Sometime Hells Pizza franchise holder Matt Blomfield failed in his claim for damages against former business associate Paul Claydon over the winding down of their joint venture company, Infrastructure NZ. Mr Blomfield claims Mr Claydon stole company contracts; Mr Claydon claims Mr Blomfield missappropriated company money.
A fraught relationship between the two was laid out in four days evidence before the High Court. Infrastructure NZ Ltd was set up in 2005 to undertake roading and subdivision work. Mr Claydon put in $48,000. Mr Blomfield was to put in $20,000, he said. This was disputed. Mr Blomfield said his contribution was to be ‘sweat equity’. An initial project at Mangawhai north of Auckland stalled when the developer ran out of money. Work on an alternative project at Massey collapsed with no payment forthcoming. Their contracting business was restructured. Some $600,000 was borrowed as working capital, heavy machinery purchased and major local government contracts secured.
Evidence was given of Mr Blomfield suffering personal financial difficulties. In late 2007 he drew down $70,000 from the company bank account without prior reference to Mr Claydon. Six months later a further $30,000 was taken, again without Mr Claydon’s agreement. In December 2008, Mr Blomfield intercepted a $99,000 cheque intended for Infrastructure NZ, converting it to his own use. The bank reimbursed Infrastructure NZ. Mr Blomfield was bankrupted in 2010.
As their business relationship deteriorated, Mr Claydon was hatching plans by mid-2008, without Mr Blomfield’s knowledge, to start a separate contracting business. Over the following twelve months, Mr Claydon had Infrastructure NZ default on its machinery leases and then negotiated replacement leases with his new infrastructure company. The court was told one of the heavy trucks went missing from a Raglan construction site. Mr Blomfield later admitted involvement. The truck was recovered several months later, damaged said Mr Claydon.
Through all this, Mr Claydon ensured Infrastructure NZ’s existing contracts were completed, some at a financial loss, he said. New banking accommodation had to be arranged when Infrastructure’s bank froze facilities because of dissension between the two.
Mr Blomfield sued for damages alleging Mr Claydon’s actions in taking over company contracts and its heavy equipment damaged his fifty per cent shareholding in Infrastructure NZ. Justice Courtney dismissed this claim. Mr Blomfield’s shareholding in Infrastructure was through a company he then controlled: Tyrion Holdings Ltd. Tyrion came to be a shareholder in November 2008. This was four months after Mr Claydon began moving Infrastructure NZ assets across to his new company. Tyrion became shareholder as replacement for another Blomfield shareholder company which was in financial difficulty; Mr Blomfield did not want to see his Infrastructure NZ investment at risk. Justice Courtney said Mr Blomfield could not say Tyrion had suffered any loss because of Mr Claydon’s actions. It bought in at a price and at a time when Mr Blomfield was aware of Infrastructure NZ’s financial position and Mr Claydon’s strategy of winding down Infrastructure NZ in favour of his new company.
Tyrion Holdings Ltd v. Infrastructure NZ Ltd – High Court (30.07.18)
18.152