertson, through his language and conduct, laid emphasis on his personal position. Throughout the negotiations, the Quote Plus software was personified by Mr Robertson himself. The name and role of any company with which he might be associated was far from explicit. This emerges from an examination of what precisely Mr Robertson said by way of reassurance or warranty as to the performance of the software.

[34] In his closing submissions, Mr Davenport, counsel for Blair Wright, extracted all the relevant evidence.

[35] Mr Davenport first summarised the relevant aspects of Mrs Wright’s brief. She identified five separate occasions on which she maintained that Mr Robertson had given a personal guarantee. However, she also made it clear, and I accept, (as indeed, to a considerable extent, did Mr Robertson) that analogous statements were made throughout the course of the negotiations. That this was the case comes through vividly in Mr Mitchell’s cross examination of Mrs Wright at T 59-60.

[36] Mrs Wright said that in late 2004 in the course of a telephone conversation, Mr Robertson told her “you will love the software, I personally guarantee it ...”. She said that he said the same sort of thing in the course of numerous telephone calls in 2005. Mr Robertson said that he probably did say that Mrs Wright would love the software, but denied personally guaranteeing it. Mrs Wright also reported Mr Robertson as saying to her in Wellington in September 2005, “Mate, in all honesty, I guarantee it. I’m using it myself and it has done so much for my business

...”. As to that, contrary to the position taken in his written brief, Mr Robertson accepted in cross-examination that he did say that he would guarantee the software, but he did not regard that as a “personal” guarantee.

[37] The third assertion which Mrs Wright relied on was a statement which she maintained was made to her in or around October 2005 along the following lines:

Mate – I personally guarantee it. I will give you a refund if you are not 100% happy with Quote Plus after using it for six months, but you will be!

[38] As to that, Mr Robertson expressly denied using the word “personally”, and denied the passage about a refund if she was not 100% happy.

[39] Next, Mrs Wright said that when she visited Mr Robertson’s premises in Auckland in March 2006, she had probed the issue of the ability of the software to work across all Blair Wright’s sites. She said that Mr Robertson reassured her about this, saying something along the lines that –

We can link the four sites – they’ll all work together ... don’t be concerned about Version 10, I guarantee we’ll get this working right for you ...

[40] Mr Robertson said that he did not recall discussion about Version 103, or using the “working right” words. But he was notably hazy about the details of this conversation and had actually completely forgotten that Mrs Wright had made that visit.

[41] Finally, Mrs Wright maintained that, at the same time, Mr Robertson had told her that he was “passionate” about Quote Plus, was “committed to Quote Plus”, and “would stake his life on it”. Mr Robertson accepted that he had said that he would have made the first two comments, but not the third. He went on, however, to say “I’m not saying that I didn’t say that to Margaret though. That was a comment I had made on several occasions. I just don’t honestly recall saying that to Margaret at that point in time”.

[42] Mrs Wright’s evidence was corroborated by Mr Stephen Jobson, Blair Wright’s Group Operations Manager. He described Mr Robertson’s visit to Wellington in September 2005, in which:

He came across as someone full of confidence and assurances about the software. I can recall him personalising his promise. He said on that day “I guarantee it”.

Mr Jobson also said that Mr Robertson had promised that Version 10 would be able to amalgamate the different sites and that in the meantime he would install the

3. A proposed upgrade of the existing software said by Mr Robertson to be under development by DNS in Australia. Mrs Wright later discovered from DNS that the work on writing the software for Version 10 had not even then begun (April 2007).

software at each site. That seems to me to imply some kind of interim workaround – see [71] below.

[43] Mr Davenport put it to Mr Robertson that he had said in publicity material about Quote Plus that “I will stake my left one on it”.

[44] Mr Davenport also referred to a letter Mr Robertson had written to Blair Wright in February 2007 (not on QPNZL letterhead) in which he referred to “my disappointment that you have become so untrusting of my commitment to your company and want to take this opportunity to reinforce my commitment to the Blair Wright Group” (emphasis added). There is an interesting contrast in the letter between Mr Robertson’s continuing use of first person singular language in respect of his own position, and the reference to Blair Wright as a separate corporate entity. In my opinion, this passage further reveals the extent to which Mr Robertson thought of himself, personally, as the prime actor in dealing with Blair Wright – and probably generally.

[45] Some of the content of these observations attributed to Mr Robertson was correct. I do not doubt that Mr Robertson was using Quote Plus himself, and that he had found it beneficial for his business. Nor do I doubt that Mr Robertson was passionate and committed to Quote Plus. Nor that Mr Robertson genuinely thought that Blair Wright would “love the software”. As Mr Mitchell, counsel for Mr Robertson, put it in his closing submissions, these remarks were no more than expressions of opinion about the quality of the software system and of Blair Wright’s likely response to it if it purchased it.

[46] But there is a strong element in the statements reported by Mrs Wright and corroborated by Mr Jobson, indicating not just Mr Robertson’s personal enthusiasm about the product, but also that, because of that enthusiasm and personal satisfaction, he would guarantee it. (The tenor of his statements is analogous to that of the defendants in Specialised Livestock Imports Limited v Borrie [2002] NZCA 62: “Importation4 will undoubtedly be successful”.) Whether or not he used the word “personally” - and I am satisfied on balance that he did use that word – I consider

4 Of ostriches – see below.

that the language he used indicated that he personally was guaranteeing the software. Even accepting what I have said earlier about the way small businessmen portray themselves and their companies, in this case Mr Robertson placed himself very much in the forefront. There was a heavy emphasis on his own personal identification with and commitment to the software. His conversation and correspondence was all about his own view of its virtues, what he personally would do to make it work, and his own eagerness to guarantee it.

[47] Objectively, therefore, the meaning of the words which I find he used is that he was prepared to, and did, personally guarantee the performance of the software in terms to be identified more precisely below. And that he made representations about its performance and indeed his own performance, again in terms to be more extensively discussed below.

[48] As to what Mr Robertson’s guarantee amounted to, I refer to the specific statement asserted by Mrs Wright and set out in [37] above. That statement is along the lines that he would give Blair Wright a refund if it was not 100% happy with Quote Plus after using it for six months.

[49] Those words reflect the wording of the guarantee contained in the contract ultimately concluded between QPNZL and Blair Wright Group evidenced by the QPNZL letter of 23 March 2006. The wording is carried down from a quotation Mr Robertson forwarded to Mrs Wright at 12.45 pm on 7 December 2005 under the heading “Option 2 ammended.doc”. The agreed bundle contains an “Option 2” document in the same overall terms, but with the more detailed and conditional guarantee for which QPNZL contended at the summary judgment hearing. The change must have arisen from Mrs Wright’s reaction to receiving the “Option 2” email: see Mrs Wright’s cross-examination. At T54/27 to T55/2, the following exchanges are recorded:

17. But you still negotiated the terms of the guarantee that Quote Plus gave you?
    

A. I didn’t negotiate the terms of –

Q. Well you didn’t accept his proposal for it.

A. He said that what he was going to write down. I said that was fine. When he sent it back he put some conditions and I said, “that’s not what you told me”. So without any further ado, he just scrubbed them out.

[50] The significance of this for the position of Mr Robertson is that it relates the wording of the 23 March contract back to December 2005 and Mr Robertson using orally in earlier discussions with Mrs Wright the words which she asserted he had said to him on a personal basis in October 2005 – at a time when she was unaware of QPNZL’s existence – see [18] – [19] above. It is also relevant to observe that Mr Robertson adverted to QPNZL for the first time in the “Option 2” proposal, its existence having been completely unknown to Mrs Wright previously: see [22] –

[24] above; but there is no reference to that company in the amended document.

[51] On the balance of probabilities, therefore, I conclude that Mr Robertson had been using wording along the lines set out in [37] in the course of negotiations with Mrs Wright for some little period, but that when he came to write them down he included conditions. He then repented of that in the face of Mrs Wright’s opposition based on her insistence (which he must have bowed to) that the wording was “not what you told me”.

Fair Trading Act causes of action

Introduction

[52] Mr Davenport placed reliance principally on the Fair Trading Act in arguing for personal liability on Mr Robertson’s part. That was because, as he submitted, the Act and jurisprudence around it had the effect of imposing personal liability on Mr Robertson in the circumstances.

[53] Blair Wright pleaded four separate causes of action under the Fair Trading Act. Only the first relates to the guarantee issue: the others raise the separate issues of false or misleading representations as to the characteristics and suitability of the software, to the provision of services in respect of the installation of the software and ongoing advice as to its operation, and to Mr Robertson’s statements concerning the financial position of QPNZL. Each cause of action must be considered separately,

but there are some preliminary issues arising under the Act which are common to the first three causes of action, which I will now address.

Did Mr Robertson have a personal liability under the Act?

[54] The starting point for liability under the Act is that the person alleged to be liable must be shown to be acting “in trade”. The question is whether a director of a company which is itself engaged in trade can be treated as being himself engaged in trade, and whether a director may also be personally responsible for false or misleading conduct, even though he or she engages in such conduct on behalf of the company.

[55] Section 45(2) of the Act provides as follows:

45 Conduct by servants or agents

...

(2) Any conduct engaged in on behalf of a body corporate—

• (a) By a director, servant, or agent of the body corporate, acting within the scope of that person's actual or apparent authority; or
  
• (b) By any other person at the direction or with the consent or agreement (whether express or implied) of a director, servant, or agent of the body corporate, given within the scope of the actual or apparent authority of the director, servant or agent—
  

shall be deemed, for the purposes of this Act, to have been engaged in also by the body corporate.

(The important word is “also”.)

[56] Mr Davenport cited several cases in which directors have made personal representations or endorsements in respect of their companies’ goods or services and were held both to be acting “in trade” and to be personally liable for the representations.

[57] In Megavitamins Laboratories (NZ) Limited v Commerce Commission (1995) 6 TCLR 231, the principal shareholder and director of Megavitamins, a Dr Stewart,

had made representations and given personal endorsements as to the efficacy of vitamin tablets sold by the company. These representations and endorsements were reproduced in brochures which expressly recorded that they had been “researched and compiled by” Dr Stewart. (Representations and endorsements appearing on the products themselves were not directly attributed to him.) As Tipping J noted at page 245 –

Dr Stewart obviously wanted his personal endorsement of and association with the tablets to be regarded as a selling point. He cannot, in the same breath, disavow personal responsibility for the contents of the brochure. In short, he represented personally, and as a principal (as opposed to a secondary party) represented to readers of the brochure that the vitamin tablets were of the stated composition.

[58] That passage strongly resonates with the facts of the present case. Mr Robertson emphasised his personal endorsement of and association with the software – and in his case his positive experience of it – as a selling point, and cannot disavow personal responsibility for that endorsement.

[59] Moreover, Tipping J drew attention to the word “also” in s 45(2) of the Act, and concluded that it –

... indicates that the relevant conduct on the part of a director ... of a company ... can be regarded, in spite of the agency, as that person’s own conduct as well as conduct for which the body corporate is liable.

Was Mr Robertson acting “in trade”?

[60] As to acting “in trade”, the Court of Appeal later held, in Specialised Livestock, that the proprietors of a company who had made representations as to the worth of investing in ostriches and ostrich eggs were acting “in trade” even though the business was being conducted through a company. The Court of Appeal agreed with the High Court Judge that –

... the confinement of the prohibitions in ss 9 and 13 to conduct “in trade” is not intended to focus on the general trading status of those acting contrary to its terms, and that status is not of itself determinative of whether persons are “in trade” in terms of ss 9 and 13 in the course of their activities on behalf of the company. The qualification is rather directed to the nature of the conduct said to be misleading or deceptive or otherwise in breach of (the Act).

[61] Put another way, the representations were made for the purposes of trade and were made personally by those involved; and those persons were to be held accountable for them. As has been said elsewhere, the Act is about conduct, not contract.

[62] Again, these words strongly resonate with the situation in this case.

[63] The approach indicated by these cases both as to personal liability and the requirement for the conduct to be “in trade” has recently been endorsed by the majority of the Court of Appeal in Body Corporate 202254 v Taylor [2008] NZCA 317; [2009] 2 NZLR 17: see the discussion at [65] – [87].

[64] With these considerations in mind, I now turn to consider the first cause of action invoking the Fair Trading Act.

First cause of action – misleading and deceptive assurances as to Mr Robertson’s guarantee of a refund.

[65] The pleading in respect of this cause of action asserts a breach of s 10 of the Act. However, I think that the circumstances fit more obviously within either s 9, concerning misleading and deceptive conduct generally, or s 13(i), concerning representations as the existence of a warranty or guarantee as to the possible supply of goods or services. I will proceed on that basis, as I am confident that there is no prejudice to Mr Robertson in so doing: there would have been no change to the evidence led or arguments raised on his behalf.

[66] I have already held that, on one occasion towards the end of 2005, Mr Robertson said to Mrs Wright that he would personally guarantee the software and would give Blair Wright a refund if the company was not 100% happy – see [47] and [48] above. I have also pointed out that the amended option 2 document of 7 December 2005 contained the same wording and did not refer anywhere to QPNZL. There was therefore no reason not to take that document itself as including the offer of a personal guarantee. It is also the case that Mr Robertson did not deny having given a personal guarantee when Mrs Wright put that to him in a telephone conversation on 14 July 2007.

[67] I am satisfied that Blair Wright purchased the software relying substantially on Mr Robertson’s assurance of a personal guarantee. I refer particularly to Mrs Wright’s evidence in re-examination at T 71: Blair Wright would not have gone ahead without the guarantee. Mr Robertson’s assurance was misleading within s 9 of the Act, because circumstances arose which called for the guarantee to be honoured, but it was not, either by QPNZL or Mr Robertson. Alternatively and for the same reasons it was false or misleading within s 13(i).

[68] Neither in the letter of 23 March 2006 which evidences the contract, nor elsewhere, did QPNZL or Mr Robertson attempt to exclude prior representations or warranties, the letter contains no “entire agreement” clause or similar exclusionary clauses5, and the authority of Mr Robertson to make representations and give warranties as to the software is nowhere denied.

[69] Even if, contrary to my view, Mr Robertson did not expressly use the word “personal”, he would be personally liable on the basis of the analysis in [55] – [59] above. His personal liability arises not merely because I have concluded that he gave personal undertakings but because, as the alter ego of QPNZL and in the light of the cases I have referred to, the law imputes personal liability to him. That is true also in respect of the second and third causes of action, in which, as I have already observed, his position is very similar to that of Dr Stewart in the Megavitamins case.

Second cause of action – misleading representations in relation to goods

[70] This cause of action relies on s 13(a) and (e) of the Act. Blair Wright asserts false or misleading representations by Mr Robertson as to the standard, quality, performance characteristics and benefits of the software. The key evidence in support of it is the representation allegedly made by Mr Robertson as to linking the Quote Plus system across Blair Wright’s four sites. I set this out at [33] above, and repeat it now for convenience:

We can link the four sites – they’ll all work together ... don’t be concerned about Version 10, I guarantee we’ll get this working right for you

5 Which, I acknowledge, may or may not have been effective in terms of the Fair Trading Act.

[71] What this representation seems to reflect is proposed further development of Quote Plus by DNS in Australia along two separate lines – a large number of improvements expected to emerge from a planned complete re-writing of the software under the name Version 10; and a “workaround” to be implemented in order to allow the use of Quote Plus in a multi-site environment. These developments are noted in the DNS email of 10 October 2005 referred to in footnote

[2] above. So what Mr Robertson’s representation meant is that, by deploying the “workaround”, he would be able to get Quote Plus working across all four Blair Wright sites.

[72] I am satisfied that Mr Robertson made the statement.

[73] The ability of the software to work across all of Blair Wright’s sites was crucial to the company. Mr Robertson knew this. It was integral to Blair Wright’s decision-making that it be satisfied about it. Had Mr Robertson not given that express assurance, I am satisfied that the company would not have gone ahead and agreed to purchase the program. Mr Robertson copied the DNS email of 10 October 2005 to Blair Wright on 25 January 2006, thus confirming that Mrs Wright had been chasing that aspect up. The assurance itself was given in the course of a visit Mrs Wright made to Auckland only a matter of days before the contract was finally concluded, again indicating its importance to Blair Wright. And the terms of the assurance are consistent with the content of the DNS email.

[74] But Blair Wright soon discovered that Quote Plus could not be made to work as an integrated system over its four sites.

[75] Whether the workaround had been included in the software supplied to Blair Wright under the contract is unknown to me. But, beyond that, Blair Wright experienced many problems with the software, identified in a lengthening list of queries forwarded to Mr Robertson. His responses are of interest. Sometimes he gave advice as to how the queries should be resolved, and the advice was effective. Predominantly, however, his responses are variants on “I’m working on it”, “the software doesn’t do that”, “that would be a good feature and we will pass it on to DNS for consideration as an upgrade”, or “you need some more hardware/tweaking

of software”. And, by the end of January 2007, there were a large and increasing number of significant concerns still unresolved. In those circumstances, Blair Wright was entitled to act on the basis that their concerns would never be resolved.

[76] Even by the end of January 2007, therefore, the four sites were not working together, and Mr Robertson had not made the software “work right” for Blair Wright. It follows that his representations about that had turned out to be false and misleading as to the standard, quality, performance characteristics and benefits of the software. It further follows that those representations breached s 13 of the Fair Trading Act. They were probably misleading in terms of s 10 as well.

Third cause of action - misleading representations in relation to services

[77] This cause of action invokes s 13(b) of the Act, concerning representations as to the quality of services. The representation at the heart of the claim under the second cause of action applies to this cause of action as well, and no further discussion is required. The services are the getting of the software to “work right”. Mr Robertson signally failed to achieve that. Section 11 probably also applies.

Fourth cause of action – misleading and deceptive conduct as to the financial status of QPNZL after summary judgment

[78] Blair Wright asserts under this cause of action that, after its application for summary judgment against QPNZL succeeded, Mr Robertson’s solicitors represented to its solicitors that the company was insolvent, that it was intending to appeal against the summary judgment, and that it was no longer in the business of selling the Quote Plus software.

[79] The representation as to insolvency appears to have been correct. On the other hand, it was established that Mr Robertson had informed the Collision Repair Association (but not Blair Wright) that QPNZL was intending to appeal – but it did not in fact do so. It was also established that QPNZL continued to derive revenue in connection with the software, both for new sales and ongoing support. Mr Robertson said in evidence that he had ceased to promote the software but sold it to people who approached him about it.

[80] Whatever may be the rights and wrongs of all this, it is not easy to see that it induced Blair Wright to do or omit to do anything, or that it caused the company loss. Mr Davenport did not press this cause of action in his closing submissions and it is not necessary for me to reach a conclusion on it.

Collateral contract

[81] As a fifth cause of action, Blair Wright relies on the facts and circumstances as set out in [28] – [44] above to establish a collateral contract between Blair Wright and Mr Robertson. Mr Davenport submitted that the circumstances gave rise to such a contract along the lines that, if Blair Wright would enter into the supply contract with QPNZL, then Mr Robertson would personally guarantee the software in the terms which I have just discussed.

[82] It is true, as Mr Mitchell argued, that Blair Wright could not point to any specific exchange between Mr Robertson and Mrs Wright in which they articulated their particular sides of that bargain. However, that does not matter if, objectively, in the words of Cooke J in Meates v Attorney General [1983] NZLR 308 at 377, “the dealings show a concluded bargain”.

[83] The Court of Appeal elaborated on this proposition in the later case of Paper Reclaim Limited v Aotearoa International Limited [2006] NZCA 27 at [52], in the following terms:

It does not particularly matter whether the parties’ understanding was reached at one meeting, two meetings, or over time. What we are clearly satisfied about is that, at least by the 1990s, the parties’ dealings, when viewed objectively from the point of view of reasonable persons on both sides, allow only for a finding that a concluded bargain had been reached. ...

[84] It remains necessary for the plaintiff to show what that bargain was. In this case, the content of the bargain is as set out in [37] above, illuminated by the other exchanges between the parties which I have set out elsewhere in this judgment. As to its meaning, it is clear that at no time did Mr Robertson give a personal guarantee that QPNZL would meet its obligations. Rather, his statements amounted to a stand- alone guarantee to Blair Wright that he would personally refund the purchase price if the company was not 100% satisfied. The consideration was Blair Wright’s purchase

of the software: that consideration is obviously implied, and was provided either when Blair Wright signed and returned the 23 March letter (28 March 2006), or when it completed payment shortly after that.

[85] As I have already concluded that Blair Wright would not have purchased the software if the guarantee had not been offered, the fact of purchase is evidence that a concluded bargain had been reached.

Disposition of QPNZL assets justifying relief under s 348 Property Law Act

[86] Blair Wright’s sixth cause of action is entirely different. It calls attention to the implications of QPNZL’s financial accounts and of Mr Robertson’s setting up of the second defendant, Daytona5 Systems Limited. It maintains that, after the summary judgment, Mr Robertson was instrumental in transferring assets out of QPNZL to Daytona or to himself.

[87] Section 348 of the Property Law Act 2007 include a group of sections (contained in subpart 6 of Part 6) dealing with the power of the Court to set aside dispositions that prejudice creditors. Section 344 helpfully states the purpose of the sub-part in the following terms:

The purpose of this subpart is to enable a court to order that property acquired or received under or through certain prejudicial dispositions made by a debtor (or its value) be restored for the benefit of creditors (but without the order having effect so as to increase the value of securities held by creditors over the debtor's property).

[88] The subpart goes on to make provision for persons prejudiced by dispositions to apply to the Court for orders reversing dispositions, leading to the prospect that money or property involved in prejudicial dispositions will be restored to the party making the disposition, or to the Official Assignee, liquidator, or other analogous party concerned in respect of the party making the disposition.

[89] In this case, Blair Wright points to evidence derived from the accounts of QPNZL and Daytona 5 and evidence elicited from Mr Robertson that, after QPNZL became insolvent, it received payments from various sources and, out of the monies so received, made payments to others. The incoming payments include contractual

support charges from persons who had purchased the Quote Plus software, sums which are of a size which probably indicate a sale of software, and payments from Accidento. The outgoing payments include payments to Accidento and salary payments to Mr Robertson.

[90] Further, the transfer of the Quote Plus business to Daytona 5 seems to have been made without consideration, as was the apparent transfer of DNS in Australia of a number of support contracts.

[91] On the face of it, the payments out of QPNZL to other parties – primarily Mr Robertson or interests associated with him – preferred such parties to the detriment of Blair Wright as a significant creditor of the company. As a result, there is clear evidence of a disposition which could be the subject of orders under subpart 6.

[92] I do not think it is appropriate for the Court to make such orders in the context of this proceeding. There are several reasons for this.

[93] First, as Blair Wright accepts, the Court has no power to order any payments to be made to Blair Wright itself. The amounts, or property involved in any dispositions to be reversed, must be used for the benefit of all creditors. Such an exercise can best be done in the context of a liquidation of QPNZL.

[94] Secondly, the Court is not in any position to carry out the investigations and accounting required in respect of the large number of transactions revealed by the company’s records with a view to ascertaining whether they amounted to dispositions which should be reversed.

[95] Thirdly, it is only upon a liquidation, or some analogous process, that the true position of QPNZL can be ascertained, both by a professional review of the company’s accounts and other records and by calling for proofs of debt and the other usual processes of a liquidation. In particular, I have no idea as to whether other major creditors might emerge who, like Blair Wright, have been ignored in the preparation of the accounts.

[96] In summary, therefore, although I accept that Blair Wright has made out a credible case that QPNZL made dispositions which could be the subject of orders under subpart (6), the company should pursue the issue in the usual way by putting QPNZL into liquidation and using its influence as a major creditor of the company to ensure that proper investigations are made.

Remedies and outcome

[97] In the light of the conclusions I have reached, Blair Wright is entitled to the remedies set out in Section 43 of the Fair Trading Act in respect of its first, second and third causes of action, and to contractual damages in respect of its fifth cause of action. The claims asserted on the fourth and sixth causes of action are dismissed. It follows that the claim against Daytona 5 is dismissed.

[98] In relation to the Fair Trading Act causes of action, s 43(2)(c) and (d) apply. Those paragraphs relevantly provide for orders for the refund or payment of money to the person who suffered the loss or damage. The amount of the loss suffered by Blair Wright under these causes of action is $47,634 - the amount Blair Wright paid QPNZL for the software and the amount of the earlier District Court judgment against QPNZL; and Blair Wright is entitled to judgment against Mr Robertson for that amount.

[99] In relation to the contractual cause of action Blair Wright is entitled to judgment against Mr Robertson for damages in the same amount.

In principle, Blair Wright is entitled to interest, costs and proper disbursements. I reserve these questions for the parties to submit memoranda if they cannot agree.

T J Broadmore

District Court Judge