Ellison Trading Limited v Liebherr Export-AG HC Hamilton CP76/99

[2001] NZHC 1309

IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY CP76/99

BETWEEN ELLISON TRADING LIMITED
Plaintiff

AND (1) LIEBHERR EXPORT - AG
(2) LIEBHERR AUSTRALIA PTY LIMITED
Defendants

Hearing: 5 and 6 December 2001

Counsel: A L Hassall QC for plaintiff
L Riddiford for first and second defendants

Judgment: 20 December 2001

JUDGMENT OF MASTER FAIRE

Solicitors:
J Webb, PO Box 132, Hamilton for plaintiff
Buddle Findlay, PO Box 1433, Auckland for defendants

[1] The defendants apply by amended applications for orders dismissing the proceedings or, alternatively, that the proceeding be stayed. The first defendant seeks additional relief by way of an order either dismissing the second cause of action or staying it. The second cause of action relates solely to the first defendant.

[2] The proceedings have been served. The first defendant filed an appearance under protest. The first defendant’s application is made in reliance on High Court Rules 131(3) and 477. The second defendant has not filed an appearance under protest. Its application relies on High Court Rule 477 alone.

[3] A preliminary matter was raised. Counsel for the first defendant objected to my considering three affidavits tendered on behalf of the plaintiff. They are affidavits of L E Ellison, dated 3 December 2001 (2) and L E Ellison Junior, also dated 3 December 2001. The basis for the objection is that the affidavits were filed without leave and outside the time I set for filing affidavits in opposition.

[4] The disposal of these applications has regrettably been delayed. The matter was first delayed to suit the convenience of the parties. Further delay occurred because of an absence of Court time to dispose of the matter.

[5] On 7 February 2001 I directed:

“The amended application seeking a stay or dismissal on the grounds of forum non conveniens are adjourned to 2.15pm on 30 April 2001. The plaintiff shall file and serve affidavits in opposition by 14 March 2001. The defendants shall file and serve affidavits in reply by 18 April 2001.”

[6] The late filing of the three affidavits has meant that the defendants cannot respond to same. Despite that difficulty, Ms Riddiford advised that her clients wished to proceed irrespective of my ruling. That position, understandably, indicates that she considered that, apart from certain issues as to admissibility which can be considered in submissions no specific prejudice is raised by the late filing of the affidavits.

[7] Mr Hassall advanced two alternative grounds for my considering the affidavits. In the first place he relied on High Court Rule 253 and says that the plaintiff is entitled, as of right, to file such affidavits. High Court Rule 253 provides:

“(1) Except by leave of the Court,-

. . .

(b) No affidavit shall be read in opposition to an interlocutory application unless it has been filed and served not later than 1 pm on the day preceding the hearing of the application, or in the case of an affidavit or an agreed statement of facts previously filed in the Court, unless notice of intention to read it has been so filed and served.

(2) Any party may, by leave of the Court, read any affidavit filed in answer to any new matter arising from an affidavit filed by any other party irrespective of the time when the answering affidavit was filed or served.”

[8] It is also appropriate that I refer to two other Rules. They are High Court Rule 238(6) and High Court Rule 6. High Court Rule 238(6) provides:

“(6) Before the hearing of the application (including an application under rule 136 or rule 137), a Judge in Chambers may make such orders as he thinks fit, including orders as to the date and place of hearing and time within which any party may file affidavits.”

High Court Rule 6 provides:

“(1) The Court may, in its discretion, enlarge or abridge the time appointed by these rules, or fixed by any order, for doing any act or taking any proceeding or any step in a proceeding, on such terms (if any) as the Court thinks just.

(2) The Court may order an enlargement of time although the application for the enlargement is not made until after the expiration of the time appointed or fixed.”

[9] In my view, the order made on 7 February 2001 is an order made pursuant to Rule 238(6) which either abridges the time for the filing of affidavits as set out in Rule 253 or fixes the time. It is made by virtue of High Court Rule 6. Accordingly, there is, in my view, no absolute right to file the affidavits outside the time that I directed on 7 February 2001.

[10] Mr Hassall advances an alternative ground. He sought leave. Pursuant to the Court’s general jurisdiction. He advanced the following matters:

[a] No specific prejudice has been identified by the defendants arising out of the late filing of the affidavits;

[b] Because of the delay in obtaining a fixture intense preparation had been delayed until just before the fixture. In the course of that preparation further evidence was brought to his attention. Because of concerns for costs this inquiry had not been undertaken at an earlier time;

[c] If the further affidavits are not considered, the matter will be considered without all issues being before the Court and there is a risk of an injustice to the plaintiff.

[11] Ms Riddiford opposes my taking into account specific aspects of the further affidavit evidence. Those parts are:

[a] A telefax from the plaintiff to Mr Michaelis which is marked “without prejudice” and which is dated 16 December 1998;

[b] Passages from Mr Ellison junior’s affidavit of 3 December 2001, on the grounds that the information is hearsay. That relates to an alleged acknowledgement that an oral agreement had been made;

[c] Passages from Mr Ellison’s affidavit of 3 December 2001 dealing with matters allegedly told to him by Mr Rod Brown, the general manager of Sims Pacific Metals Limited

[12] Mr Hassall submitted that the material that was advanced with the 3 December affidavits was introduced primarily to counter a plea that the defendants have a defence based on the Limitation Act. He submitted that because there were no pleadings he had not appreciated that such a defence would be raised. It came to his notice when counsel for the defendant very helpfully made available her submissions to Mr Hassall some days before the hearing.

[13] I have reached the conclusion that leave should be granted to the plaintiff to allow the reading of the further affidavits of Mr Ellison senior (2) and one of Mr Ellison junior dated respectively 3 December 2001 and 30 November 2001. As to the specific objections to the contents of those affidavits, those will be dealt with as I deal with the specific elements of the application. In this way, I am satisfied that there is no risk of prejudice to the defendants. Indeed, had there been any risk of prejudice to the defendants, this is a case where certainly an adjournment of the application on the defendants’ application would have been granted. Until the protest or the application for stay is resolved, the proceeding cannot advance. That is the measure of protection that is available to the defendants. By electing to proceed with the applications, the defendants have confirmed to me the position that was fairly put by Ms Riddiford that there is no prejudice caused by the late filing of these affidavits.

[14] On the other hand, if I look at the position of the plaintiff and I take into account that there is no specific pleading to the statement of claim which would have identified the existence of a limitation defence, there may well be injustice to the plaintiff if I do not consider this further material. Weighing up the positions of both parties, it seems to me that it is in the interest of justice that I receive the affidavits subject to my further consideration of the specific objections to some of their content.

[15] It is appropriate that I briefly set out the background.

[16] The plaintiff is a New Zealand company. Until 31 December 1993, it imported into New Zealand and retailed sold Liebherr hydraulic excavators, Liebherr bulldozers and the spare parts for this machinery.

[17] The first defendant is a Swiss company. It sells and services the Liebherr hydraulic excavators and bulldozers and spare parts. The second defendant is an Australian company. It imports the same Liebherr equipment to Australia. Since 31 December 1993 it imports and retail sells the same equipment in New Zealand. Both defendant companies are separate entities. They report to a third company, known as Liebherr International AG. That is a Swiss company.

[18] The plaintiff’s statement of claim contains two causes of action. The essence of the first cause of action is an allegation that the plaintiff entered into an oral agreement on or about 30 November 1993 involving both the first and second defendants and the purchase back of spare parts which the plaintiff had purchased form the first defendant. This cause of action is pleaded in the alternative against the first and second defendants.

[19] The second cause of action alleges breach by the first defendant of an agreement dated 3 November 1977 between the plaintiff and the first defendant. The plaintiff here seeks the loss of profit which the plaintiff claims it has suffered as a result of the alleged breach of the agreement. The plaintiff has quantified that loss of profit at $75,000. The relief sought in this second cause of action is against the first defendant alone.

[20] The link between the causes of action is the termination of a written dealership agreement between the plaintiff and the first defendant.

[21] On 3 November 1977 the first defendant entered into a written dealership agreement with the plaintiff. That agreement granted to the plaintiff the right to import and sell in New Zealand Liebherr hydraulic excavators, manufactured by Liebherr-Hydraulikbagger GmbH, Federal Republic of Germany and Leibherr-France S.A., France. It also gave the plaintiff the right to import and sell in New Zealand Liebherr bulldozers manufactured byLeibherr-Werk Telfs Ges.m.b.H., Austria. In addition, the plaintiff was given the right to import and sell in New Zealand spare parts for the Liebherr hydraulic excavators and the Liebherr bulldozers. It also had the right to perform after-sales service and repair work for the excavators and bulldozers.

[22] The agreement, though initially for a finite period, makes provision for its continuation indefinitely. It then provides that both parties:

“Shall then be entitled to terminate the agreement at the end of any calendar month by giving three month’s advance notice. Notice of termination is to be submitted in writing.”

[23] On 31 August 1993 the first defendant sent a letter to the plaintiff terminating the agency agreement effective from 31 December 1993. Although it was not obliged to do so, the first defendant said the letter was issued due to the change in company policy. The first defendant advised that in future the New Zealand operation would be governed by Liebherr Australia.

[24] On 30 November 1993 a meeting took place in Auckland, New Zealand between Mr Ellison senior of the plaintiff company, Mr Klovekorn of the second defendant and Mr Michaelis of the first defendant. The plaintiff alleges that at that meeting either the first or second defendant agreed to purchase from the plaintiff all the spare parts held by the plaintiff for Liebherr equipment. It is alleged that the purchase price would be:

“At a fair and reasonable price.”

Both defendants contended now that no such agreement was effected because:

[a] There was no agreement as to price;

[b] There was no agreement as to which spare parts were to be covered by the agreement.

[25] A second cause of action alleges a breach of a specific clause of the agreement of 3 November 1977. The particular clause provides:

“Inquiries received by Liebherr

If inquiries are received for the articles covered by this agreement direct from the dealers’ territory, Liebherr will forward them to the dealer for his attention. Liebherr shall be entitled to trade with customers in the agreement territory without using the dealer as an intermediary if the matter is one which the dealer could not himself undertake.”

[26] There is a further provision which is relevant is the provision dealing with termination. In particular, the agreement provides the following:

“If the agreement has been terminated by one of the parties giving notice, Liebherr shall be entitled from the date of notice of termination onwards to sell the articles covered by the agreement either directly or through third parties within the agreement territory. The dealer shall not be entitled to receive any discount or commission in respect of any dealings negotiated in such circumstances by Liebherr or by third parties.”

The reference in the agreement of 3 November 1977 to Liebherr is defined in the agreement itself as a reference to the first defendant.

[27] Two further provisions of the agreement of 3 November 1977 are relevant. The first is under the heading “Fulfilment of commitments, legal jurisdiction”. The agreement under this heading provides:

“The place of fulfilment and for jurisdiction in respect of all commitments under this agreement shall be the appropriate registered office of Liebherr. Liebherr shall, however, be entitled to take action to establish its claims at the place where the dealers’ registered offices are situated if it sees fit.”

[28] The agreement also contains the following provision:

“Legal Code

The legal relationship between Liebherr and the dealer shall be exclusively governed by Swiss law.”

[29] The first defendant’s registered office is at Nussdaumen/Obersiggental, Switzerland.

[30] The precise circumstances and facts which are said to justify the claim of a breach of 3 November 1977 agreement by the first defendant are not spelled out with specific particulars. The allegation made is that prior to the cancellation of the agreement effective as at 31 December 1993, the first defendant and the second defendant received an inquiry for a Liebherr 932 hydraulic excavator, manufactured by Liebherr-France, SA France from Sims Pacific Metals Limited of Otahuhu, New Zealand. It is then alleged that neither the first nor second defendant referred the inquiry to the plaintiff. It is next alleged that the defendants proceeded to respond to the inquiry and in the end result sold an excavator to Sims Pacific Metals Limited for a purchase price of NZ$417,000. It is alleged that delivery took place in December 1993. It is alleged that the invoice for the excavator was dated 6 January 1994. It is alleged that the first defendant was in breach of the agreement of 3 November 1977.

[31] That general allegation has been expanded upon by Mr Ellison senior, in his affidavit of 3 December 2001. Ms Riddiford challenged Mr Ellison’s deposition on the grounds that it was hearsay because he was simply repeating what he had been told by the general manager of Sims Pacific Metals Limited. I will return to the admissibility argument later in this judgment. The general manager of Sims Pacific Metals Limited is alleged to have said that his company received a quotation from the second defendant to supply an excavator on 20 July 1993. The quote was accepted by Sims Pacific Metals Limited on 4 August 1993. Delivery was effected in December 1993. The machine became operational in January 1994. The second defendant issued the invoice for the machine to Sims Pacific Metals Limited on 6 January 1994.

[32] This proceeding was filed on 16 December 1999. The second defendant was served at an date not provided to the Court but apparently prior to 20 June 2000. The first defendant was served on 20 July 2000.

[33] On 23 June 2000 Simpson Grierson, barristers and solicitors of Auckland, issued a notice on behalf of both first and second defendants. The notice required

“The plaintiff to serve upon them within 21 days of the date of service of this notice, the further particulars set out below, being particulars which are necessary to give fair notice of the plaintiff’s causes of action against the defendants. The defendants consider that the statement of claim is defective in that it omits the particulars required by Rules 108(b) and 181, and appears by the list required of the particulars set out below.”

[34] I need not in this judgment detail the precise notice. The first aspect of the notice seeks further particulars regarding the alleged oral agreement of 30 November 1993. The second aspect raised in the notice of particulars requires the plaintiff to specify

“The alleged fair and reasonable value of each spare part for which it is claimed the defendants are obliged to pay.”

[35] It will be observed from the above that the particulars so far referred to, relate to the first cause of action alone.

[36] The notice for particulars, however, sought a further inquiry. It relates specifically to the second cause of action and sought specification of

“The basis upon which alleged loss of profits of NZ$75,000 is calculated including details of plaintiff’s gross income, expenses and profit margin.”

[37] The next development occurred with the filing on the same day of an appearance by the first defendant under protest to jurisdiction and a notice of interlocutory application by the first defendant for orders dismissing or staying the proceedings.

[38] The next event came with the filing and service of a document entitled “Further Particulars of Statement of Claim by Plaintiff, dated 9 November”. It is appropriate that I record that this is a substantial document. The major task in its preparation was clearly in allocating a price for each spare part. One of the plaintiff’s directors, estimated that it took of the order of 240 hours to prepare that specific part of the document.

[39] The next event occurred with the filing of an application by the second defendant for orders dismissing or staying the proceedings on 7 December 2000. It is appropriate that I also record that correspondence took place between solicitors in Adelaide, Australia who advised that they had instructions from Liebherr Australia Pty Limited. That correspondence confirmed an agreement that no statement of defence was to be filed pending the provision of the further particulars requested.

[40] The first defendant’s application relies on Rule 131 but has an alternative application based on Rule 477. Rule 131(3) provides:

“A defendant who has filed an appearance under subclause (1) may apply to the Court to dismiss the proceeding on the ground that the Court has no jurisdiction to hear and determine it.”

[41] The proceedings were served on both defendants overseas. No leave to do so was sought. It seems to be a reasonable assumption that service took place relying on Rule 219(b) of the High Court Rules at least so far as the first cause of action is concerned. That provides:

“(b) Where the contract sought to be enforced or rescinded, dissolved, annulled, or otherwise affected in any proceeding, or for the breach whereof damages or other relief is demanded in the proceeding-

(i) Was made or entered into in New Zealand; or

(ii) Was made by or through an agent trading or residing within New Zealand; or

(iii) Was to be wholly or in part performed in New Zealand; or

(iv) Was by its terms or by implication to be governed by New Zealand law:

the proceedings may issue without leave.”

[42] It is now appropriate that I record a short summary of the applicable principles. They are as follows:

[a] The fact that there is prima facie jurisdiction under Rule 219 of the High Court Rules does not remove the requirement that the plaintiff show that there was a good arguable case. The Court has a discretion as to whether it is appropriate for it to accept jurisdiction. Society of Lloyd’s & Oxford Members’ Agency Ltd v Hyslop [1993] 3 NZLR 135, 148;

[b] An application pursuant to Rule 131 covers both the issue of whether jurisdiction exists and the issue of whether the Court, in its discretion ought to decline jurisdiction. Kuwait Asia Bank EC v National Mutual Life Nominees Ltd [1990] 3 NZLR 513, 525;

[c] Two elements are required before a Court can assume jurisdiction over a defendant who is outside the jurisdiction of the Court. They are:

[i] That there is prima facie jurisdiction for service abroad under either Rules 219 or 220 of the High Court Rules;

[ii] That the plaintiff has a good arguable case; and

[d] If the above are proved the Court should not, in the exercise of its overall discretion, dismiss the proceeding on other grounds. H Timber Protection Ltd (In rec) v Hickson International Plc [1995] 2 NZLR 8, 9, 10; Kuwait Asia Bank EC v National Mutual Life Nominees Ltd (supra) 523-524; Springfield Acres Ltd (in liq) v Abacus (Hong Kong) Ltd [1994] 3 NZLR 502, 507;

[e] If a defendant satisfies the Court that there is no good arguable case, the New Zealand proceeding should be dismissed regardless of other discretionary considerations. Biddulph v Wyeth Australia Pty Ltd [1994] 3 NZLR 49, 57.

[f] Whether a plaintiff has a good arguable case is assessed at the time the application under Rule 131 is heard and on the evidence then adduced to the Court. EF Hutton & Co (London) Ltd v Mofarrij [1989] 2 All ER 633, 640.

[g] The Court has regard to all the admissible material before it. What is required is a provisional or tentative conclusion on all the admissible material before the Court that the plaintiff is probably right. Attock Cement Co Ltd v Romanian Bank of Foreign Trade [1989] 1 All ER 1189, 1196. It will not be sufficient to rely on the basis for opposing a strike out of a statement of claim. Biddulph v Wyeth Australia Pty Ltd (supra) at 58.

[h] Rule 131 considerations include the exercise of a discretion as to whether jurisdiction ought to be declined. The Privy Council in Kuwait Asia Bank EC v National Mutual Life Nominees Ltd (supra) has approved the Court having regard to forum non conveniens factors when exercising the discretion. While different considerations apply when considering forum non coveniens arguments, and a different onus of proof, the fact that forum non conveniens is raised will not amount to a submission to jurisdiction which bars the Court considering the protest. Williams & Glyn’s Bank Plc v Astro Dinamico Cia Naviera SA [1984] 1 All ER 760, 763; Re Dulles’ Settlement Trusts [1951] 2 All ER 69, 72 both cited with approval by Justice Wylie in Equiticorp v Hawkins [1991] 3 NZLR 700, 717.

[i] If the Court accepts that the plaintiff has a good arguable case, the Court may then move to consider the issue of forum non conveniens.

In considering forum non conveniens issues I adopt the statement of principles extracted by Justice Wallace in Oilseed Products v HE Burton Ltd (1987) 1 PRNZ 313. He relied on the House of Lords decision in Spiliada Maritime Corporation v Cansulex Ltd (supra) and the specific requirements which Rule 220 directs consideration to be taken of. He said at page 316:

“a. The basic principle is that a stay will only be granted on the ground of forum non conveniens where the Court is satisfied that there is some other available forum, having competent jurisdiction, which is the appropriate forum for the trial of the action, ie in which the case may be tried more suitably for the interests of all parties and the ends of justice.

b. In general the burden of proof rests on the defendant to persuade the Court to exercise its discretion to grant a stay.

c. The burden resting on the defendant is not just to show that the country in which the proceedings have been issued (ie New Zealand) is not the natural or appropriate forum for the trial, but to establish that there is another available forum which is clearly or distinctly more appropriate. If, however, the connection of the defendant with the New Zealand forum is a fragile one, it should be all the easier for the defendant to prove that there is another more clearly appropriate forum.

d. The “natural forum” is that with which the action has the most real and substantial connection. So it is for connecting factors in this sense that the Court must first look. These will include not only factors affecting convenience or expense (such as the availability of witnesses) but also other factors such as the law governing the relevant transaction and the places where the parties respectively reside and carry on business.

e. If the Court concludes at this stage that there is no other available forum which is clearly more appropriate for the trial of the action, it will ordinarily refuse a stay.

f. If, however, the Court concludes at this stage that there is some available forum which prima facie is clearly more appropriate for the trial of the action, it will ordinarily grant a stay unless there are circumstances by reason of which justice requires that a stay should nevertheless not be granted. In this inquiry the Court will consider all the circumstances of the case. One such factor can be the fact, if established effectively by cogent evidence, that the plaintiff will not obtain justice in the foreign jurisdiction. On this inquiry the burden of proof shifts to the plaintiff.”

[43] The major issues to be determined in these applications are the following:

In respect of the second cause of action:

[i] Has the plaintiff submitted to the exclusive jurisdiction of the Swiss Courts in respect of the obligations arising under the 1977 agreement?

[ii] If there has been a submission, what approach should the Court adopt on the question of jurisdiction?

[b] Have the defendants, by their notice for particulars, submitted to the New Zealand Court’s jurisdiction?

[c] Has the plaintiff established a good arguable case on the merits?

[d] Even if the New Zealand High Court has jurisdiction and there is a good arguable case on the merits, has the defendant shown that the plaintiff’s choice of venue is forum non conveniens?

[44] I make some specific observations concerning the notice for further particulars. In Laws of New Zealand, Conflict of Laws: Jurisdiction and foreign judgments, para 16, the learned author said:

“A person may submit to the jurisdiction of a New Zealand Court to determine a dispute where it would not otherwise have jurisdiction to hear and determine a proceeding against that person, or where the Court might otherwise decline jurisdiction, in any of the following ways.

. . .

Second, a person may submit to the New Zealand Court’s jurisdiction by taking a step in the proceeding which is necessary or useful only if the Court does have jurisdiction.”

[45] It is appropriate to observe that Rule 131(2) provides that the filing and service of an appearance under subclause (1) shall not be or be deemed to be a submission to the jurisdiction of the Court in the proceeding.

[46] Counsels’ research had turned up no cases where a request for particulars has been held to be a step in the proceeding which was necessary or useful only if the Court does have jurisdiction. Certainly, the filing of a statement of defence together with seeking and giving general discovery was held to be a submission. , Donald Export Trading Limited v Vande velde PVA (CA 53/81, 2 June 1981). In Equiticorp Industries Group Limited v Hawkins [1991] 3 NZLR 2000, it was held that an application for security for costs in relation to the determination of a protest to jurisdiction and an associated application for production of a document did not constitute a submission to New Zealand jurisdiction.

[47] In this case the notice was accompanied by a letter which provided:

“We are the New Zealand solicitors for the first and second defendants in the above matter. Further to Finlayson’s facsimile of 20 June 2000, we confirm that we are taking instructions in respect of service and other jurisdictional issues. In the meantime, without prejudice to our client’s rights, we attach a notice requiring further particulars of your client’s claim. Please also provide written confirmation of service upon the first defendant. Once these matters have been addressed, we will revert to you further.”

[48] A similar, without prejudice designation was contained in the material which accompanied the defendants’ application for security for costs in Equiticorp Industries Group Limited v Hawkins (supra). Wylie J, although mentioning the argument of counsel based on the without prejudice declaration went on to consider whether in fact there had been a waiver. In my view, the accompanying letter is not determinative. The Court of Appeal in Donald Export Trading Limited v Vande velde PVA (supra) at page 5 said:

“The principle in these matters is that a party has to make up his mind whether or not he will challenge the jurisdiction unequivocally and without qualification. If the defendants have been content to do no more than challenge it, the result might have been different. And even if a challenge had been made unsuccessfully, time would undoubtedly have been allowed thereafter for filing of defences appearing for trial.”

In that case the defendant pleaded to the merits of the claim and had also made application for discovery. It is significant, however, that the Court said that what was fatal was the pleading on the merits.

[49] The short point, however, is that a without prejudice designation given with a notice, in my view, will not save the jurisdictional argument for a later time. The real question is, whether the notice is a step

“Which is necessary or useful only if the Court does have jurisdiction.”

The answer to that question must depend upon the circumstances of the individual case. Equiticorp Industries Group Limited v Hawkins [1991] 3 NZLR 700, 717.

[50] When I consider the chronology I note that there has been, at the time of the issue of that notice, no protest to the New Zealand Court jurisdiction. Arrangements had apparently been made to extend the time for filing a statement of defence. The notice was specifically given making reference to the relevant High Court Rules. It takes little imagination to infer that had the plaintiff ignored the notice an application might well have been made to stay or strike out the statement of claim for non-compliance. The protest and the application to dismiss by the first defendant was filed without obtaining answers to the request for particulars.

[51] I propose now to consider specifically the application made in relation to the second cause of action. The notice for particulars in relation to this cause of action I have set out in paragraph 36 of this judgment. It is an inquiry directed specifically at quantum. It is not a particular which is designed to clarify any matter relating to jurisdiction or, for that matter, to forum conveniens. Its purpose is to obtain an aid to a better understanding of the proceeding itself. I conclude that the request is:

“Necessary or useful only if the Court does have jurisdiction.”

[52] In all other respects, however, there is nothing to support New Zealand as the jurisdiction to hear this case. Further the plaintiff’s case, as the law currently stands, is either subject to a Limitation Act defence or, alternatively, is met by a defence that no cause of action exists because of the terms of the 1977 contract.

[53] It will be recalled:

[a] The parties have agreed to Swiss law applying in respect of the 1977 agreement;

[b] The parties have also agreed to the determination of any dispute under that agreement to be resolved by the Swiss courts;

[c] The terms of the agreement of 1977, particularly that set out in paragraph 26 of this judgment, make it plain that if the inquiry in respect of the Sims Pacific Metals Limited contract was made after the giving of the notice terminating the 1977 agreement there is no breach of the agreement by such request.

[54] If, on the other hand, the inquiry was made before 31 August 1993, that is the date of the notice terminating the 1977 agreement, the issue requires a consideration of the Limitation Act 1950. Section 4(1) provides that actions founded on simple contracts shall not be brought after the expiration of six years from the date on which the cause of action accrued. In contract, the traditional approach has been that the cause of action accrues when the breach of the contract actually occurs. In this case, the breach occurred with the failure to pass on the inquiry. If that failure appeared before the giving of the notice terminating the 1977 agreement, then more than six years have elapsed. To overcome that problem Mr Hassall argued that the provisions of the Limitation Act 1950 must be read subject to a principle which he described as the principle of reasonable discoverability. He referred to Laws of New Zealand: Contract, para 448 where the proposition is advanced that:

“it seems very likely that the reasonable discoverability principle will be held to extend to contractual claims as well as tortious ones.”

Neither he nor Ms Riddiford could find any recent authorities which would assist me in the resolution of this matter.

[55] Since the argument of this case I have located the recent judgment of O’Regan J in Saunders & Co v Bank of New Zealand & Ors (Auckland Registry, CP 19sd01, 14 November 2001). His Honour analyses the issue relating to the limitation defence and a possible extension of time based on reasonable discoverability in paragraphs 23-45. I agree with his reasoning and adopt it. His conclusion expressed in paragraph 41 of the judgment is:

“that reasonable discoverability is a limited doctrine designed to deal with the specific problems identified in building latent defect and personal injury cases. It does not apply to contract cases”

[56] The position in summary is that if the breach occurred after the notice terminating the contract, then contractually there is no cause of action. If the breach occurred before the notice terminating the contract, then, more than six years have passed and the cause of action is met by the limitation defence.

[57] The conclusion that I have reached in relation to the second cause of action is that there was a submission to the jurisdiction by the notice seeking further particulars. This, however, is a dual application and relies in addition on Rule 477. The circumstances of this case are that it cannot succeed in relation to the second cause of action because of the matters that I have just examined. For that reason, it is appropriate that the second cause of action be either stayed or dismissed.

[58] It will be self-evident from the conclusion that I have reached that the evidence to which Ms Riddiford took exception to, dealing with the alleged hearsay statements of Mr Rod Brown and referred to paragraph 11(c) of my judgment cannot affect the conclusion I have reached. For that reason it is not necessary for me to rule on that specific aspect of the objection to evidence that Ms Riddiford made.

[59] If the telex from the plaintiff to Mr Michaelis which is marked “without prejudice” has any relevance at all to the second cause of action, it likewise cannot affect the conclusion I have reached. For the sake of completeness, however, I should record that I agree with the authorities produced by Ms Riddiford, namely Turf Industries Pty Ltd [1975] QR 266 and Sumatra v Sinclair Roach (2000) 1 L1 L Rep 311. Without prejudice privilege is a joint privilege. As a matter of principle it cannot be waived by one party alone. Accordingly, the correspondence to Mr Michaelis is privileged and cannot form part of the evidence to be considered in relation to the cause of action without both parties waiving the privilege.

[60] It is appropriate that I refer to the jurisdiction provision in the 1977 agreement.

[61] I did not understand that Mr Hassall contested the effect of such provision. I adopt the statement of principle as set out in the judgment of the Court of Appeal in Advanced Cardiovascular Systems Inc v Universal Specialties Limited [1997] 1 NZLR 186, 190 where the Court said:

“Prima facie therefore the New Zealand Courts lack jurisdiction to entertain the proceeding because the parties have so agreed. However it is settled law that the Court nevertheless has a discretion to exercise jurisdiction if it otherwise exists. It can also be regarded as settled law that the discretion will not be exercised unless there is strong cause or the existence of exceptional circumstances for denying the contractual provision its operative effect. The principle is equally applicable to an application for stay under R 477. In Society of Lloyd’s & Oxford Members’ Agency Ltd v Hyslop [1993] 3 NZLR 135 Richardson J observed at p 142:

“The existence of an exclusive jurisdiction clause places a heavy burden on the party seeking to oppose the clause. While the Court has a discretion, a stay should be granted unless strong cause for not doing so is shown by the plaintiff.”

[62] Were I to decide this case without reference to the submission to jurisdiction, I would find that the plaintiff has not made out a case for opposing the clause in the contract granting the exclusive jurisdiction to the Swiss Courts. The issue is unnecessary to decide having regard to the conclusion I have reached on the limitation issue.

[63] I now consider the first cause of action.

[64] The notice seeking particulars must be looked at in two parts. The request relating to paragraph 8 of the statement of claim is designed to clarify when, where, how and who with, the alleged oral contract was made. Its purpose could well be to ascertain alleged facts which disclose whether the contract was allegedly made in New Zealand or out of New Zealand. That is of direct relevance to the issue of the Court’s jurisdiction. For that reason, I conclude that that part of the notice dealing with paragraph 8 of the statement of claim is not

“Necessary or useful only if the Court does have jurisdiction.”

[65] However, the notice goes on to seek particulars in relation to paragraph 14 of the statement of claim. I have set out the specific request in paragraph 34 of this judgment. That request is designed solely to extract information relating to quantum of the claim. When analysed in this way, it is apparent that it is a request that is

“Necessary or useful only if the Court does have jurisdiction.”

In my view, the inquiry has no relevance to matters going to jurisdiction. It does not assist in any meaningful way with the issue of whether the plaintiff has established a good arguable case. For that reason, I conclude that part of the notice makes it plain that the first defendant, in respect of the first cause of action, has submitted to the New Zealand Court’s jurisdiction. It took a step with the issue of the notice that was relevant only if the New Zealand Court had jurisdiction in the case.

[66] There are other factors pertaining to the first cause of action that I must consider. For completeness sake I record that a limitation defence, as such, was not specifically raised in argument in relation to this cause of action. For that reason, I examine it no further. In my view, it is appropriate to record, however, that it would not have been possible on the facts presented to me to make a ruling as I have in relation to the second cause of action. This is because I have not been provided with every material fact which makes up the cause of action.

[67] There are other aspects that need to be taken into account. This contract was allegedly made in New Zealand. The subject-matter of the contract, namely the spare parts, are in New Zealand. The 1977 agreement does not provide a submission to Swiss law for a separate contract such as the oral contract alleged. Indeed the relevant provision of the 1977 agreement which I have set out in paragraph 27 specifically refers to:

“All commitments under this agreement.”

The oral agreement alleged in the first cause of action is not a commitment under the 1977 agreement.

[68] Ms Riddiford invited me to follow the conclusion of Dr F W Schenker. I have considered carefully his affidavit. It does not assist me, however, on the specific conclusions that I have just recorded. These are matters which a New Zealand Court must rule upon.

[69] The next matter that can be briefly dealt with in relation to the first cause of action is whether, despite the submission to jurisdiction, I should nevertheless conclude that New Zealand is a forum non conveniens for the disposal of the first cause of action. When I apply the summary of principles which are recorded in paragraph 42(h) to this judgment to the matters referred above in relation to the first cause of action, I can find no compelling reason for concluding that, in relation to the first cause of action, Switzerland is the appropriate jurisdiction and that New Zealand is a forum non conveniens. The matters that I have earlier referred to indicate quite the contrary.

[70] That leads me to the final matter which is clearly the most difficult in this case. It relates to the question of whether the plaintiff has a good arguable case on the merits. The position is complicate because I have dual applications, that is, applications under Rules 131 and 477. It seems to me, having concluded that there has been a submission to jurisdiction by the issue of the notice for particulars, it is appropriate to now consider the issue of whether the plaintiff has a good arguable case pursuant to the provisions of Rule 477.

[71] That is significant because, in my view, the onus changes. Whilst, under Rule 131, the obligation is on the plaintiff to establish a good arguable case on the merits, where the application is made under Rule 477 it is for the defendant to prove either:

[a] No reasonable cause of action is disclosed; or

[b] The proceeding is frivolous or vexatious; or

[c] The proceeding is an abuse of process.

[72] Ms Riddiford submitted on behalf of the first and second defendants that the plaintiff does not have a good arguable case in relation to the first cause of action. In particular, there is no evidential foundation to prove the agreement alleged. The documentary evidence, she submitted, supports a finding that there was no oral agreement.

[73] The conclusion I have reached is that it would be unsatisfactory to rule on any aspect that required a consideration of the credibility of one or other version of what took place at the alleged 9 November meeting. Further, that the correct approach is to determine whether the type of agreement alleged by the plaintiff is one that the law would recognise. If so, then the appropriate place for the matter to be resolved is at trial. If not, it is appropriate that the proceeding be stayed or dismissed at this stage.

[74] There are two specific problems with the agreement which is alleged. First, the price to be paid for the spare parts has not been fixed. Second, it is acknowledged by the plaintiff that no specific list or schedule of the spare parts was available at the time of the alleged agreement. Mr Hassall, in submissions in relation to the question of the actual spare parts to be included, submitted that the plaintiff’s case is that the agreement covered all spare parts held by the plaintiff consequent upon the plaintiff having acted as the first defendant’s agent in New Zealand. Any anomaly, he said, was to be addressed by the mechanism agreed upon for ascertaining the price to be paid for those spare parts, which the parties designate as

“A fair and reasonable price.”

[75] Two positions must be contrasted. They are:

[a] Have the parties expressly agreed on the basis upon which prices could be fixed, alternatively

[b] Are the parties simply indicating a desire to negotiate to a position where some of the parts are purchased at an appropriate price.

Ms Riddiford invited me to find by trawling through the correspondence and the evidence so far adduced, that the parties in fact had got no further than the second alternative that I have mentioned. The two positions are the subject of comment by the Court of Appeal in Willetts v Ryan [1968] NZLR 863. In relation to a contract for the sale of land, the position may be illustrated as follows:

For a contract to be a valid contract the parties must be distinctly indicated, the land sufficiently described and the amount of consideration specified. If that is the position the court may find a concluded contract on the basis that all the unexpressed obligations of the vendor and purchaser are capable of implication in terms which are reasonable in the circumstances. If, however, the parties expressly reserve a matter for later negotiation and that until there is agreement there is no contract, then, of course, no contract comes into existence. The difficulty that arises is in relation to how the matter still to be decided, is left to be concluded. The plaintiff’s case in essence here is that the essential agreement was made at the meeting in November 1993. The on-going discussions related to a fixing of the reasonable price without the need to embark on litigation or an arbitration, if that mechanism is agreed to.

[76] In short, the proposition can be put this way: had the parties simply indicated that they wished to negotiate in an effort to attempt to reach a price for the spare parts, or, alternatively, had they bound themselves in a way where the plaintiff is obliged to supply all the parts and the defendants are required to pay a fair and reasonable price established by objective means. Indeed, the position was put in Barrett v IBC International Ltd [1995] 3 NZLR 170, 174 in a case, dealing again with the sale of land, as follows:

“In the event of silence, it may well be possible to hold that the gap is filled by an implied term as to reasonableness. In the event of an express reservation, according to the reasoning in Willetts, that solution is excluded.”

[77] In ECNZ v Fletcher Challenge Energy Ltd (CA 132/00, 10 October 2001) at paragraphs 53 and 54 the Court said in relation to the formation of a contract:

“53. The prerequisites to formation of a contract are therefore:

(a) An intention to be immediately bound (at the point when the bargain is said to have been agreed); and

(b) An agreement, express or found by implication, or the means of achieving an agreement (e.g. an arbitration clause), on every term which

(i) was legally essential to the formation of such a bargain; or

(ii) was regarded by the parties themselves as essential to their particular bargain.

A term is to be regarded by the parties as essential if one party maintains the position that there must be agreement upon it and manifests accordingly to the other party.

54. Whether the parties intended to enter into a contract and whether they have succeeded in doing so are questions to be determined objectively. In considering whether the negotiating parties have actually formed a contract, it is permissible to look beyond the words of their “agreement” to the background circumstances from which it arose - the matrix of facts. This can include statements the parties made orally or in writing in the course of their negotiations and drafts of the intended contractual document.”

[78] Later, in the same judgment, the Court drew attention to the type of evidence that is admissible where the inquiry goes to the question of the formation of the contract. Evidence of negotiations and all other surrounding circumstances will be received. In paragraph 55 the Court said:

“It is therefore just as permissible to prove that one party told the other that the otherwise apparently binding contract was not in fact to be binding as it is to prove that they agreed upon a term but then did not correctly record that agreement in their written document.”

[79] And at paragraph 56 the Court said:

“It is also permissible when considering contract formation (or rectification) to look at subsequent conduct of the parties towards one another, including what they have said to each other after the date of the alleged contract”

[80] At paragraph 58 the Court said:

“The Court has an entirely neutral approach when determining whether the parties intended to enter into a contract. Having decided that they had that intention, however, the Court’s attitude will change. It will then do its best to give effect to their intention and, if at all possible, to uphold the contract despite any omissions or ambiguities”

[81] Then at paragraph 60 the Court said:

“Something should be said about the place that the controversial decision of the House of Lords in May and Butcher Ltd v The King [1934] 2 KB 17n has in the modern law of contract. We take the view that this case is no longer to be regarded as authority for any wider proposition than that an “agreement” which omits an essential term (or, as Lord Buckmaster called it, “a critical part”), or a means of determining such a term, does not amount to a contract. No longer should it be said, on the basis of that case, that prima facie, if something essential is left to be agreed upon by the parties at a later time, there is no binding agreement. The intention of the parties, as discerned by the Court, to be bound or not to be bound should be paramount. If the Court is satisfied that the parties intended to be bound, it will strive to find a means of giving effect to that intention by filling the gap. On the other hand, if the Court takes the view that the parties did not intend to be bound unless they themselves filled the gap (that they were not content to leave that task to the Court or a third party), then the agreement will not be binding.”

[82] The Court made a specific comment on the question of price-fixing arrangements at paragraph 61 and said:

“On its own facts we respectfully doubt that May and Butcher would be decided by their Lordships in the same way today. We are now perhaps more accustomed to resort to arbitration in order to settle even matters of considerable importance to the contracting parties. We find curious the notion that, in a commercial contract where price is left to be agreed, a reasonable price cannot be fixed and that, even where there is an arbitration clause, that clause cannot be used to determine the price because “unless the price has been fixed, the agreement is not there”. (p 20)

Conclusion

[83] The express pleading of the plaintiff, that is that the price to be paid for the spare parts was agreed to be a fair and reasonable price, may well be the formula or standard which the Court can use to fill the gap. The conclusion I reach is that this issue is not an appropriate issue to determine on what is effectively a strike out application. The matter is better determined at trial. Having reached that conclusion, and having earlier reached the conclusion that there has been a submission to jurisdiction it seems to me that with respect to the first cause of action both the first and second defendants’ applications should be declined. I see no inconsistency in reaching that conclusion and at the same time directing a stay of the proceedings in respect of the second cause of action. The second cause of action, when analysed is quite distinct. The liability issues have no connection with the oral agreement alleged in November 1993. Quantification has no connection with the matters raised in the November 1993 oral contract.

Orders

[84] I order:

[a] The second cause of action is stayed;

[b] Both first and second defendants’ applications in respect of the first cause of action are dismissed;

[c] An initial conference shall be held at 10.45am on 14 February 2002. Counsel shall file and serve memoranda dealing with the items listed in Appendix C to the Civil Case Management in the High Court Practice Note three working days before the conference.

Costs

[85] I reserve costs in relation to the applications determined by this judgment. Applications for costs will be considered at the conference at 10.45am on 14 February 2002.