Closurepac NZ Ltd v WS 2014 Ltd

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-1397 [2015] NZHC 1587

BETWEEN

CLOSUREPAC NZ LIMITED

Plaintiff

AND

WS 2014 LIMITED First Defendant

AND

DAVID NIGEL DALE Second Defendant

AND

JANENA NENE CORLETT Third Defendant

AND

DAVID NIGEL DALE AND JANENA NENE CORLETT

Fourth Defendants

Hearing:	11 - 15 May 2015
Appearances:	H L Thompson for the Plaintiff A Maclean for the defendants
Judgment:	8 July 2015

JUDGMENT OF THOMAS J

This judgment was delivered by me on 8 July 2015 at 3.00 pm pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date:………………………….

Solicitors:

McMahon Butterworth Thompson, Auckland. Alistair Maclean, Auckland.

CLOSUREPAC NZ LIMITED v WS 2014 LIMITED [2015] NZHC 1587 [8 July 2015]

Introduction

[1]      The plaintiff, Closurepac NZ Ltd (Closurepac), is a company carrying on business as a converter and supplier of wadding closures and seals to the packaging industry.

[2]      Closurepac purchased the business of the defendant company, The Wadding Shop (2007) Ltd since renamed WS 2014 Ltd (The Wadding Shop), in January 2013. Closurepac brings proceedings against The Wadding Shop, as well as Mr David Dale and  Ms Janena Corlett  (Mrs  Dale)  in  their  personal  capacity  as  directors  and shareholders of The Wadding Shop.

[3]      Closurepac’s case is that it purchased The Wadding Shop business and assets (the Business) based on misrepresentations made to Mr Ralph, Closurepac’s director, on two occasions.  It seeks damages under the Contractual Remedies Act 1979 and compensation under the Fair Trading Act 1986.

Background

[4]      In December 2013, Mr Ralph entered into a sale and purchase agreement (the Agreement) with The Wadding Shop to buy the Business for $820,000.  Mr Ralph then nominated Closurepac1 as purchaser under the Agreement and settlement occurred on 31 January 2014.  The plaintiff says the Agreement was entered into by Mr Ralph for the benefit of Closurepac.

[5]      On 3 February 2014, the first day on which the Business was operating under Closurepac’s ownership and management, Mr Ralph was contacted by Mr Dale.  He was told that a major customer of the business, VIP Packaging (VIP), had been advised of quality control issues by its own substantial customer, Comvita.   The problems  relating  to  the  closures  which  had  been  lined  by The Wadding  Shop included:

(a)       contamination of closures with loose shards of wadding material;

1      The  plaintiff  was  then  called  Kilsheelan  Investments  Ltd  but  was  subsequently re-named

Closurepac Ltd.

(b)      elliptically cut and therefore ill-fitting wads; and

(c)       imprecisely cut wads with ragged or torn edges, particularly when

using a wadding product known as Lift ‘n’ Peel T Max (Lift n Peel).

[6]      As a result, Comvita rejected a large quantity of closures supplied to it by VIP which had been lined by The Wadding Shop.  Despite various damage control measures, VIP withdrew some work from Closurepac.

[7]      Closurepac’s   case   is   that   it   purchased   the   Business   as   a   result   of representations contained in an Information Memorandum (the Memorandum) which was provided to Mr Ralph by Three Sixty Capital Partners Ltd (Three Sixty)…