Matai Mining Ltd v Morris Contractors Ltd HC Christchurch CIV-2010-409-001949 [2011] NZHC 1209 (10 October 2011)

Last Updated: 23 October 2011

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

_{CIV-2010-409-001949}

BETWEEN MATAI MINING LTD Plaintiff

AND MORRIS CONTRACTORS LTD Defendant

Hearing: 8 September 2011

Appearances: M J Wallace for Plaintiff

No appearance for Defendant

Judgment: 10 October 2011

_{JUDGMENT OF WHATA J}

This judgment was delivered by Justice Whata on

10 October 2011 at 3.00 p.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Date:

Solicitors:

B Pengelly, 821 Mt Thomas Road, RD1 Rangiora, 7174

JT Law, PO Box 25443, Wellington 6140

Copy to:

M J Wallace,

PO Box 13254, Christchurch 8141

MATAI MINING LTD V MORRIS CONTRACTORS LTD HC CHCH CIV-2010-409-001949 10 October 2011

[1] This is an application for entry of judgment by the plaintiff against the defendant in respect of gold extracted by the defendant from land subject to a Mining Permit exercisable by the plaintiff.

[2] There are two underlying causes of action pleaded namely: (a) Conversion; and

(b) Constructive trust.

[3] The defendant company is in receivership and now takes no steps in defence of the plaintiff ’s claim. It did file and serve a statement of defence. Most recently the receivers have also filed a memorandum confirming that they will not be participating in the proceedings further, but providing the Court with some information relating to the claim, including:

(a) That there is no gold in the possession of the defendant; and

(b) Referring to relevant authorities in relation to conversion.[1]

[4] The background to this matter is usefully set out by the plaintiff. Given that its account is uncontested I quote from it for ease of reference (footnotes omitted):

5. The plaintiff entered into a Tribute Agreement dated 29 March 2009, with Tui Trust Mining Limited (“Tui”). The controlling minds of the plaintiff and Tui respectively are brothers, Kevin and Jack Meates.

6. Tui was the holder of certain permits, including MP41756. Pursuant to clause 5[a] of the Tribute Agreement Tui transferred to the plaintiff, all rights accruing to it by virtue of the Access Agreement, the resource Consents the Mining Permit and this Contract.

_{7. Pursuant to clause 4 the plaintiff was to pay to Tui a 10% tribute.}

8. The mining operation was commenced by the plaintiff in or about

June 2009.

9. The defendant was one of those contractors, being a general construction contractor, rather than a gold specialist.

10. Unhappily the mining operation met with problems, which caused the plaintiff cashflow problems. The plaintiff sought to compromise with its creditors, with a view to moving forward with the operations. It did so, but for an application to set aside the compromise by the defendants. That application was heard in December 2010 before his honour Associate Judge Osborne. No decision has yet been given.

11. The plaintiff was therefore hamstrung.

12. Tui purported to cancel the Tribute Agreement. That cancellation was not accepted by the plaintiff, and the directors of Tui later (20 May

2010) tried to introduce an agreed cancellation into an overall resolution of

matters between the parties. By a later email, Kevin made it very clear to

Tui that he viewed the cancellation as invalid.

13. The plaintiff put the defendant on notice that it was not entitled to

mine the gold from MP41756 by letter to the defendant’s solicitors dated 30

June 2010.

14. In defiance of that demand the defendant continued to mine the gold. The records disclosed by the receivers shows that the defendant extracted

485.20 oz of gold. While the plaintiff is suspicious that more must have been extracted, it does not have any direct evidence to contradict those figures.

[5] I have had the opportunity to read the affidavit filed on behalf of the plaintiff by Mr Kevin Meates. I am satisfied that there is a sound evidential basis for the matters raised by the plaintiff.

Issues

[6] For the purposes of entry of judgment I must be satisfied: (a) That the plaintiffs had a right to the gold;

(b) That the gold was extracted by the defendant without lawful permission; and

(c) What quantity of the gold was extracted and its value.

[7] The position is somewhat complicated because Tui alleges that it had cancelled whatever rights it had conferred on the plaintiff so that the plaintiff had no entitlement to the gold at the key time. This matter is complicated by the fact that there are arbitration proceedings currently in play and unresolved regarding whether or not that cancellation was appropriate.

[8] Nevertheless, I am advised by Mr Wallace that Tui was on notice of these proceedings and indeed at one stage it was contemplated by the defendant that Tui would be joined. Tui therefore has had ample opportunity to intervene in these proceedings to the extent that it affects their interests. It has chosen not to. Accordingly, I am prepared to proceed with entry of judgment if I am satisfied as to the matters set out above. I do indicate, however, that the scope of this judgment is strictly limited to a claim as between the plaintiff and the defendant and does not extend to enable judgment to be entered against Tui or any other party, save perhaps for the insurers of Morris (if there are any). In respect of the insurers, they will have any defences available to them as at the time a claim is brought against them. But the starting point will be that Morris is liable (if I reach that conclusion) for the sum set out in this judgment.

Plaintiff ’s gold?

[9] I am satisfied on the information before me that Tui had transferred to the plaintiff the right to mine gold pursuant to Permit MP41756. The right to mine the gold was specifically transferred to the plaintiff pursuant to the tribute agreement and was consented to by the Crown.

[10] To the extent that there is a further assignment of the permit to DCL, I am satisfied on the evidence before me that assignment was subject to the prior existing rights of the plaintiffs applying orthodox prior in time principles.

[11] On that basis, the plaintiff contends it had a prior claim to any gold extracted within the area subject to the permit and with that a right to possession of any such gold upon its extraction.

[12] There may be problems with this analysis. A permit to mine may not necessarily equate to a right to the gold. It is arguable that the right to the gold or mineral remains vested in the Crown pending extraction to the surface. The right to the gold is then acquired on extraction, lawfully undertaken pursuant to a permit. If so, the right to the gold or possession of it never crystallised into the hands of Matai and a claim in conversion would not be appropriate.

[13] Nevertheless even if Matai did not acquire a possessory right to the gold, I am of the view that the plaintiff plainly holds an actionable right to recover the gold or its value, taken in breach of the Tribute agreement or Matai’s rights of access, and with knowledge of the existence of Matai’s claim to the gold. I do not consider it is necessary to precisely describe the right as a right in tort, contract, equity or restitution in order to qualify for a proprietary remedy, though a remedial

constructive trust has intuitive appeal.[2] Whatever rights Morris acquired to the gold

through Tui, they were subject to the prior rights acquired by Matai (unless those rights were lawfully cancelled). When Morris was notified of Matai’s rights on 30

June 2010, they must have known they were at risk of unlawfully interfering in the contractual rights of Matai to extract the gold and that Matai would make a claim on the gold. In my view, from that point, given the uncontested facts, a proprietary remedy was available to Matai as against both Tui and/or Morris, depending on who was in possession of the gold. In addition, to the extent that possession of the gold can no longer be claimed as a remedy, it having been sold or otherwise disposed of, Morris is liable to the plaintiff for the value of the gold.

Did Morris have possession of the gold?

[14] Mr Meates attaches to his affidavit documentary evidence that Morris extracted gold to the value of 400 ounces during the development period. That documentary material is clear on its face and I am therefore satisfied that the defendant had in its possession gold that ought to have been in the possession of the

_plaintiff.

Quantum and Value of the gold

[15] As stated at paragraph [14], the quantum of gold extracted was 400 ounces. [16] Mr Meates has also provided evidence as to the value of the gold as at August

2011. While the plaintiff has provided me with authority for the basic proposition that a monetary remedy for the taking of the gold can be based on the value of the goods as at the date of trial, I am not comfortable in entering judgment without independent evidence from someone other than the plaintiff’s director on this issue. It appears that the current value of the gold is greatly elevated over the value of the gold at the date of taking. In the absence of such evidence, I prefer to approach this on the orthodox basis that the damages arise on the taking together with an interest sum that may be appropriately awarded since that date.

[17] Accordingly, on the question of the quantum I invite counsel:

(a) to derive a figure for the gold from the documentary evidence produced establishing the conversion; or

(b) to produce independent evidence as to the value of the gold at trial.

[18] On the production of this information, I will grant judgment in the figure specified.

[19] I am content to grant interest at the prescribed rate (8.4%) on the sum from the date of the taking to 30 June 2011. I am satisfied that the plaintiffs would have benefited at least to that extent had it had the gold in its possession. From 1 July

2011 the prescribed rate is 5%. That rate will apply thereafter.

[20] Judgment accordingly, together with costs on a 1B basis, with disbursements to be fixed by the Registrar.

Whata J

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[1] Stock Co Ltd v Tawhiti – Ariki Ltd HC Auckland CIV 2010-404-003, 413 28 April 2011; and

Rangatira Forest Ltd v Transfield NZ HC Wellington CIV 2006-483-199, 22 November 2007.

[2] See Peter Blanchard (ed) Civil Remedies in New Zealand (1st ed, Brookers, Wellington, 2003) at [9.2.4].