Hill Forest Services Limited v Cirrus Design Corp
[2020] NZHC 2551
•30 September 2020
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2020-404-000615
[2020] NZHC 2551
BETWEEN HILL FOREST SERVICES LIMITED
Plaintiff
AND
CIRRUS DESIGN CORP
First Defendant
FLINN AVIATION LLC and JOEL DE LA GARZA
Second Defendant
Hearing: 24 September 2020 Counsel:
MC Black for Plaintiff
C Andrew and K Lee for First Defendant
DJ Chisholm QC and J Ryan for Second DefendantJudgment:
30 September 2020
JUDGMENT OF DOWNS J
This judgment was delivered by me on Wednesday, 30 September 2020 at 11 am pursuant to r 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Solicitors/Counsel:
McVeagh Fleming, Auckland.
Claymore Partners Ltd, Auckland. DJ Chisholm QC, Auckland.
G Bogiatto, Auckland.
MC Black, Auckland.
HILL FOREST SERVICES LTD v CIRRUS DESIGN CORP [2020] NZHC 2551 [30 September 2020]
Jurisdiction in relation to a helicopter?
[1] Hill Forest Services Ltd1 bought a helicopter from a vendor in the United States of America. The helicopter was shipped here. Much money will need to be spent to make the helicopter airworthy. Hill Forest sues defendants based in the United States: Cirrus Design Corp;2 Flinn Aviation LLC;3 and Joel de la Garza. Cirrus is in Minnesota; the remaining defendants, Texas.
[2] Hill Forest contends Cirrus was the vendor; Flinn Aviation and Mr de la Garza Cirrus’s agents. The defendants protest jurisdiction. Hill Forest applies to set aside the protest.4 So, I must dismiss Hill Forest’s suit because there is no jurisdiction; or dismiss the protest.5
Background
[3] Hill Forest manages forests, including through aerial inspection. Robert Hill, Hill Forest’s shareholder and director, has a helicopter pilot’s license.
[4] In January 2019, Mr Hill contacted Mr de la Garza about buying a used helicopter. The two liaised, primarily by WhatsApp messages. Mr de la Garza also sent email using an address of Flinn Aviation, an international dealer of aircraft.6 Mr de la Garza referred Mr Hill to Action Helicopters Incorporated,7 another American company. Mr Hill and Action Helicopters corresponded; so too Mr Hill and Mr de la Garza.
[5] In early April 2019, Mr Hill travelled to the United States. On 6 April, Mr Hill inspected the helicopter in question, a 1993 Bell 206B3. Warren Hopely, Action Helicopter’s owner, was present. Mr de la Garza was not. On 8 April, Mr Hill asked Mr de la Garza, again by WhatsApp message, what it would cost to make the helicopter “airworthy”.
1 Hill Forest.
2 Cirrus Design.
3 Flinn Aviation.
4 High Court Rules 2016, r 5.49(5).
5 Rule 5.49(6).
6 Flinn Aviation’s website refers to Mr de la Garza as its helicopter sales representative.
7 Action Helicopters.
[6] By 11 April, Mr Hill had returned to New Zealand. On the same day, Mr Hill (on behalf of Hill Forest) signed what appears to be a sale and purchase contract for the helicopter with Action Helicopters. The purchase price was US$392,500. The document records Hill Forest had visually inspected the helicopter and logbooks “and accepts the Aircraft as is”. The document also records the helicopter would be delivered to New Zealand with an “Export Certificate of Airworthiness”, the “cost of such compliance to be paid by the Purchaser”.
[7] Hill Forest does not rely on this document or associated sequence as part of its claim. Because of the document’s significance, I reproduce it:
PURCHASE OFFER
Date: April 10, 2019
Subject: Offer to Purchase
RE: 1993 Bell 206B3 s/n 4261 Reg. N63MB (Aircraft) From: Hill Forest Services (Purchaser)
To: Action Helicopters Inc. (Seller)
Subject: Offer to Purchase 1993 Bell 206B3 s/n 4261 Reg. N63MB
Robert Hill of Hill Forest Services agrees to purchase the above referenced Aircraft subject to the following terms and conditions:
1. The total price for the Aircraft is Three Hundred Ninety-Two Thousand Five Hundred US Dollars ($392,500).
2. The title company will be Aviator’s Title and Escrow in 1304 Camelot Drive, Yukon, OK 73099.
3. Aircraft will be delivered as is, with all available logbooks, all associated loose equipment such as tie down kit, inlet plugs and covers, and pilot’s operating handbook and all accessories related to the Aircraft. The Aircraft will be delivered deregistered from the US FAA Registry.
4. The Aircraft shall be delivered with an Export Certificate of Airworthiness to New Zealand. The cost of such compliance will be paid by the Purchaser.
5. At closing, the Aircraft title will be free and clear of all liens and encumbrances.
6. The Purchaser has visually inspected the Aircraft and the logbooks and accepts the Aircraft as is.
7. Once items in paragraphs 3 and 4 are complete, and Seller places the original Bill of Sale and Lien Releases in the title company, Purchaser will transfer full payment for the Aircraft through the title company.
8. Upon Seller’s and Purchaser’s written acceptance of this Purchase Offer, Purchaser will place the full purchase price into the title company
“Aviator’s Title and Escrow. Title company fees will be paid by the Purchaser.
Agreed and accepted by:
Seller: Purchaser:
Action helicopters Inc. Hill Forest Services
Warren Hopely Date Robert Hill Date
[8] Also, on 11 April, Hill Forest, Action Helicopters and Mr de la Garza signed a “Commission Agreement”, in which Mr de la Garza was to be paid $5,000 from the purchase price. I reproduce this too:
COMMISSION AGREEMENT
THIS COMMISSION AGREEMENT dated for reference April 10, 2019, by and between Warren Hopely of Action Helicopters Inc. having an address of 1020 N BANCROFT PKWY STE 100, WILMINGTON, DE 19805-2666
(“Seller”) and Robert Hill of Hill Forest Services having an address of PO Box 21, Whangamata 3643 New Zealand (“Buyer”) and Joel De La Garza (“Agent”), 1900 Scofield Ridge Pkway, #2103, Austin, TX 78727 pertains to 1993 Bell 206B# s/n 4261 Reg. N63MB (“Aircraft”).
Joel De La Garza has diligently and effectively marketed the Aircraft and has produced a qualified prospect. That buyer is Robert Hill of Hill Forest Services having an address of PO Box 21, Whangamata 3643 New Zealand (“Purchaser”) or a Hill Forest Services-controlled company.
Upon Seller and Purchaser selling and purchasing the Aircraft for $392,500, Seller and Purchaser each agrees to release $2,500 usd each for a total of
$5,000 of the final sales price from Aviator’s Title and Escrow per wiring instruction provided by Joel De La Garza as his sales commission.
Agreed and accepted by:
Agent:April 10, 2019 Buyer: April, 11th 2019 Date Date
Joel De La Garza Robert Hill
Hill Forest Services
Seller:
Warren Hopely
Action Helicopters Inc.
[9] On 22 April, Mr Hill paid the purchase price to the escrow account identified in the first 11 April document.
[10] Cirrus does not appear to have been party to any of this, save for what follows. Action Helicopters bought a new, fixed-wing aircraft from Cirrus. Cirrus agreed to accept the proceeds of the sale of the helicopter as part payment for the aircraft it sold to Action Helicopters. This resulted in two bills of sale dated 3 May 2019. The first transferred title for the helicopter from Action Helicopters to Cirrus; the second from Cirrus to Forest Hill. The first bill of sale records consideration of $1. The second records none.
[11] On 16 July 2019, the helicopter arrived in New Zealand. Hill Forest says it was inspected by engineers, who found serious defects. These defects were also, Hill Forest alleges, not recorded in the logbooks.
Hill Forest’s claim
[12] Hill Forest contends the sequence at [10] and associated bills of sale reveal Cirrus as vendor. Hill Forest says earlier, on 8 March 2019, Mr de la Garza represented in a text message any problems with airworthiness would be repaired at the vendor’s expense.
[13] Hill Forest’s statement of claim is difficult to follow. The statement of claim is also bereft of pleadings clearly identifying:
(a)When or how a contract arose between Hill Forest and Cirrus in relation to the helicopter.
(b)The conditions of that contract.
(c)When or how the second defendants became agents for Cirrus in relation to the sale and purchase of the helicopter.
[14] Mr Black, who acts for Hill Forest, described paragraphs 12 and 13 of the statement of claim as the “key pleadings”. These provide:
Flinn Aviation and Mr De La Garza thereby also provided the Information, representations, advice and the warranty confirmation about the Helicopter, including that the seller [Cirrus] would fix and rectify any defects which it also knew Hill Forest would rely upon in New Zealand, for the purpose for which the Information and the rectification confirmation was provided.
On 3 May 2019, Cirrus (by its Client Relations Manager, Brooke Sodahl) signed on behalf of the ‘seller’ [Cirrus] an Aircraft Bill of Sale for the Helicopter, to Hill Forest as the ‘purchaser’. The sale price was US392,500. This sum was paid by funds transferred by Hill Forest from New Zealand.
Neither is illuminating. My concerns remain.
[15] The statement of claim does not refer to the 11 April documents either.8 I asked Mr Black why neither was pleaded. He said he wished to avoid prolixity.
[16]Six causes of action are pleaded:
(a)Against Cirrus: for breach of contract under the Contract and Commercial Law Act 2017 (implied terms and duties in a contract for the sale of goods).
(b)Against Cirrus: for breaches of implied terms, conditions and warranties in the United Nations Convention on Contracts for the International Sale of Goods (pursuant to the Sale of Goods (United Nations Convention) Act 1994 and subpart 7 of the Contract and Commercial Law Act).
(c)Against Cirrus: for misrepresentation and breach of contractual terms under the Contract and Commercial Law Act.
(d)Against Cirrus, in the alternative (if the representations and terms alleged do not comprise a term of the sale contract) for breach of the terms of a collateral contract.
8 Mr Hill’s affidavit does.
(e)Against both defendants: for negligent misstatement as to the airworthiness of the helicopter and failure to provide accurate records of maintenance.
(f)Against both defendants: for breach of the Fair Trading Act 1986 by misleading representations about the helicopter’s airworthiness.
The protests
[17] Cirrus protests on procedural, substantive and convenience grounds. Cirrus says Hill Forest’s claim has insufficient connection to New Zealand. The tort claim relates to alleged damage that did not occur here. The contract was not made in New Zealand; does not involve a New Zealand agent; and does not provide for New Zealand law. No breach occurred here. Cirrus’s conduct was elsewhere too.
[18] Cirrus says there is no serious issue to be tried. It alleges Hill Forest bought the helicopter from Action Helicopters. Moreover, even if Cirrus were vendor, Hill Forest agreed to buy the helicopter “as is”.
[19] Cirrus says this court is not the appropriate forum because the defendants are all resident in the United States and have no “substantial presence” in New Zealand. Action Helicopters would need to be joined, and it is in the United States. So are witnesses. Cirrus says applicable law is either United States (federal) law or state law.
[20] Flinn Aviation and Mr de la Garza offer similar protests. They also deny there is a serious issue to be tried because the sale of the helicopter was on an “as is” basis. Thomas Flinn, the owner of Flinn Aviation, says the company was not an agent for the vendor and Mr de la Garza did not act as Flinn Aviation’s representative.
The rules
[21]Applicable rules are thicket-like.
[22] Rule 6.29(1) of the High Court Rules 2016 provides if service has been made outside New Zealand without leave and the defendant protests jurisdiction, the Court
must dismiss the case unless the plaintiff establishes one of two grounds specified in that rule. The defendants have protested jurisdiction. So, Hill Forest must establish either:
(a)A good arguable case the claim falls within one or more of the criteria in r 6.27; and the Court should assume jurisdiction because of the matters specified in r 6.28(5)(b) to (d); or
(b)That if it had applied for leave under r 6.28, leave would have been granted; and it is in the interests of justice its failure to seek leave be excused.
[23] There is much overlap between (a) and (b): whether there is a serious issue to be tried on the merits; forum considerations; and other relevant circumstances supporting assumption of jurisdiction. Antecedent requirements are whether Hill Forest has a good arguable case in relation to jurisdiction (required by (a)); and whether its claim has a real and substantial connection with New Zealand (required by (b)). I need not determine if Hill Forest can meet either because, even if it could, Hill Forest cannot establish any of the required elements common to (a) and (b).
Analysis
Serious issue to be tried on the merits?
[24] Hill Forest’s claim for breach of contract against Cirrus turns on the two bills of sale in May 2019. Hill Forest adduces no other document which implies a contractual relationship with Cirrus. Indeed, it adduces no other evidence of any relationship with Cirrus.
[25] Mr Oleksa, Cirrus’s assistant general counsel, testifies no evidence of any communication between its employees and Hill Forest can be found. Mr de la Garza’s evidence supports this. Mr de la Garza annexes his WhatsApp messages with Mr Hill. These reveal Mr Hill’s interactions were with Mr de la Garza and Action Helicopters, not Cirrus.
[26] As observed earlier, the first 11 April document appears to be a contract between Action Helicopters and Hill Forest for the sale and purchase of the helicopter. Mr Hill testifies “this did not proceed”. It follows on Hill Forest’s case, it bought a helicopter from Cirrus—a company in America without an arm or representative in New Zealand—without anything in writing beyond the bills of sale, even though these are silent on price and conditions.
[27] Mr Black said this reflects “objective intentions”. He argues it matters not what Mr Hill believed, nor with whom Mr Hill believed he was contracting, if objectively, a contract exists between Hill Forest and Cirrus. I acknowledge the correctness of this submission in the abstract. However, law does not reside in the abstract.
[28] As foreshadowed, the statement of claim does not explain how or when a contract arose between Hill Forest and Cirrus; or how or when the second defendants became Cirrus’s agents vis-à-vis Hill Forest. The statement of claim does not identify the conditions of the alleged contract between Hill Forest and Cirrus either. These deficiencies are not mere technicality; pleadings are the spine of a litigant’s case, on which everything hangs. Mr Hill’s evidence does not assist. It makes clear Hill Forest’s dealings were with Mr de la Garza and Action Helicopters. Mr Hill says he first learned of Cirrus on 3 May 2019 when he received the two bills of exchange by Dropbox.
[29] Mr de la Garza’s alleged misrepresentation and misstatement were in March 2019. His evidence this was superseded by developments, including Mr Hill’s direct negotiations with Action Helicopters, is consistent with the two 11 April documents, neither of which was pleaded by Hill Forest. These and related evidence point to the existence of a contract—the first 11 April document—superseding anything Mr de la Garza said. This document (twice) records Hill Forest acquired the helicopter “as is”.
[30] That Hill Forest paid the entire purchase price before delivery in New Zealand supports this view. So too the WhatsApp messages between Mr Hill and
Mr de la Garza. These are consistent with Mr Hill agreeing to assume risk for, among other things, the certificate of air worthiness.
[31] Hill Forest does not clearly identify any relationship between the second defendants and Cirrus. Absent one, it is not obvious how Cirrus could be liable for what Mr de la Garza said.
[32] For these reasons, Hill Forest has not satisfied me there is a serious issue to be tried on the merits. Indeed, its case appears strained. In making these observations, I do not overlook the preliminary stage of the case, the absence of full discovery, and the customary caution required at this juncture.
Forum
[33] The Court of Appeal has said subject to the different onus in r 6.28(5), factors articulated by the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd should be considered when assessing forum.9 These include:
… issues of convenience or expense, availability of witnesses, the law governing the relevant transaction and the places where the parties resided or carried on business.
We accept that other relevant considerations also bear on the issue of appropriate forum. These include the cautious approach already discussed to the subjection of foreigners to the jurisdiction of a New Zealand court; whether other related proceedings are pending elsewhere; whether the New Zealand court would provide the most effective relief or whether a foreign court is in a better position to do so; whether the overseas defendants will suffer an unfair disadvantage if a New Zealand court assumes jurisdiction; and any choice of jurisdiction previously agreed by the parties.
[34] Some things do favour trial in New Zealand. Hill Forest is here; so too Mr Hill. The helicopter is here. Expert examination of it may be necessary. That said, no real doubt appears to attach to its forlorn condition.
[35] However, other things strongly favour trial in America. The defendants reside there; so too their witnesses. Action Helicopters is in the United States. It is likely
9 Wing Hung Printing Company Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 at [45]–[46]; Spiliada Maritime Corporation v Cansulex Ltd [1987] AC 460 (HL) at 843, 844-855.
that company would be joined given its role and apparent connection. Moreover, the dispute appears to turn on the two May documents described as bills of sale. Both are form documents, headed:
UNITED STATES OF AMERICA
US DEPARTMENT OF TRANSPORTATION FEDERAL AVIATION ADMINISTRATION AIRCRAFT BILL OF SALE
[36] While it would be possible for this Court, including with the help of expert evidence, to assess these; a United States federal court or state court would be much better placed to assess them. Moreover, these documents appear to be central to Hill Forest’s claim. It would be odd to require American defendants to come all the way here to meet claims founded on American documents—hence ones more familiar to their courts.
[37] Two other things favour trial in America. It is likely United States law, federal or state, applies, for, almost everything happened there. The latter underscores the desirability of a United States-based trial.
[38] Hill Forest expresses concern at the possible expense and inconvenience of a trial in the United States. However, the same holds true for the defendants if they are required to come here. In any event, audio visual technology would likely facilitate Mr Hill’s participation, perhaps even testimony.
[39] This leaves convenience, which I address under the next banner given the COVID-19 pandemic.
Other relevant considerations
[40] Trial here would not be for some time. Still, foreign nationals are not currently allowed to travel to New Zealand due to the pandemic. The evidence of Mr Broughton, on behalf of Cirrus, is that no such restrictions exist for travel from New Zealand to Texas (beyond general wellness requirements).
Summary
[41] Even assuming Hill Forest has a good arguable case in relation to jurisdiction or its claim a real and substantial connection with New Zealand, Hill Forest does not satisfy the balance of jurisdictional criteria. It does not establish a serious issue exists to be tried on the merits; forum should be New Zealand; or other circumstances support assumption of jurisdiction. It follows Hill Forest’s application to dismiss the jurisdictional protests must be dismissed along with its claim.
Result
[42]Hill Forest’s:
(a)Application (to set aside the protests) is dismissed.
(b)Claim is also dismissed.
Costs
[43] I can think of no reason why the defendants should not have scale costs. If there is disagreement, the parties may file memoranda of not more than seven pages each, in this order:
(a)All defendants – by 21 October 2020.
(b)Hill Forest – by 4 November 2020.
……………………………..
Downs J
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1
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