Adama New Zealand Limited v Raam Chem Pte Limited

[2021] NZHC 315

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

I TE KŌTI MATUA O AOTEAROA TE WHANGANUI-A-TARA ROHE

CIV-2018-485-961

[2021] NZHC 315

BETWEEN

ADAMA NEW ZEALAND LIMITED

Plaintiff

AND

RAAM CHEM PTE LIMITED

Defendant

AND

FALCON INTERNATIONAL BIOSCIENCES PRIVATE LIMITED

First third party

ARISTO BIO-TECH AND LIFESCIENCE PRIVATE LIMITED
Second third party

JAY LAXMI INDUSTRIES
Third party

ORCHID AGRO SYSTEMS
Fourth third party

UPL LIMITED

Fifth third party

Hearing:

3 December 2020

Appearances:

No appearance for plaintiff

W Holden and N Cannon for defendant

No appearance for first to fourth third parties A Johnson for fifth third party

Judgment:

26 February 2021

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

ADAMA NEW ZEALAND LIMITED v RAAM CHEM PTE LIMITED [2021] NZHC 315 [26 February 2021]

[1]                  In this proceeding the plaintiff, Adama New Zealand Ltd, a New Zealand company, sued the defendant, Raam Chem Pte Ltd, a Singaporean company. As described in my judgment of 29 May 2020, Raam has commenced third party proceedings against five Indian concerns including the fifth third party, UPL Ltd.1

[2]In that judgment I outlined the background in these terms:

Background

[3]                   The plaintiff, Adama New Zealand Ltd (“Adama”), is a New Zealand company. Raam is a Singaporean company. In late 2016 Adama and Raam entered into a contract pursuant to which Adama ordered 50,000 kg of Mancozeb, a fungicide used by horticulturalists to protect against a range of diseases in crops, and commonly used by apple growers.

[4]                   In early 2017 the Mancozeb was delivered to Adama in New Zealand in four consignments.

[5]                   During the course of 2017 Adama sold a substantial quantity of the Mancozeb to Horticentre Ltd (Horticentre), another New Zealand company. Horticentre sold the product to various apple growers, who applied it in their orchards.

[6]                   In its claim, Adama alleges that the Mancozeb was contaminated with a chemical known as Azoxytrobin with the result that it damaged the trees.

[7]                   The apple growers claimed compensation from Horticentre. Horicentre in turn looked to Adama.

[8]                   Adama took responsibility for settling the claims and paid out compensation totalling more than $13 m.

[9]                   In late 2018 Adama commenced this proceeding against Raam alleging breach of contract and related causes of action. Raam is defending the claim.

[10]                It turns out, that, quite possibly unbeknown to Adama, behind Raam there was a prodigiously long manufacturing and supply chain.

[11]                Raam, which, it will be recalled, is a Singaporean company, ordered the Mancozeb from an Indian company known as Falcon International Biosciences Pte Ltd (“Falcon”). Falcon in turn ordered it from another Indian company known as Aristo Bio-Tec and Lifescience Pte Ltd (“Aristo”). Aristo engaged another Indian concern, Jay Laxmi Industries (“Laxmi”) to manufacture the Mancozeb by blending the necessary ingredients. Aristo supplied the primary chemical component, Mancozeb TC 85%, to Laxmi from its own stock and from additional stock acquired from two other Indian concerns, Orchid Agro Systems (“Orchid”) and UPL. As if this were not

1      Adama New Zealand Ltd v Raam Chem Pte Ltd [2020] NZHC 1163.

complicated enough, it would seem that all or a proportion of the Mancozeb TC 85% that Aristo acquired from Orchid had originally been acquired by Orchid from UPL.

[12]                One of the deponents who has sworn an affidavit in opposition to Raam’s application is Mr Amitesh Mishra who is  a  principal  of  UPL’s New Delhi solicitors. Mr Mishra exhibits to his affidavit an opinion from Justice V N Khare who is a former Chief Justice of India (one of two former Chief Justices whose opinions on aspects of this matter are in evidence, or, rather, are exhibited to affidavits sworn by others). Justice Khare’s opinion includes a diagram of the manufacturing and supply chain involved which is reproduced below:

[13]                In early 2019 Raam commenced third party proceedings citing Falcon, Aristo, Laxmi, Orchid and UPL as first to fifth third parties.

[14]                Understandably, given the relatively straight forward nature of its claim against Raam, and that the resolution of this claim would unquestionably be delayed by Raam’s third party claims, Adama applied for an order striking out or severing those claims.

[15]                I heard that application on 14 October 2019. Having explored various options with counsel, in the end, I was able to make an order by consent severing Adama’s claim against Raam from Raam’s third party claims. This approach had advantages for both parties. From Adama’s perspective it could proceed with its claim against Raam unimpeded by Raam’s third party proceedings (Adama’s claim has since been allocated a fixture and is to be heard over two weeks commencing on 3 August 2020). From Raam’s perspective, the approach avoided the necessity of commencing new proceedings.

[16]                In his submissions on Raam’s behalf Mr Holden described that company as a “fixer”. By this I understood him to mean that Raam merely facilitated Adama’s acquisition of the Mancozeb. It is common ground that Raam did not handle the product at all. As already said, Aristo was responsible for its preparation, which it engaged Laxmi to undertake. It was also responsible for its packaging and labelling. Falcon arranged shipment.

[17]                In its third party claims, Raam says that in those circumstances it could not have been responsible for any contamination, which must therefore have occurred further down the manufacturing and supply chain. At this stage, it does not claim to be able to pinpoint exactly where. Accordingly, it sues all of the entities involved.

[18]                Having filed its third party notices and statements of claim, Raam proceeded on the basis that it was entitled to serve these outside the jurisdiction without leave pursuant to r 6.27 of the High Court Rules 2016.

[19]                Raam first communicated with the third parties asking whether they were prepared to accept and acknowledge service of the originating documentation in the third party claims against them. These enquiries appear to have been ignored by Falcon, Aristo, Laxmi and Orchid. But UPL accepted service. Raam therefore arranged for service on the other third parties through diplomatic channels. My understanding is that as at the date of the hearing before me the originating documentation had been served on Laxmi and Orchid (though those entities had not taken any steps in the proceeding), but was still to be served on Falcon and Aristo.

[20]                For its part, having accepted service, UPL filed and served the appearance under protest to jurisdiction pursuant to r 5.49 of the High Court Rules that Raam now applies to have set aside.

[21]                The Court has the benefit of a considerable amount of affidavit evidence before it. For a start, there is the evidence filed and served by Adama and Raam in connection with the former’s application to set aside or sever the third party proceedings to which I have already referred. In relation to this application, Raam relies also on affidavit evidence sworn by Mr Saurabh Gupta, the company’s General Manager, Ms Caitlin Barclay, a solicitor

employed by the firm representing the  company  in  this  proceeding  and Mr Gautam Khazanchi, a New Delhi advocate. For its part, UPL relies also on affidavits sworn by Mr Suman Dutta, the company’s Vice President, Mr Rohit Kumar, its Global General Counsel, and Mr Amitesh Mishra whose evidence has already been mentioned.

[22]                The sole purpose of the affidavits sworn by Messrs Khazanchi for Raam and Mishra for UPL was to exhibit the opinions obtained for those parties by, respectively, Justices Dipak Misra and V N Khare, the two former Chief Justices.

[3]                  For the reasons given in my 29 May 2020 judgment, I made the order sought by Raam setting aside UPL’s protest.

[4]                  Since 29 May 2020, Adama and Raam have settled the primary claim — at the eleventh hour by the sound of it. In these circumstances, counsel for Raam and UPL jointly sought a recall of my earlier judgment and a re-hearing of the former’s application to set aside UPL’s protest to jurisdiction. I made such an order by minute dated 7 October 2020.

[5]                  Raam’s position is that the settlement of the primary claim does not affect the reasoning in my earlier judgment. UPL’s position is that the settlement undermines the basis for my earlier determination, and so it contends for the opposite outcome.

[6]A preliminary issue is the scope of the re-hearing.

[7]                  On Raam’s behalf, Mr Holden acknowledges that there is little or no authority as to the scope of a rehearing granted in circumstances where matters have changed materially following the delivery of judgment. As he says, the recall of the judgment falls within the narrow category of having been necessary as a result of “some very special reason”.2 He goes on to submit that a rehearing in such circumstances is not an opportunity to relitigate the entire matter, as this would involve recall being a substitute for an appeal. Rather, he submits that the rehearing should be confined to whether the change of circumstances calls for a different outcome.3 Mr Johnson for UPL did not adopt a materially different position.

2      Horowhenua County Council v Nash (No. 2) [1968] NZLR 632 (HC) at 633.

3      See generally the commentary on the recall and rehearing contained in McGechan on Procedure

(loose-leaf ed, Thompson Reuters) at [HR 11.9.01] and the cases there referred to.

[8]                  I am inclined to accept that that is the appropriate approach to take here. It may be that once a judgment has been recalled it is generally open to the Court to reconsider the matter and that such reconsideration may extend beyond the particular change in circumstances that gave rise to the recall in the first place. However, it is unnecessary to say more in this case because it seems to me that it is only necessary to consider the change in circumstances here in order to deal with the underlying interlocutory issue that is (again) before the Court.

[9]                  The questions of when the New Zealand courts will assume jurisdiction to deal with a claim against a foreign party engages issues of both procedural and substantive (private international) law. The most convenient entry point for the discussion is the High Court Rules 2016, and in particular rr 6.29, 6.28 and 6.27.

[10]Rule 6.29 provides as follows:

6.29     Court’s discretion whether to assume jurisdiction

(1)If service of process has been effected out of New Zealand without leave, and the court’s jurisdiction is protested under rule 5.49, the court must dismiss the proceeding unless the party effecting service establishes—

(a)that there is—

(i)a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and

(ii)the court should assume jurisdiction by reason of the matters set out in rule 6.28(5)(b) to (d); or

(b)that, had the party applied for leave under rule 6.28,—

1. leave would have been granted; and

   (ii)it is in the interests of justice that the failure to apply for leave should be excused.

   (2)If service of process has been effected out of New Zealand under rule 6.28, and the court’s jurisdiction is protested under rule 5.49, and it is claimed that leave was wrongly granted under rule 6.28, the court must dismiss the proceeding unless the party effecting service establishes that in the light of the evidence now before the court leave was correctly granted.

(3)When  service  of  process  has  been  validly   effected   within   New Zealand, but New Zealand is not the appropriate forum for trial

of the action, the defendant may apply for a stay, or for a dismissal of the proceeding under rule 15.1.

(4)This rule is subject to section 27(1) of the Trans-Tasman Proceedings Act 2010 (see rule 5.49(7A)).

[11]              Rule 6.29(1) applies here. Raam served its third party proceedings on UPL out of New Zealand without seeking leave, and UPL has filed and served a protest to jurisdiction under r 5.49. The Court must dismiss Raam’s claim against UPL unless Raam can establish that it is entitled to proceed against UPL in this country because one or more of the circumstances in (a) or (b) of r 6.29(1) applies.

[12]              In my 29 May 2020 judgment I concluded that the appropriate route by which to approach the case was pursuant to r 6.29(1)(b), and therefore that whether or not Raam’s application for an order dismissing UPL’s protest to jurisdiction should be granted turned on whether r 6.28 applied.

[13]Rule 6.28(5) materially provides as follows:

6.28     When allowed with leave

…

(5)The court may grant an application for leave if the applicant establishes that—

(a)the  claim  has  a  real  and  substantial  connection  with New Zealand; and

(b)there is a serious issue to be tried on the merits; and

(c)New Zealand is the appropriate forum for the trial; and

(d)any other relevant circumstances support an assumption of jurisdiction.

[14]              I analysed Raam’s claim against UPL under the first three of those sub-paragraphs and concluded that Raam’s claim against UPL had a real and substantial connection with this country, that there was a serious issue to be tried on the merits, and that New Zealand was the appropriate forum for the trial of that claim (the substantive private international law issue).

[15]              I did not understand Mr Johnson for UPL to contend that Raam’s claim against UPL did not have a real and substantial connection with New Zealand or that there was not a serious issue to be tried. Accordingly, the key issue determined in my earlier judgment — and the issue that now needs to be revisited in light of changed circumstances — is whether New Zealand is the appropriate forum for the trial of that claim.

[16]              After analysing the forum conveniens considerations (essentially those summarised in The Laws of New Zealand upon which Mr Johnson relied4) and having referred to the Court of Appeal’s judgment in Longbeach Holdings v Bhanabhai and Co Ltd, 5 I reached the view that “… the considerations that arise in relation to [that] issue [were] finely balanced”.6

[17]              My conclusion was as follows:7

[78]      In the end, I have reached the view that New Zealand is the appropriate forum for the trial of Raam’s claim against UPL. The considerations that have influenced me in reaching that conclusion are these:

(a)The damage in respect of which both Adama and Raam seek recovery occurred in New Zealand.

(b)Adama’s  claim  against  Raam  is  to   be   litigated   in   New Zealand, and Raam’s claim against UPL is a third party claim.

(c)Core factual aspects of Adama’s claim pertain to the damage or loss which is the subject matter of that claim as well as Raam’s claim will have to be determined. Ideally, these would be determined by one court in one trial. This is not to happen here because Adama’s claim has been severed from Raam’s. Nevertheless, consistency remains important, and in my view consistency is more likely to be achieved if the two aspects of the claim are litigated in the same jurisdiction.

(d)Adama’s claim against Raam will be determined in accordance with New Zealand procedural law, and consistency suggests that Raam’s claim against UPL should be determined on the same basis.

(e)If this Court were to order that Raam’s claim against UPL should be determined in India, then the practical difficulty for

4      See The Laws of New Zealand Conflict of Laws (online ed, LexisNexis) at 30.

5      Longbeach Holdings v Bhanabhai and Co Ltd [1994] 2 NZLR 28 (CA) at 36 and 37.

6      Adama New Zealand Ltd v Raam Chem Pte Ltd, above n 1, at [77].

7      Adama New Zealand Ltd v Raam Chem Pte Ltd, above n 1.

Raam will be that it will have to re-establish the core factual considerations already referred to in India. This will necessitate it in calling evidence from New Zealand-based witnesses over whom it has little influence and may in the end mean from a practical perspective that it is deprived of the opportunity to prove its case.

(f)In terms of overall efficiency and expediting the resolution of the entire dispute (by which I mean to refer both to Adama’s claim against Raam and Raam’s claim against UPL), I have been influenced by the opinion of Justice Misra which, without going into great detail, tends to suggest that the matter will be dealt with more expeditiously in New Zealand than in India.

[18]              The question then is whether the settlement between Adama and Raam has undermined my conclusion as to whether the New Zealand Courts should assume jurisdiction.

[19]Mr Johnson commenced his submissions as to this by saying that:

5.Following the Settlement, if the Court were to assume jurisdiction, the claim which would remain before the Court for determination would be a claim by a Singaporean Company against an Indian company in respect of something which happened in India, in the course of a non- contractual relationship which was not governed by New Zealand law, and in respect of which the claimant has suffered loss in Singapore. It is submitted that, absent the parties’ agreement, the Court should not exercise jurisdiction over such a claim.

[20]              As Mr Holden said in reply, that was the case both before and after the settlement.

[21]              In relation to the question of the damage that is the subject of the claim, it appears to me that nothing has changed.

[22]              Mr Johnson submitted that the damage that is the subject matter of Raam’s claim against UPL arose in Singapore.

[23]Here is how he put the point:

15. For conflict of law purposes, the situs of a debt is the country in which the debtor resides. Raam Chem is a Singapore-registered company, and it appears to have its place of business there. The place of the damage is therefore Singapore, not New Zealand. Even if it could

have been said previously that Adama was suffering  damage  in New Zealand (which is not conceded), the Settlement means that Raam Chem’s damage occurred in Singapore.

(footnotes omitted)

[24]              I do not accept that.

[25]The argument appears to me to confuse the notion of the physical “damage”

— the damage to the fruit trees in New Zealand — that has given rise both to Adama’s claim against Raam and is a core component of any claim that Raam may have against any of the third parties, with the “damages” that Raam may be able to claim from any of those third parties, who are not registered and do not carry on business in this country. The fact that the quantum of Raam’s liability to Adama was only determined when the primary claim was settled does not alter the fact that the damage that gave rise to Adama’s claim occurred in New Zealand.

[26]              In any event, the principle on which Mr Johnson relies seems to relate to claims in debt, which this is not. And the argument that Mr Johnston advances in relation to this damage issue is one that would have been open to him irrespective of the settlement as between Adama and Raam.

[27]              In short, the settlement does not alter the fact that the same physical damage that led to Adama’s claim against Raam is also behind Raam’s third party claims.

[28]              In contrast, it appears to me that the settlement as between Adama and Raam materially alters the dynamics of the situation as I described theses in the remaining points (points (b)–(f)).

[29]              Adama’s claim against Raam will now not be litigated in New Zealand. The core factual aspects of Adama’s claim pertaining to the physical damage that was the subject matter of that claim will not be determined in litigation here, so there is no prospect of inconsistent findings as between a New Zealand court and any overseas jurisdiction such as India. Moreover, Adama’s claim against Raam will not be determined in accordance with New Zealand procedural law. If this Court were to

order that Raam’s claim against UPL should be determined in India, that would not require Raam to re-establish any core facts determined in New Zealand litigation.

[30]              Those four factors, which were heavily influential in my earlier determination, therefore fall away.

[31]              Of course, from Raam’s point of view, there remains the position that there will be complications pursuing its claim in India.

[32]              In order to pursue its claim against UPL (or any of the other third parties), Raam will need to establish both the legitimacy of Adama’s claim against it and that the settlement it has agreed to is a proper reflection of its liability. Given that the exclusive focus of Adama’s claim against Raam was events that occurred in New Zealand, Raam will unquestionably face difficulties in establishing that aspect of its claim against UPL in India. However, in part at least those difficulties will be ameliorated by the term in the settlement arrangements between Adama and Raam obliging the former to cooperate with Raam in terms of providing evidence. In any event, mere inconvenience and difficulty for a plaintiff is never in and of itself a proper basis for founding extraterritorial jurisdiction.

[33]              There  is  another  ameliorating  factor  from  Raam’s  point  of  view.  As   Mr Johnson submitted, a claim by a Singaporean concern against an Indian concern of a non-contractual nature regarding the actions of the latter that took place in India will in all probability fall largely to be determined at Indian law. Therefore, if it were to be litigated in New Zealand, Indian law would have to be established as a matter of fact, whereas if it were to be litigated in India that would not be necessary.

[34]              The final consideration on which I relied concerned the evidence as to the relative efficiency of disposing of litigation in this country and India. I had, and of course still have, the benefit of evidence from a number of Indian-based witnesses, including two former Chief Justices of that country. On that basis of that evidence, I concluded that the preponderance of that evidence suggested to me that the litigation could be disposed of more efficiently in New Zealand than in India. That may still be

the case, but in and of itself that is not a proper foundation for this Court claiming jurisdiction over a party in litigation that is not otherwise properly available.

[35]              For those reasons, I have reached the conclusion that the settlement of the primary claim as between Adama and Raam so fundamentally alters the situation that UPL’s protest to jurisdiction must stand.

[36]              I therefore dismiss Raam’s application for an order setting aside UPL’s appearance under protest to jurisdiction and dismiss the third party claim.

[37]              Once again, I reserve costs having not heard from counsel in relation to these. My preliminary view is that UPL is entitled to its costs of both the original hearing and this rehearing, although there may well be an argument as to whether full costs for both hearings should be allowed. I expect that counsel will be able to settle costs on an appropriate basis. But if that proves impossible then counsel may file memoranda in the usual way.

Associate Judge Johnston

Solicitors:

Wootton + Kearney, Wellington for defendant Martelli McKegg, Auckland for fifth third party