Bomac Laboratories Limited v Life Medicals (MSDN BHD)
[2012] NZHC 363
•7 March 2012
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV 2010-404-4654 [2012] NZHC 363
BETWEEN BOMAC LABORATORIES LIMITED Plaintiff
ANDLIFE MEDICALS (MSDN BHD) Defendant
Hearing: 16 February 2012
Appearances: H Macfarlane and G Luen for the Defendant/Applicant
C R Langstone for the Plaintiff/Respondent
Judgment: 7 March 2012
JUDGMENT OF GILBERT J
This judgment was delivered by me on 7 March 2012 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules. Registrar/Deputy Registrar
Date: ………………….
Solicitors: Jones Fee, Auckland: [email protected]
Hesketh Henry, Auckland: [email protected] [email protected]
BOMAC LABORATORIES LTD V LIFE MEDICALS (MSDN BHD) HC AK CIV 2010-404-4654 [7 March
2012]
[1] This is an application for review of Associate Judge Abbott’s decision declining the defendant’s application to stay this proceeding on the basis that New Zealand is forum non conveniens.
Background
[2] The defendant is a Malaysian-based company which manufactures products for medical and pharmaceutical companies. The plaintiff is a New Zealand company which produces and supplies a range of animal health products to the farming and veterinarian markets in New Zealand. Its products are also distributed worldwide through 60 overseas distributors.
[3] Some of the plaintiff’s products are supplied in PVC bags with tubes designed to enable medical solutions to be administered to animals. The defendant manufactured and supplied the plaintiff with PVC bags and tubes designed for this purpose. The plaintiff alleges that the supplies were made pursuant to an agreement entered into in November 1997 which required that the bags and tubes be manufactured from specified grades of plastic.
[4] The plaintiff says that in July 2007, soon after the commencement of the calving season, it began receiving complaints from customers throughout New Zealand that the bags were leaking. It says that it was forced to dispose of a large amount of product as a consequence. It claims to have suffered losses currently estimated to be $525,000.
[5] The plaintiff commenced this proceeding in July 2010. It alleges that the bags and tubes were manufactured from an inferior plastic material in breach of an express term of the contract. It also alleges that the bags and tubes did not correspond with description, were not of merchantable quality, and were not reasonably fit for purpose in breach of the implied conditions in ss 15 and 16 of the Sale of Goods Act 1908.
[6] Following service in Malaysia the defendant applied for a stay of the proceeding on the basis that Malaysia is clearly the more appropriate forum for resolution of the dispute. Despite service having been effected in Malaysia it founded its application on r 6.29(3) of the High Court Rules which provides:
6.29 Court's discretion whether to assume jurisdiction
...
(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.
[7] The application was argued before Associate Judge Abbott on 14 March
2011. In a fully reasoned reserved judgment dated 5 August 2011, the Associate Judge declined the application, rejecting the defendant’s submission that Malaysia was clearly the appropriate forum to hear the substantive dispute.
The Associate Judge’s decision
[8] In considering the stay application, the Associate Judge applied the well- settled legal principles set out by the House of Lords in Spiliada Maritime Corp v Cansulex Ltd[1] as applied and elaborated in New Zealand in such cases as Oilseed Products (NZ) Ltd v H E Burton Ltd, McConnell Dowell Constructors Ltd v Gardner-Roberts and Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd.[2]
There is no suggestion that the Associate Judge misdirected himself on any legal principle.
[1] Spiliada Maritime Corp v Cansulex Ltd [1986] UKHL 10.
[2] Oilseed Products (NZ) Ltd v H E Burton Ltd (1987) 1 PRNZ 313 (HC); McConnell Dowell Constructors Ltd v Gardner-Roberts [1988] 2 NZLR 257 (CA); and Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2011] 1 NZLR 754 (CA).
[9] The Associate Judge considered all relevant factors in determining the appropriate forum. These were as set out below.
[10] Associate Judge Abbott noted that Malaysia is a Commonwealth country with a Commonwealth jurisdiction. Its courts have power under s 74 of the Malaysian Contracts Act 1950 to order compensation for loss or damage arising from a breach of contract. The Associate Judge also noted that ss 15 and 16 of the New Zealand Sale of Goods Act 1908 are in identical terms to ss 15 and 16 of Malaysia’s Sale of Goods Act 1957. He was therefore persuaded that a Malaysian court would be able to grant the relief claimed in the proceeding and that this was a neutral factor in considering the appropriate forum.
Connection of the dispute to a particular jurisdiction
[11] The Associate Judge noted that the defendant has no business in New Zealand other than the arrangement with the plaintiff. Equally the plaintiff has no presence in Malaysia. Although the plaintiff distributes its products worldwide, it does so through independent distributors rather than having a presence itself in overseas countries. The Associate Judge noted that the supplies, the subject of the claim, were all to New Zealand and that the defendant had accepted that the New Zealand court had jurisdiction.
Relative cost and convenience
[12] The defendant filed an affidavit from its solicitor, Mr Yee, who estimated that the total cost of pursuing the proceedings in Malaysia would be 50,000 Malaysian ringgit. The Associate Judge noted that Mr Yee’s estimate was a bare figure unsupported by any breakdown or substantiating methodology. He found this evidence too general to be helpful. The Associate Judge was not persuaded that cost and convenience was a factor favouring one forum over the other.
Location and availability of documents and witnesses
[13] The Associate Judge considered that the defendant had not established an evidential basis for contending that there will be a significant disparity in the cost or
convenience of having to bring witnesses and documents to one forum or the other. The Associate Judge concluded that this factor was reasonably evenly balanced although he considered that the plaintiff would have difficulty securing the evidence of veterinarians and farmers if the trial proceeded in Malaysia.
Governing law
[14] The Associate Judge noted that the parties made no express choice of law in their contract. On the available evidence, he considered that there were arguments going both ways as to the governing law. He left the question open but considered that this was not a factor favouring one forum over the other because the relevant laws in each country were similar.
Strength of the plaintiff ’s case
[15] The Associate Judge attached little weight to this factor given the very early stage of the proceeding.
Enforcement of any judgment
[16] The Associate Judge considered that this was not a significant factor given that the plaintiff will have to bear the risk and costs of enforcement in Malaysia irrespective of which forum was chosen.
Other factors
[17] The Associate Judge briefly considered other factors being the costs already incurred, whether the application had been brought by the defendant to gain a tactical advantage, and whether there were procedural advantages in either jurisdiction. On the evidence available he considered that none of these factors significantly favoured one jurisdiction over the other.
[18] The Associate Judge concluded by finding that the defendant had not discharged its onus of showing that Malaysia is clearly the appropriate forum for this
dispute to be tried in the interests of the parties and for the ends of justice. Accordingly, he dismissed the stay application.
Approach on review
[19] The defendant, as the review applicant, has the burden of showing that the decision was wrong in that it rested on unsupportable findings of fact or applied incorrect legal principles.
[20] A court’s power in respect of forum non conveniens determinations is discretionary in nature[3] and requires a balancing of various considerations ignore which forum would be more convenient. The balancing exercise undertaken by the Associate Judge should not be carried out afresh on review. The decision will not be disturbed unless the Associate Judge gave such unwarranted weight to some factor, or such insignificant weight to another, as to be clearly wrong.[4]
Grounds of application for review
[3] Primesite Outdoor Advertising Ltd v City Clock (Australia) Ltd (1991) 4 PRNZ 472 (HC).
[4] Alex Harvey Industries Ltd v Commissioner of Inland Revenue (2001) 15 PRNZ 361 (CA) at [12]- [15].
[21] Ms Macfarlane submitted that the Associate Judge made unsupportable findings of fact that were plainly wrong because he failed to take into account the following relevant matters:
(a) relative cost and convenience;
(b) location and availability of documents and witnesses; and
(c) consequences of faulty manufacture.
Submissions
Relative cost and convenience
[22] Ms Macfarlane’s primary submission was that Associate Judge Abbott was wrong to disregard Mr Yee’s evidence. She submitted that this was the only evidence of the cost of a trial in Malaysia and was unchallenged in substance. She invited the Court to take judicial notice of the exchange rate between the New Zealand dollar and the ringgit and conclude that the cost of a trial of this dispute in Malaysia would be approximately NZ$20,000.
[23] There was no direct evidence of the likely cost of a trial in New Zealand but Ms Macfarlane submitted that the cost could be inferred from the scale costs under the High Court Rules. She submitted that a “barebones process”, allowing nothing for expert costs, would attract scale costs of $29,328. Ms Macfarlane submitted that scale costs are intended to represent two thirds of actual costs. On that basis, she submitted that a trial in New Zealand would cost $39,104, approximately double Mr Yee’s estimate for a trial in Malaysia.
[24] Ms Macfarlane submitted that it would cost less for food, accommodation, and other expenses in Malaysia than in New Zealand because of exchange rate differences.
[25] Ms Macfarlane submitted that the Associate Judge was wrong to disregard Mr Yee’s evidence. As a result, he failed to take into account that there was a cost disparity favouring Malaysia as the appropriate forum and he was therefore plainly wrong.
Location and availability of documents and witnesses
[26] Ms Macfarlane next submitted that the defendant may have to call Mr Shee (the managing director of the defendant at the time the contract was originally entered into in 1997). She submitted that the Associate Judge was not entitled to assume that Mr Shee was still employed by the defendant or that the defendant
would have no difficulty producing evidence in New Zealand of the contractual arrangements.
[27] Ms Macfarlane also submitted that the Associate Judge was wrong to assume that it would be relatively straightforward for the defendant to call evidence relating to the manufacturing process. She submitted that this was an assumption unsupported by any evidence.
[28] Ms Macfarlane submitted that the location of witnesses and documents should have favoured Malaysia or at least been neutral.
Consequences of faulty manufacture
[29] Finally, Ms Macfarlane submitted that the Associate Judge was wrong in stating at [43]:
What is significant, in my view, is that Life Medicals elected to enter into this contract with Bomac, knowing that its product would be used in New Zealand, and that the consequences of any faulty manufacture would be experienced in New Zealand.
She submitted that this finding conflicted with the evidence. She claimed that the defendant had no way of knowing the ultimate destination of its products and therefore where the consequences of any faulty manufacture would be felt. Ms Macfarlane argued that no weight should have been placed on this factor.
[30] In summary, Ms Macfarlane submitted that proceedings should have been stayed on the grounds of forum non conveniens because, on the basis of Mr Yee’s evidence, it would be less expensive to conduct the trial in Malaysia than in New Zealand. She submitted that all other factors were neutral.
Discussion
[31] The Associate Judge described Mr Yee’s evidence as “too general to be helpful”.5 I agree. Further, Mr Yee did not purport to be independent. He did not
5 At [22].
qualify himself as an expert and he did not confirm that he had read or agreed to comply with the code of conduct for expert witnesses set out in Schedule 4 of the High Court Rules. Mr Yee did not reveal his analysis or reasoning. There is no way of critiquing his bare assertion about the likely cost of a trial of this dispute in Malaysia. In my view, the Associate Judge was entitled to disregard Mr Yee’s evidence.
[32] The defendant, having accepted that all other factors are neutral, is wholly reliant on Mr Yee’s evidence to support its contention that Malaysia is clearly the more appropriate forum for trial of this dispute because of cost. Therefore, without Mr Yee’s evidence, the whole basis of the defendant’s application falls away. It follows from my conclusion that the Associate Judge was entitled to disregard Mr Yee’s evidence, that the application for review must be dismissed.
Result
[33] The application is dismissed.
[34] The plaintiff is entitled to costs on this application on a 2B basis. [35] A case management conference is to be allocated by the Registry.
M A Gilbert J
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