Adama New Zealand Limited v Raam Chem Pte Limited

[2019] NZHC 2637

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

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

CIV-2018-485-961

[2019] NZHC 2637

BETWEEN

ADAMA NEW ZEALAND LIMITED

Plaintiff

AND

RAAM CHEM PTE LIMITED

Defendant

FALCON INTERNATIONAL BIOSCIENCES PRIVATE LIMITED

First third party

AND OTHERS

Second to fifth third parties

Hearing:

14 October 2019

Appearances:

A Darroch for plaintiff

W Holden and N Cannon for defendant
No appearances for first to fifth third parties

Judgment:

16 October 2019

JUDGMENT OF ASSOCIATE JUDGE JOHNSTON

[1]    In November 2016 the defendant, Raam Chem Pte Ltd, a Singaporean concern, sold, and Adama New Zealand Ltd, the local subsidiary of a global manufacturer and distributor of agricultural products, bought, a large quantity of broad spectrum protectant fungicide known as Mancozeb. No other parties were directly involved in this sale and purchase transaction. The terms of the transaction are unimportant for present purposes. The Mancozeb arrived in New Zealand in January 2017. Adama sold the bulk of the product at the wholesale level to a local concern by the name of Horticentre Ltd. Horticentre thereafter sold the product at the retail level to a number of apple growers who applied it in their orchards. The plaintiff says that the Mancozeb

ADAMA NEW ZEALAND LIMITED v RAAM CHEM PTE LIMITED [2019] NZHC 2637 [16 October 2019]

was contaminated, with the result that it caused damage to trees or crops. As a result, Adama and Horticentre have been on the receiving end of claims by the orchardists. Adama has assumed responsibility for dealing with these. It has arranged for testing of the Mancozeb, satisfied itself that the product was contaminated and that this was causative of the damage, and settled claims for a total of over $13 million.

[2]    The only other aspect of the background which needs to be mentioned here is that Adama advised Raam of these claims and has kept that company informed. Raam has apparently notified its insurers who have instructed loss adjusters. The loss adjusters have asked for samples of the product, presumably so that they can arrange their own testing. Adama has not received any report as to the outcome of that testing.

[3]    In December 2018 Adama commenced this claim against Raam alleging a breach of the Fair Trading Act and two other causes of action, all founded on the allegation that Raam supplied a contaminated product.

[4]Adama’s claim is defended.

[5]    Within the time period provided for in r 4.4(2)(a) of the High Court Rules, Raam commenced third party proceedings against five third parties, all companies based abroad. Those third party proceedings were commenced in March 2019. To date the defendant has managed to serve the fifth third party which has signalled a challenge to the jurisdiction of the New Zealand courts to hear the claim against it. The originating documentation in the third party proceedings has not yet been served on the first to fourth third parties.

[6]    By notice of interlocutory application dated 10 June 2019 the plaintiff applies to set aside the third party notices, essentially on the basis that its proceeding against Raam would be delayed unreasonably if the third party proceedings were allowed to stand. The defendant has filed a notice of opposition to that application dated 24 June 2019.

[7]The plaintiff’s application came on for hearing on 14 October 2019.

[8]    I am grateful to both Mr Darroch for Adama and Mr Holden and Ms Cannon for Raam for the responsible approach they have taken to this matter, and for their assistance in formulating a consent order.

[9]    The plaintiff’s application is made pursuant to r 4.16 which materially says that when an application is made to set aside a third party notice or third party notices:

…

(3)… the court may—

(a)set the third party notice aside and dismiss the defendant’s statement of claim against the third party—

(i)on the merits; or

(ii)without prejudice to the right of the defendant to pursue that claim against the third party in an independent proceeding; or

(b)give other directions.

[10]   There is much to be said for both parties’ arguments. On the one hand, the plaintiff is entitled to pursue its claim without undue delay and it is clear on the evidence that allowing the defendant’s third party proceedings to continue would result in considerable delay. On the other hand, the defendant has a right to commence third party proceedings and, on the basis of its allegations at least, this case involves classic examples of such claims. Without indicating any concluded view as to the merits of the plaintiff’s application, it became obvious to me as the argument developed that there was an alternative to the polemic positions adopted by the parties, that is to say an order that would effectively sever the plaintiff’s claim against the defendant on the one hand from the defendant’s claims against the third parties, so as to enable the former to proceed without delay but also enable the defendants to take advantage of the current proceeding and the steps that it has already taken vis-a-vis the third parties (in other words, not requiring the defendant to start again).

[11]   Bearing in mind the wide discretion in r 4.16 entitling the Court to “give other directions” it seems to me that such a course is quite open to the Court.

[12]   Both Mr Darroch for the plaintiff and Mr Holden for the defendant agreed to this course.

[13]   Accordingly, pursuant to rr 4.16 (3)(b) and 10.4, by consent, I make an order directing that the plaintiff’s claim against the defendant be tried separately from the defendant’s claims against the third parties.

[14]   The plaintiff’s claim against the defendant is to be allocated a case management conference as soon as conveniently possible with a view to dealing with any outstanding interlocutory matters, setting the case down for trial and making any necessary pre-trial directions.

[15]   The defendant’s claims against the third parties need not be allocated a case management conference until such time as one or more of the third parties enters a defence or takes some other formal step in the proceeding. However, I grant the defendant leave to apply further in order to bring its claims against the third parties on by way of a case management conference or to take any other step that it wishes to expedite those claims.

[16]   I make no costs order in relation to the plaintiff’s application for an order setting aside the defendant’s third party notices. Although the plaintiff has been largely successful in its objective of shedding the third party claims, the defendant was entitled to issue third party proceedings, and the defendant, through counsel, has acted responsibly in ensuring that this application was disposed of as efficiently and economically as possible.

Associate Judge Johnston

Solicitors:

Darroch Forest Lawyers, Wellington for plaintiff Wotton Kearney, Wellington for defendant