Gao v Zespri Group Limited - [2022] NZSC 13

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 128/2021
[2022] NZSC 13

BETWEEN	HAOYU GAO First Applicant
SMILING FACE LIMITED Second Applicant
XIA XUE Third Applicant
AND	ZESPRI GROUP LIMITED Respondent

Court:	Glazebrook, O’Regan and Ellen France JJ
Counsel:	E St John for Applicants L A O’Gorman QC, S A Barker and L C Sizer for Respondent
Judgment:	1 March 2022

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.
B The applicants must pay the respondent costs of $2,500.

____________________________________________________________________

REASONS

Background

Zespri Group Ltd (Zespri) holds the exclusive plant variety rights (PVRs) under the Plant Variety Rights Act 1987 (PVR Act) to propagate for commercial production the G3 and G9 varieties of golden kiwifruit. Between 2013–2014, Zespri granted licenses to grow G3 and sell the fruit produced (the G3 License Agreements) to the applicants, Mr Gao, Ms Xue and their company, Smiling Face Ltd (Smiling Face). Zespri later commenced proceedings against the applicants alleging that they had engaged in conduct breaching Zespri’s exclusive PVRs in New Zealand as well as the G3 License Agreements.

Decisions below

In February 2020, the High Court made a number of factual findings including:[1]
(a)that Mr Gao supplied G3 and G9 plant material to two growers based in the People’s Republic of China (PRC), Mr Shu and Mr Yu;
(b)in 2012, Mr Gao executed a license agreement purporting to authorise Mr Shu to exploit the G3 and G9 varieties throughout the whole of the PRC (the False License Agreement);
(c)in or about 2014, Mr Gao entered into a joint venture with Mr Yu to commercialise G3 and G9 in the PRC;
(d)that as a result, G3 and G9 varieties have been established on five orchards in the PRC associated with Mr Shu and Mr Yu with a total land area of 174.2 ha (although not all the land is planted with G3 and G9);[2]
(e)Mr Gao offered to sell G3 to another PRC grower, Mr Li, although the deal did not proceed; and
(f)that Mr Gao’s acts in relation to both Mr Shu and Mr Yu were undertaken on behalf of his associated company, Smiling Face.[3]
[1]Zespri Group Ltd v Gao [2020] NZHC 109 (Katz J) at [192]–[195].
[2]Four orchards were associated with Mr Shu (at [85](i)): Chibi, Xianning 1, Xianning 2 and Wuhan. One orchard was associated with the joint venture between Mr Gao and Mr Yu (at [99](a)): Liangshan Yi.
[3]At [197].
Consequently, the High Court awarded damages of $14,894,100 against Mr Gao and Smiling Face each for acts infringing Zespri’s New Zealand PVRs,[4] as well as damages of $10,824,300 against Mr Gao and Ms Xue jointly for acts infringing Zespri’s contractual rights.[5] The Court also granted Zespri a permanent injunction against the applicants restraining them from further infringing Zespri’s PVRs with respect to the G3 and G9 varieties.[6]
[4]At [202](b) and [202](c).
[5]At [202](d). The High Court had found Ms Xue jointly liable for Mr Gao’s breaches because they were…

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: [2022] NZSC 13
Decision Date: 1 March 2022

CaseChat Overview and Summary

In the Supreme Court of New Zealand, Haoyu Gao, Smiling Face Limited, and Xia Xue (the applicants) sought leave to appeal against Zespri Group Limited (the respondent) over the decision of the Court of Appeal. The applicants sought to challenge the Court of Appeal’s decision that upheld the decision of the High Court, which found the applicants liable for breaching the respondent’s exclusive plant variety rights (PVRs) under the Plant Variety Rights Act 1987 and the G3 License Agreements. The applicants contended that the Court of Appeal erred in several respects, including finding that the False License Agreement was irrelevant to the case and that the licensing of protected varieties in the People’s Republic of China did not infringe upon the respondent’s rights.
The Court considered whether the proposed appeal raised any point of general or public importance, or whether there was a risk of a miscarriage of justice. The Court found that the applicants’ arguments did not point to any matters suggesting that the findings of the lower courts were wrong. The proposed appeal related to the particular circumstances of the case, and the Court held that no point of general or public importance arose. The Court also found that there was no risk of a miscarriage of justice.
The application for leave to appeal was dismissed, and the applicants were ordered to pay the respondent’s costs of $2,500. The Supreme Court upheld the decision of the Court of Appeal and confirmed the liability of the applicants for breaching the respondent’s PVRs and the G3 License Agreements. The applicants’ appeal was unsuccessful, and the damages awarded against them by the High Court remained in place.

Orders