BDM Grange Ltd v Trimex Pty Ltd - [2017] NZCA 12

IN THE COURT OF APPEAL OF NEW ZEALAND

CA645/2015
[2017] NZCA 12

BETWEEN	BDM GRANGE LTD Appellant
AND	TRIMEX PTY LTD Respondent

Hearing:	4 August 2016
Court:	Kós P, Harrison and Venning JJ
Counsel:	L J Turner for Appellant M H L Morrison and C M Hanafin for Respondent
Judgment:	17 February 2017 at 10:00am

JUDGMENT OF THE COURT

A The appeal is allowed in part:

(a)by setting aside judgment for the respondent for special damages of $1,537,643 and substituting judgment for $1,419,297; and
(b)setting aside judgment for the respondent for general damages of $150,000.

BAny issue as to practical implementation of the revised calculation of permissible deductions by the appellant is to be dealt with in the High Court, as is costs in that Court.
CThe appellant will have costs in this Court for a standard appeal on a Band A basis, together with usual disbursements.

____________________________________________________________________

REASONS OF THE COURT

(Given by Kós P)

Trimex Pty Ltd held the Australasian distribution rights to a number of leading cosmetics brands, such as Clarins. BDM Grange Ltd was its long term New Zealand distributor, remunerated by a profit share arrangement. A dispute arose about costs BDM was entitled to deduct. In 2012 Trimex terminated the distribution arrangement.
In the High Court, Duffy J found costs deductions made by BDM were impermissible. Partly as a result of this, BDM had underpaid Trimex its net profit entitlement. On that basis she entered judgment against BDM for $1,537,643.[1]
[1]BDM Grange Ltd v Trimex Pty Ltd [2015] NZHC 2469 (“HC Judgment”).
Duffy J also found BDM had committed the tort of injurious falsehood by sending three emails to customers of Trimex in 2013. For that she awarded general damages to Trimex of $150,000.
BDM appeals. The issues on appeal have narrowed from those before the High Court. They are:
(a)Issue 1: did the Judge err in finding BDM had made impermissible deductions for advertising and promotions costs (A&P costs) for the 2011 and 2012 financial years?[2]
(b)Issue 2: did the Judge err in quantifying damages at $150,000 for injurious falsehood?
[2]The parties adopted a financial year that ran from 1 October to 30 September of the next year.
The amount in dispute in Issue 1 is $702,746. It comprises $590,866 for the Clarins line, $92,771 for the RoC line and $19,109 for Swarovski.[3]

Facts

[3]A table setting these figures out is shown at [22].

Trimex is an Australian company that holds distribution rights in Australasia from certain brand principals for high quality cosmetics. Its main business was distributing cosmetics produced by the French group Clarins.
In 1984 Trimex agreed with BDM that the latter act as its wholesaler in New Zealand. BDM would store the products in its warehouses and distribute them to retailers. This arrangement was informal, flexible, ill-defined and not ultimately governed by the written joint venture contract they entered at that time. No such joint venture actually occurred. The parties at trial approached the task of defining the…

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.

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Details

Case: [2017] NZCA 12
Decision Date: 17 February 2017 at 10:00am

CaseChat Overview and Summary

BDM Grange Ltd (BDM) appealed against a decision of the High Court which found BDM had breached its contract with Trimex Pty Ltd (Trimex) by deducting excessive costs in relation to advertising and promotions. The High Court also awarded Trimex general damages for injurious falsehood. The Court of Appeal allowed the appeal in part. It found that the Judge had erred in her assessment of the allowable advertising and promotion costs for 2011. The Court of Appeal found that BDM was permitted to deduct advertising and promotion costs up to the budgeted sum, so long as those costs were in fact incurred. The Court of Appeal also found the Judge had erred in awarding general damages for injurious falsehood. The Court of Appeal held that Trimex had not met its onus of showing the emails were more likely than not to cause or to have caused pecuniary loss to Trimex. The appeal is allowed in part: (a) by setting aside judgment for the respondent for special damages of $1,537,643 and substituting judgment for $1,419,297; and (b) setting aside judgment for the respondent for general damages of $150,000. Any issue as to practical implementation of the revised calculation of permissible deductions by the appellant is to be dealt with in the High Court, as is costs in that Court. The appellant will have costs in this Court for a standard appeal on a Band A basis, together with usual disbursements.

Orders