BDM Grange Limited v Trimex Pty Limited

[2014] NZHC 2400

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2013-404-4460 [2014] NZHC 2400

BETWEEN

BDM GRANGE LIMITED

Plaintiff

AND

TRIMEX PTY LIMITED Defendant

Hearing:	1 October 2014
Appearances:	L J Turner for Plaintiff C M Hanafin & K D Puddle for Defendant
Judgment:	2 October 2014

JUDGMENT OF KEANE J

This judgment was delivered by me on 2 October 2014 at 2.30 pm pursuant to r 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Solicitors:

Whaley Garnett, Auckland for Plaintiff

Lowndes Jordan, Auckland for Defendant

BDM GRANGE LTD v TRIMEX PTY LTD [2014] NZHC 2400 [2 October 2014]

[1]      In issue in this proceeding is the nature of the relationship between Trimex, an Australian  company,  and  BDM  Grange,  a  New  Zealand  company,  under  an October 1984 agreement, as a result of which until September 2012 Trimex supplied BDM Grange with Clarins and other skin-care products for sale and distribution in New Zealand.

[2]      Was this relationship, as BDM contends, a joint venture in the nature of a partnership, under which BDM is now entitled to an account of profits?  Or was it, as Trimex contends, at most a distribution relationship under which BDM owes Trimex unpaid royalties?  This issue is to be resolved by inference from the conduct of the parties  after  the  agreement  was  entered  into.    It  is  a  short  agreement  which anticipates that they would enter into a joint venture.  BDM contends that they did, and Trimex that they did not.

[3]      Also in issue is whether BDM is entitled to a termination fee as a result of Trimex ending their relationship as from September 2012.   BDM relies on an agreement they had been negotiating, but never executed, that it says governed their relationship as from 23 October 2007.  Trimex denies that the unexecuted draft ever achieved that force.   In issue as well is whether BDM is answerable in injurious falsehood and for misleading conduct under the Fair Trading Act, as a result of an email sent to one of Trimex’s suppliers on 18 October 2013 stating that Trimex was unable to pay whatever it owed BDM.

[4]      The proceeding is set down for a seven day hearing to begin on 24 November

2014.  To be resolved before then, at this present fixture, according to Andrews J’s minute, dated 25 September 2014, there were six matters.  In the event those matters were largely resolved before this fixture, and I have resolved the confined issues that remain largely unopposed.

[5]      As to the first issue Andrews J identified, the use that may be made at trial of the affidavit evidence given for the purpose of a proceeding prior to this in which BDM sought to have set aside a statutory demand Trimex had issued for unpaid royalties, she said this:

Following discussion with counsel, my understanding is that it is agreed that

… affidavits (in the earlier proceeding) may be relied on as evidence in chief

for the parties, but that supplementary evidence may be adduced in respect of any matters not addressed in the related proceeding.

[6]      As to four of its six proposed witnesses, BDM wishes to rely on the affidavits given in the earlier proceeding, but Trimex intends to file full witness briefs and contends that its position has always been that BDM should also file and serve full briefs.   Trimex’s concern is that it may be caught by surprise by reply briefs containing evidence that should have been set out by BDM in primary briefs.

[7]      BDM’s position is that the affidavits given in the prior proceeding set out adequately the documentary trail since the 1984 agreement was entered into; a trail which it says is consistent only with a joint venture from that point.  Witness briefs saying the same thing, it contends, are unlikely to serve any useful purpose.   But those affidavits were prepared for a more confined proceeding than this, and whether they are adequate is not to be assumed uncritically.

[8]      I direct therefore that, while BDM may continue to rely on the affidavits filed in the earlier proceeding as if they were briefs filed in this proceeding, counsel is to review them and file and serve any supplementary briefs called for by 10 October

2014, 10 days before Trimex is required to file and serve its briefs in response.

[9]      There is no issue, I should add also, that at trial the affidavits given in the prior  proceeding  by  both  BDM  and  Trimex  are  admissible  independently  for whatever probative purpose they may serve.  The trial Judge, it is accepted, may rely on those affidavits.

[10]     Secondly, Trimex’s application for particular discovery, dated 5 August 2014, is granted by consent as to all the categories of document set out in paragraph 1.1(a) and (b), except those set out in subparagraphs 1.1(a)(ii) and (iii), which Trimex already has.     BDM is to comply by affidavit filed and served no later than 10

October 2014.

[11]     The only issue as to the particular discovery Trimex seeks concerns two further categories of document, which it has identified in its submissions, dated 26

September 2014: (i) BDM’s full financial statements for the 2013 financial year; and (ii) any fixed assets register of the alleged partnership in the years 1994 – 2013. BDM takes no issue as to the latter.  It puts in issue the relevance of the former.  The

2013 financial statements, it says, are irrelevant because the relationship ceased in

2012.  Moreover, BDM and Trimex are now competitors and Trimex is concerned to keep its current financial state confidential.

[12]     The 2013 financial statements are relevant, according to Trimex, as a possible point of contrast with BDM’s earlier relevant financial statements that it does have. If the 2013 statements are indistinguishable, it says, BDM’s claim that there was a joint partnership will be rendered less cogent.  BDM responds that it never singled out the joint venture in its financial statements during the relevant years and that there will be no contrast.

[13]     BDM  may  well  be  right.    But  Trimex  is  entitled  to  compare  the  2013 financial statements with those it has, subject to this;  as a competitor Trimex should not have access to BDM’s current financial statements.  I direct BDM, therefore, to disclose the 2013 statements to Trimex’s counsel, and expert accounting witness, on condition  that  neither  discloses  them  to  anyone  else,  and  that  the  statements disclosed are to be destroyed immediately the case concludes.

[14]     Thirdly, BDM now has only a limited need to pursue its application for further particular discovery, dated 17 September 2014, and, fourthly, no need to pursue its application for an order setting aside Trimex’s claim of privilege.  Trimex has filed an affidavit containing further information, annexing copies of some documents and, in some instances, changed its claims to privilege or as to relevance. BDM now only pursues two email exchanges, which Trimex disclosed initially, claiming litigation privilege, but has not disclosed in its affidavit of documents on the ground that they are irrelevant.  The first ends on 12 May 2012 and the second ends on 25 December 2013.

[15]     To resolve whether these email exchanges may be relevant I have reviewed them myself and required Trimex to supply copies to BDM’s counsel on his undertaking not to disclose them to BDM, and to review them solely for this present

purpose.    He  accepts  that  neither  falls  within  the  adverse  document  category requiring disclosure under the present rules and I agree.  I uphold Trimex’s decision that  the  documents  are  irrelevant.    I  decline  BDM’s  application  that  they  be disclosed.

[16]     Fifthly,  BDM  abandons  its  application  for  an  order that Trimex  produce documents for inspection. The documents in question have now been produced.

[17]     There remains, sixthly, BDM’s application for an order striking out Trimex’s second and third counterclaims, which rely on the email sent to one of Trimex’s suppliers on 18 October 2013.   BDM contends that Trimex’s pleaded claims for injurious falsehood and breach of the Fair Trading Act are unsustainable because it has not identified any damage to its commercial relationships or any loss.

[18]     Trimex contends in response that, as a matter of law, it need only prove the likelihood of loss, and it has also undertaken to confirm by evidence at trial whether it has suffered any detriment.  BDM’s two causes of action as pleaded are otherwise sustainable and this confined issue of law, I consider, is better resolved by the trial Judge against such evidence as there finally is.  I decline to resolve BDM’s strike out application at this point.

[19]     Finally, there is the issue of costs.  Trimex, more especially, pursues costs. But the six issues Andrews J identified in her minute, dated 25 September 2014, have largely been resolved sensibly by counsel, as she urged that they should be, and counsel are to be commended.  I decline to make any order either way.  Costs are to

lie where they fall.

P.J. Keane J