Barrie v Nature Discoveries Limited

[2012] NZHC 3345

IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2008-485-2530 [2012] NZHC 3345

BETWEEN  SCOTT BARRIE First Plaintiff

ANDANITA WOOD Second Plaintiff

ANDNATURE DISCOVERIES QUEENSGATE LIMITED

Third Plaintiff

ANDNADIS PORIRUA LIMITED Fourth Plaintiff

ANDDAKARIS LIMITED Fifth Plaintiff

ANDNADIS GLENFIELD LIMITED Sixth Plaintiff

ANDSCOTT BARRIE AND ROBIN JAMES BARRIE AS TRUSTEES OF THE BARRICHES TRUSTS

Seventh Plaintiff

ANDNATURE DISCOVERIES LIMITED First Defendant

ANDNATURE BY DESIGN LIMITED Second Defendant

ANDNATURE FOUNDATION LIMITED Third Defendant

ANDDOUGLAS PFLAUM Fourth Defendant

ANDBLAXALL & STEVEN DISTRIBUTORS LIMITED

Fifth Defendant

ANDJOHN GARLICK Sixth Defendant

SCOTT BARRIE V NATURE DISCOVERIES LIMITED HC WN CIV 2008-485-2530 [11 December 2012]

ANDMARK CHAN Seventh Defendant

ANDDANIEL GARRETT Eighth Defendant

Hearing:         5 December 2012

Counsel:         J H Waugh for Plaintiffs

H C Matthews for First to Fifth, and Eighth Defendant
Sixth Defendant has taken no part in proceedings

J P Forsey for Seventh Defendant (attendance excused) Judgment:    11 December 2012

JUDGMENT OF SIMON FRANCE J

Introduction

[1]      On 29 August 2012  I issued judgment rejecting the plaintiffs’ claims and allowing the defendants’ counterclaims.  Mr Barrie and his entities had entered into four franchise agreements with Mr Pflaum, the franchisor, and his entities.   The venture was unsuccessful, and eventually the franchisor took over the businesses. The  plaintiffs’ claims  centred  on  misrepresentation  in  the  negotiations  prior  to signing the franchise agreements, but there were several other causes of action.  The counterclaim centred on unpaid goods supplied.

[2]      On 23 October 2012 the plaintiffs filed:

(a)       an application to strike out the seventh plaintiff;

(b)an  application  to  recall  the  judgment  insofar  as  it  concerns  the counterclaim.

[3]      On 29 October 2012 the plaintiffs filed an application for leave to file the applications already filed.

[4]      On 16 November 2012 the plaintiffs discontinued the application to strike out the seventh plaintiff.

[5]      This judgment deals with:

(a)      the recall application;

(b)the final allocation of the counterclaim amounts across the various defendants;

(c)      an application by the defendants for increased costs.

The recall application

[6]      I give leave to file the recall application.  I indicated at the oral hearing the application was declined. These are my reasons.

[7]      In my judgment I observed:

Counterclaims

[153]    The counterclaims relate to unpaid accounts for goods supplied. In his evidence-in-chief Mr Pflaum provided summaries of these. He was not challenged on the specifics.

[154]    During closing, as previously noted, Nature Discoveries provided an updated  claim  which  reflected  developments  during  the  hearing.  The changes reflect credit being given in respect of the stores for stock, fittings, petty cash and lay-by payments taken over by the franchisor. As I understand it, these changes resolve the challenges between the parties over the quantums.

[155]    The sums claimed, and not disputed, are:

Nature Discoveries Queensgate Ltd             –     $115,310.71
Nadis Porirua Ltd  –       $68,880.81
Dakoris Ltd  –     $150,791.12
Nadis Glenfield Ltd  –     $131,182.69

[156]    Judgment for those amounts is appropriate.   However, as regards each  total  sum  is  owing  to  the  first  defendant  and  some  to  the  fifth defendant.   I am unaware of the adjusted amounts applicable to each. Memoranda may be filed if the parties cannot agree.

[8]      The basis of the recall application is that I was in error in thinking that the matter was now agreed. The plaintiffs still disputed the quantum.

[9]      Mr Waugh, who presented the recall application, was not trial counsel.  In a

Minute previously issued in relation to this application I had advised:

[5]       I indicated at the teleconference, and formally record, that the basis apparently  being  advanced  for  the  recall  does  not  accord  with  my recollection of events at trial.   It was my understanding that the area of dispute related to credits not given to the plaintiffs for various matters, that counsel had consulted, and adjustments made.   They were either by agreement, or allocated to the plaintiffs all the credits that were sought.  The plaintiffs, as I recall it, did not subsequent to that arrangement, advance submissions on the issue.

[6]       If the plaintiffs wish to present a different understanding of what occurred, they will need to make clear what is alleged to have occurred, and file any evidence available to it in support.  It will also need to be articulated, in clear terms and appropriate detail, in what way the counter-claim remains contested.

[10]     The plaintiffs have filed an affidavit and an affirmation, both by Mr Barrie. One predates my Minute; the other is subsequent.  In the affidavit (filed first) there is no reference to events at the trial, and the basis on which the case was put to me.  In the affirmation filed after my Minute, and obviously responding to its contents, Mr Barrie says he recalls trial counsel saying in closing submissions:

the value of credits due would need to be decided by the court.

[11]     The situation as set out in my Minute remains my recollection.  It accords, as I understand it, with Mr Matthews’ recollection.   He adds that I invited Mr Paine (trial counsel) to comment in his reply on the amended counterclaim, and that was not done.  That is also my recollection, but I am not certain of it.  I do not recall trial counsel saying what Mr Barrie recalls.   I note I have no evidence from former counsel for the plaintiffs.

[12]     It  must  to  the  outside  reader  seem  somewhat  surprising  that  there  is uncertainty, but it reflects, in my view, the total lack of focus at trial on the counterclaim.  Mr Pflaum in his evidence presented the invoices, and explained the basis for the claim.  He was not cross-examined on this evidence.  Earlier Mr Barrie had briefly in the overall context of his evidence, identified points of dispute.  He

was not cross-examined on these.  During the hearing (at NOE, p 228) counsel had indicated they were looking at resolving the issues.

[13]     In support of his present application, Mr Barrie in his evidence has identified the matters of dispute to be:

(a)      the failure of the defendants to include a payment of interest on the credits owing to the plaintiffs;

(b)the  actual  amount  of  some  credits  given  to  the  plaintiff,  being primarily a complaint about how the value of the fit-out had been assessed.  It is said it is incorrect to have done it on an “on site, forced sale” basis.

[14]     I can confidently say these matters were never addressed in this way at the hearing.  The parts of his trial evidence to which Mr Barrie refers appear to relate to different disputes, including the matters which were the subject of adjustment.

[15]    The simple reality is that the hearing did not equip me to address the counterclaim in the way the plaintiffs would now like it addressed because it was never put that way in evidence, or addresses.   Counsel for the plaintiffs did not address the counterclaim in opening, closing or reply.

[16]     I do not consider the circumstances come within the situations where recall is appropriate. The application is advanced on the “requirements of justice” limb of the test in Horowhenua County v Nash (No 2).[1]   However, at least as I see it:

[1] Horowhenua County v Nash (No 2) [1968] NZLR 632 (SC).

(a)      the plaintiffs seek a recall to be able to make arguments not advanced at trial.   The fact that the evidence filed in support of the present application needs to explain the disputes the plaintiffs want the Court

to now address, reflects this trial reality;

(b)the defendants (plaintiffs on the counterclaim) filed their evidence, were not cross-examined on it, nevertheless adjusted it down to reflect complaints  in  the  plaintiffs’ evidence,  and  submitted  an  amended claim.  No points of dispute were thereafter identified for the Court by the plaintiffs, despite opportunity to do so.

[17]     I am reluctant to comment further.  I accept, for the purposes of determining this application, Mr Barrie’s evidence that he did not want to concede the amended counterclaim, but that is not how the case was presented to the Court, and I do not consider it is a recall situation.

Finalising counterclaim

[18]     The counterclaim primarily relates to goods supplied.   In my judgment I indicated it was not clear to me how the identified sums were to be allocated across the different defendants.  Mr Matthews has filed a response, which is not opposed in relation to the amounts applicable to the various plaintiff corporate entities.

[19]     What is disputed are the judgments sought against Mr Barrie and Ms Wood, stemming from their position as guarantors.  The opposition arises because in giving judgment I did not refer at all to the position of the first and second plaintiffs.  It was an oversight by me.   No separate argument had been or is advanced to deny the liability of the first and second plaintiffs as guarantors.  All that is relied upon is my error.  The original judgment should have entered judgment against them, and failed to do so by oversight.

[20]     In the circumstances I consider I should treat the defendant’s application as one for recall, and accede to it.  It is a classic recall situation; I had simply in error omitted to include these two counterclaim defendants in the judgment.

Costs

[21]     The calculations made on a 2B scale basis are not in dispute. All defendants, however, seek increased costs, which are opposed.  The submission on this claim for

increased costs has been presented by Mr Matthews, and adopted by the seventh defendant.   What is sought is a 50 per cent uplift on three steps – preparation of briefs,  preparation  for  hearing,  and  preparation  of list  of issues, authorities  and common bundles.

[22]     The basis for the application is that matters were raised in the pleadings which were not pursued at trial, or which were conceptually flawed and had no chance of success.   It is submitted that the task of demonstrating the conceptual flaws  and  articulating  the  correct  law  rested  primarily  with  counsel  for  the defendants.  Matters specifically referred to are:

(a)       the  claim  of  fiduciary  duty  between  intending  franchisee  and franchisor;

(b)      the claim of interference with contractual relations; (c)           the cause of action in conversion;

(d)      the claim for general damages;

(e)       the claim for exemplary damages in relation to causes of action for which they were not available.

[23]     In the main judgment I commented on the merits or otherwise of various claims.   I do not repeat them.   There was a reasonable basis to pursue misrepresentation, and breach of contract.   The others were either optimistic, conceptually flawed,  and also at times just plain unnecessary (interference with contractual relations being the most obvious).

[24]     I am not satisfied these matters made a sufficient impact on the evidence to warrant an uplift.  In so far as it extended the scope of expert evidence, as Mr Waugh points out, that is being recovered as a disbursement.

[25]     I do consider there is merit in the claim for an uplift for the other two steps, at least as regards the parties for whom Mr Matthews acted.  I mean no disrespect to

Mr Forsey when I record an uplift is not justified for the seventh defendant.   The situation was that his client’s involvement was more peripheral, and accordingly Mr Matthews carried the bulk of the argument.  I accept the defendant’s claim that the onus of explaining the law, and then the conceptual flaws, rested with counsel for the defendants.  An uplift is justified.  Twenty-five per cent on those two heads is appropriate.

Conclusion

[26]     The application by the plaintiffs for recall is declined.

[27]     The defendants’ application for judgment against the first and second plaintiff is allowed.  I either treat their submission as a plaintiffs’ application for recall, and allow it; or of my own motion, recall paragraph [156] of the judgment to correct an unintended oversight. After the first sentence of para [156], there is added:

Judgment is also awarded against the first and second plaintiffs in sums to be confirmed.

[28]     Concerning the allocation of the counterclaim I make the following orders: (a)           Judgment for the first defendant against each of:

(i)       Scott John Barrie (first plaintiff) - $324,717.61;

(ii)      Annita Margaret Wood (second plaintiff) - $216,759.83;

(iii)     Nature Discoveries  Queensgate  Limited  (third  plaintiff)  -

$69,054.51;

(iv)     Nadis Porirua Limited (fourth plaintiff) - $34,599.24; (v)       Dakaris Limited (fifth plaintiff) - $107,957.78;

(vi)     Nadis Glenfield Limited (sixth plaintiff) - $113,106.08.

(b)      Judgment for the fifth defendant against each of:

(i)       Nature  Discoveries  Queensgate  Limited  (third  plaintiff)  -

$46,256.20;

(ii)      Nadis Porirua Limited (fourth plaintiff) - $34,281.57; (iii)      Dakaris Limited (fifth plaintiff) - $42,833.34;

(iv)     Nadis Glenfield Limited (sixth plaintiff) - $22,076.61.

Concerning costs

[29]     The seventh defendant is awarded costs and disbursements of $74,536.30. An uplift is declined.

[30]     No award is made in favour of the sixth defendants.

[31]     The other defendants are awarded costs of $85,048.00 and disbursements of

$40,615.01.  The costs figure for the other defendants represents a 25 per cent uplift on step 7.4, and trial preparation.  The calculation is based on the undisputed scale costs assessment appended to Mr Matthews’ submission.

[32]     Finally, if costs are not paid within 21 working days, the security held by the

Registrar is to be transferred to the first defendant, on request by the first defendant for that to occur.

Simon France J

Solicitors:

J H Waugh, Barrister, Wanganui, email:  [email protected]
H C Matthews, Partner, White Fox & Jones, Christchurch, email:  [email protected]

J P Forsey, Duncan Cotterill, Christchurch, email:  [email protected]