About Image Limited v Advaro Limited - [2017] NZHC 2017

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV 2016-404-2183 [2017] NZHC 2017

BETWEEN
ABOUT IMAGE LIMITED AND

OTHERS Plaintiffs

AND

ADVARO LIMITED Defendant

ADVARO FUNDING LIMITED Counterclaim plaintiff

JENNIFER DOHERTY AND OTHERS Counterclaim Defendants

Hearing: 17 August 2017

Counsel:

D Fraundorfer and T J Condor for plaintiffs

D H McLellan QC & P Hunter for defendant/counterclaim plaintiff

Result:

17 August 2017

Reasons:

22 August 2017

REASONS JUDGMENT OF DUFFY J

This judgment was delivered by me on 22 August 2017 at 4.00 pm pursuant to
Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar

Solicitors: Solicitors/Counsel: Holand Beckett, Tauranga
Simpson Western, Auckland

ABOUT IMAGE LIMITED AND OTHERS v ADVARO LIMITED [2017] NZHC 2017 [17 August 2017]

[1] At the hearing on 17 August 2017 I adjourned the plaintiffs’ application for strike-out of part or division of the proceeding and awarded costs against the plaintiffs. My reasons now follow.

[2] This is a dispute about termination of an agreement to rent physical telephone equipment.

[3] The sixty-four plaintiffs are all small businesses of some description. They rented telephone equipment from the defendant (Advaro), which carries on business as a financier. Advaro would buy the equipment from a company called Intagr8 Ltd, and then lease it to the customer. The customer would make lease payments to Advaro under the lease contracts. On 17 December 2015, Intagr8 was placed in liquidation and it ceased providing services. The majority of the plaintiffs then ceased making automatic payments to Advaro.

[4] Advaro considers the lease contracts are still enforceable. It commenced separate proceedings in the District Court against each lessor under the lease contracts and against their guarantor/s. Some if not all of the lessors responded by issuing the present proceeding in this Court against Advaro.

[5] In their amended statement of claim (dated 27 April 2017), the plaintiffs plead various causes of action, including breach of contract, frustration of contract, and misleading and deceptive conduct under the Fair Trading Act 1986. The plaintiffs in their statement of claim are separated into two categories (Category One and Category Two), but Category Two only refers to two plaintiffs. The vast majority are therefore in Category One.

[6] Advaro counterclaims against all the plaintiffs (except for five named plaintiffs) saying that they breached their agreements with Advaro by failing to pay outstanding rental instalments. It claims judgment for to the total amount due by each plaintiff on termination, with interest and costs.

[7] Advaro also counterclaims against fifty-three counterclaim defendants, all of whom are individuals who, Advaro says, personally guaranteed the due payments by

the relevant plaintiff to Advaro (the counterclaim defendants/guarantors). Advaro seeks judgment for the total amount due by each counterclaim defendant on termination, with interest and costs. By this process Advaro seeks to obtain from this proceeding the same outcomes that it hoped to achieve with the proceeding filed in the District Court.

[8] Now that Advaro has counterclaimed against the counterclaim defendants/guarantors, the plaintiffs have become concerned that the present…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

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Details

Case: [2017] NZHC 2017
Decision Date: 22 August 2017

CaseChat Overview and Summary

In this case, About Image Limited and others (the plaintiffs) sued Advaro Limited (the defendant) over the termination of lease agreements for rental telephone equipment. The defendant had entered into a counterclaim against the plaintiffs and additional counterclaim defendants who had personally guaranteed the payments of the plaintiffs. The plaintiffs applied to strike out the defendant's counterclaim against the guarantors or, in the alternative, to have the claims heard separately. Advaro opposed the plaintiffs' applications, arguing that separate trials would not result in res judicata findings and would only add to the complexity of the litigation. The court found the plaintiffs' applications to be premature as there was insufficient information on the representation of the counterclaim defendants and their impact on the trial. The court also noted that the plaintiffs' third option, which involved having staged trials with six specified plaintiffs and their associated guarantors, was too general and speculative. The court adjourned the application and directed the parties to provide more information on the representation of the counterclaim defendants and to consider the option of bringing the proceeding as a representative proceeding.

The court further found that the plaintiffs' applications were premature and that they could have postponed the hearing date earlier on. The court awarded category 2B costs to the defendant, which was satisfied with the amount. The court also gave timetable directions for the next mention hearing, which was to be held after all the counterclaim defendants/guarantors had filed their statements of defence. The court reserved leave to the parties to return to court on the issue if necessary.

Orders