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Detection Services Pty Ltd v Pickering

Detection Services Pty Ltd v Pickering

Case [2019] NZCA 575 21 November 2019

Contract Formation

Breach of Contract

Unconscionable Conduct

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IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA30/2019
[2019] NZCA 575

BETWEEN	DETECTION SERVICES PTY LIMITED First Appellant DETECTION SOLUTIONS PTY LIMITED Second Appellant
AND	CHRISTOPHER LORRAINE PICKERING First Respondent AQATAR LIMITED Second Respondent

Hearing:	10 September 2019
Court:	Gilbert, Duffy and Wylie JJ
Counsel:	M A Corlett QC, R D Butler and J Nedeljkov for Appellants A R B Barker QC and J K Grimmer for Respondents
Judgment:	21 November 2019 at 9.30 am

JUDGMENT OF THE COURT

AThe appeal is allowed.
BThe cross-appeal is dismissed.
CThe proceeding is remitted to the High Court to determine the quantum of damages payable to the appellants.
DThe Costs judgment is set aside. Costs in the High Court are to be assessed by that Court in the light of this judgment.
EThe respondents are to pay the appellants costs for a standard appeal on a band A basis and usual disbursements. We certify for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Gilbert J)

Table of contents

Introduction  [1]
           Appellants’ claim  [9]
           Respondents’ defence and counterclaim  [14]
           High Court judgment  [16]
           Grounds of appeal  [24]
           Grounds of cross-appeal  [25]
           The issues  [27]
           Did the respondents breach their obligations to the appellants?
           Submissions on appeal  [28]
  Analysis  [31]
           Was the High Court correct to deny relief to the appellants by
           applying the clean hands maxim?  [42]
  Submissions on appeal  [49]
  Analysis  [51]
           Was the High Court correct to dismiss the respondents’
           counterclaim for breach of contract?
Submissions on appeal  [58]
  Analysis  [63]
           What, if any, relief should be given?  [66]
Result  [68]

Introduction

This appeal and cross-appeal illustrate the difficulties that can arise when long‑standing friends enter into a business venture without legal advice, formal documentation, or any clear understanding of their respective rights and obligations.
Stephen Simmons, who lives in Sydney, is the founder of the Detection Services group of companies which specialises in detecting leaks in water pipes. The group comprises the two appellant companies, both based in Australia, and two related New Zealand companies, Detection Services Ltd and Detection Solutions Ltd. For convenience, we will refer to these companies collectively as “Detection Services”. Detection Services’ customers include various Australian water authorities responsible for public water supply.
Christopher Pickering, who lives in Auckland, is the founder of the second respondent, Aqatar Ltd, a company incorporated in New Zealand in January 2010. Mr Pickering has expertise in computer software development.
Mr Simmons and Mr Pickering were long-standing friends until they fell into dispute over ownership of a new computer‑controlled leak detection system, which the High Court found was designed and built for Detection Services in a joint venture between the parties.[1] The system was intended to be used by Detection Services to detect leaks in high‑pressure water mains. In very general terms, the system was a refinement of existing technology involving the deployment of a hydrophone attached to the head of a cable into the main. As the hydrophone travels down the main with…

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.

Continue reading Detection Services Pty Ltd v Pickering

Details

AGLC: Detection Services Pty Ltd v Pickering [2019] NZCA 575
Case: [2019] NZCA 575
Decision Date: 21 November 2019 at 9.30 am

CaseChat Overview and Summary

In this case, Detection Services Pty Limited and Detection Solutions Pty Limited (appellants) appealed against the decision of the High Court, which found that they were not entitled to relief for the respondents' breaches of fiduciary duty. The respondents, Christopher Lorraine Pickering and Aqatar Limited, cross-appealed against the dismissal of their counterclaim for breach of contract. The issues in this case were whether the respondents breached their obligations to the appellants, whether the High Court was correct to deny relief to the appellants by applying the clean hands maxim, whether the High Court was correct to dismiss the respondents' counterclaim for breach of contract, and what, if any, relief should be given.

The Court found that the respondents breached their obligations under the joint venture by claiming sole ownership of the system, refusing to disclose the third-party costs incurred in developing it, and refusing to deliver the completed system to the appellants for their exclusive use. These were all breaches of pleaded obligations that were found by the Judge to have been terms of the joint venture. The Court also found that the High Court was not correct to deny relief to the appellants by applying the clean hands maxim. The Court held that the appellants' losses consequent on not being able to use the system were not in any way caused or contributed to by the letter sent by their solicitors on 4 July 2011. Finally, the Court found that the High Court was correct to dismiss the respondents' counterclaim for breach of contract.

As a result of these findings, the appeal is allowed, the cross-appeal is dismissed, the proceeding is remitted to the High Court to determine the quantum of damages payable to the appellants, and the Costs judgment is set aside. The respondents are to pay the appellants costs for a standard appeal on a band A basis and usual disbursements.

Orders