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About Image Ltd v Advaro Ltd

About Image Ltd v Advaro Ltd

Case [2017] NZHC 3264 20 December 2017

Contract Formation

Breach of Contract

Frustration of Contract

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IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-2183 [2017] NZHC 3264

BETWEEN
ABOUT IMAGE LIMITED AND OTHERS

(as named in the amended statement of claim)

First to sixty-fourth Plaintiff

AND

ADVARO LIMITED Defendant

ADVARO FUNDING LIMITED Counterclaim plaintiff

JENNIFER DOHERTY AND OTHERS (as set out in the counterclaim against the counterclaim defendants)

First to fifty-third counterclaim defendants

Hearing: 11 December 2017

Counsel:

DM Fraundorfer and TJ Conder for plaintiffs
DH McLellan QC, JC Adams and PM Hunter for defendants

Judgment:

20 December 2017

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 20 December 2017 at 3:30 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Holland Beckett, Tauranga
Simpson Western, Auckland

About Image Limited v Advaro Limited [2017] NZHC 3264 [20 December 2017]

Introduction and procedural background

[1] These proceedings arise out of the liquidation of a company called Intagr8 Ltd (“Intagr8”). Intagr8 supplied telephone, internet and other related services (“Services”). The 64 plaintiffs are generally small to medium businesses. They say they were contacted by Intagr8 and encouraged to enter into an arrangement by which they received the Services from Intagr8, in conjunction with rented telephone equipment from the defendant (“Advaro").

[2] The plaintiffs say the arrangements between each of them and Intagr8 on the one hand and Advaro on the other were in fact a composite arrangement, referred to in the pleadings as the “Tripartite Agreement”. Under this arrangement, the plaintiffs say Intagr8 provided substantial credits against its charges for the Services (“Credits”) which offset their rental payments to Advaro. The plaintiffs say without the Credits, they would not have entered into the arrangements.

[3] When Intagr8 went into liquidation in December 2015, the plaintiffs had to secure the Services from alternative providers. As a result, they no longer got the Credits. Given this, the large majority of the plaintiffs took steps to cancel their rental agreement with Advaro.1

[4] Advaro says the rental agreements remain on foot, because the plaintiffs’ purported cancellation was unlawful. It says the rental agreements are free-standing agreements which are not dependant or otherwise linked to the plaintiffs’ arrangements with Intagr8.

[5] These proceedings initially involved the 64 plaintiffs and Advaro as a single defendant. The plaintiffs sought various declarations as to the meaning and effect of the contractual arrangements, and there is also a claim under the Fair Trading Act 1986
(“FTA”).

1 A small number have taken the position that they are entitled to cancel, but pending the outcome of this litigation, continue to make rental payments.

[6] Advaro has since assigned its rights under the rental agreements to Advaro Funding Ltd (“Advaro Funding”).2 That company has now counterclaimed in these proceedings against the non-paying plaintiffs and the individuals who guaranteed each plaintiff’s rental obligations. I was informed by Mr Fraundorfer at the hearing that the counterclaim against each plaintiff is in the region of $30,000 to $60,000. Mr McLellan QC, counsel for Advaro, said the amounts were somewhat less than…

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.

Continue reading About Image Ltd v Advaro Ltd

Details

AGLC: About Image Ltd v Advaro Ltd [2017] NZHC 3264
Case: [2017] NZHC 3264
Decision Date: 20 December 2017

CaseChat Overview and Summary

The case of About Image Ltd v Advaro Limited [2017] NZHC 3264 involved a dispute between 64 plaintiffs (small to medium businesses) and Advaro Limited (Advaro), a company that supplied telephone and internet services. The plaintiffs sought various declarations regarding the contractual arrangements with Intagr8 (a company that supplied the services) and Advaro, as well as a claim under the Fair Trading Act 1986. Advaro claimed that the rental agreements were free-standing and not linked to the plaintiffs' arrangements with Intagr8.

The plaintiffs sought representative orders to handle the large number of claims in the proceedings. They proposed two alternative bases for representative orders: (1) certain plaintiffs as representatives for the remaining plaintiffs, or (2) a stage-one trial to determine common issues across all plaintiffs, with the findings binding all plaintiffs.

Advaro opposed the application, arguing that many aspects of the causes of action required proof of individual issues, making them unsuitable for a representative action. The court found that while the proposed representative plaintiffs had a sufficiently similar common interest in the proceedings to meet the threshold for a representative order, all the proposed represented plaintiffs were already parties to the proceedings. Therefore, representative orders were not required to bind each of them to findings made in the proceedings.

The court found that there were sufficient common issues to make a stage-one trial appropriate. The common issues identified included the interpretation of the contractual documents, whether Intagr8 marketed the rental agreement on behalf of Advaro, and whether the whole agreement clause prevents the plaintiffs from relying on the Explanation in making a claim under the Fair Trading Act 1986. The court granted the plaintiffs' application to determine certain common issues at a stage-one trial.

The court also declined to make the representative orders sought, ordered the Registry to allocate a one-hour face-to-face case management conference, declined the defendant's application to set aside the plaintiffs' privilege claims, and ordered the defendant to provide a reformulated tailored discovery request. The court also ordered that the master list be verified by Mr. Preston or Mr. Lind, rather than a solicitor involved in the compilation.

Orders