Mayhew v Future Mobility Solutions Limited

[2020] NZHC 1089

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2018-404-001292

[2020] NZHC 1089

BETWEEN

WILLIAM MAYHEW

First Plaintiff

CAROLINA SEALEGS
Second Plaintiff

AND

FUTURE MOBILITY SOLUTIONS LIMITED

First Defendant

SEALEGS INTERNATIONAL LIMITED
Second Defendant

DAVID MCKEE-WRIGHT

Third Defendant

Hearing:

22 May 2020

Appearances:

P Sills for the Plaintiffs

B Henry for the Defendants

Judgment:

22 May 2020

JUDGMENT OF WOOLFORD J

Solicitors:           Sargent Lawyers, Auckland, (P Sargent) for the Plaintiffs

Shanahans, Family and Property Law, Auckland, (M A Shanahan) for the Defendants

Counsel:            P Sills, Auckland, for the Plaintiffs

B Henry, Auckland, for the Defendants

MAYHEW & ANOR v FUTURE MOBILITY SOLUTIONS LTD & ORS [2020] NZHC 1089 [22 May 2020]

Factual background

[1]                 In a statement of claim filed in the High Court at Auckland on 4 July 2018, the plaintiffs seek damages for negligent misstatement against the first defendant, breach of contract and misrepresentation against the second defendant and breach of the Fair Trading Act 1986 against the first, second and third defendants. Six separate causes of action are pleaded.

[2]                 In a judgment dated 29 November 2018,1 and on the application of the defendants, Associate Judge Smith stayed the proceeding under r 15.1 of the High Court Rules. It was common ground that the defendants were entitled to have three of the plaintiffs’ six causes of action referred to arbitration under Article 8 of the First Schedule to the Arbitration Act 1996 and there were significant overlaps between the issues raised in those causes of action and the issues raised in the remaining three causes of action. Although two of the defendants were not parties to the two relevant arbitration agreements, one of the defendants was the parent company of the defendant who had entered the two arbitration agreements, and the other was its chief executive.

[3]                 Associate Judge Smith therefore stayed the proceedings pending the issue of an arbitration award or awards following the arbitration of the disputes in the second, fourth and fifth causes of action. The Associate Judge noted that it would be for the plaintiffs to decide whether or not they would take up the defendants’ offer to arbitrate all of the issues in the proceeding, including those raised by the first, third and sixth causes of action.

[4]                 Finally, the Associate Judge reserved leave to the parties to apply to lift the stay following the issue of an arbitration award or awards on the issues presently comprised in the plaintiffs’ second, fourth and fifth causes of action. Leave was also reserved to the plaintiffs to apply to lift the stay in the event of the defendants or any of them delaying the arbitration process.

[5]                 On 2 August 2019, the plaintiffs applied for orders granting leave to discontinue against the second defendant and lifting the stay of proceedings ordered

1      Mayhew & Anor v Future Mobility Solutions Ltd & Ors [2018] NZHC 3112.

by the Court on 29 November 2018. On 20 December 2019, Associate Judge Sargisson declined both applications.2 The Associate Judge found that the application to discontinue was premature without an amended statement of claim, as the second defendant may still be required for discovery or otherwise affected by the proceedings. She also declined the application for a lift of the stay on the basis that although the plaintiffs stated that they did not intend to pursue arbitration against the second defendant, so long as the right to arbitration lived on, the risk of tandem proceedings remained.

Application for injunction restraining arbitration

[6]                 On 12 March 2020, the defendants applied on notice for an injunction restraining the arbitration between the parties until such time as the plaintiffs signed an arbitration deed appointing Ms Polly Pope of Russell McVeagh as arbitrator and specifying the scope of the arbitration to relate to all issues between the parties arising from the statement of claim, including defences, set offs and counter claims filed in this proceeding between the parties.

[7]                 The defendants submit that as a matter of public policy all issues between the parties should be resolved in the one forum. The defendants all agree to the resolution of all issues arising out of this proceeding by way of arbitration. The plaintiffs are, however, seeking to arbitrate only part of the dispute between the parties.

[8]                 The application is opposed by the plaintiffs on the grounds that there is no arbitration agreement between the plaintiffs and the first defendant and/or the third defendant. The plaintiffs also note that in the judgment of 29 November 2018, Associate Judge Smith expressly stated it was for the plaintiffs to decide whether or not they would take up the defendants’ offer to arbitrate all the issues in the proceeding, including those raised by the first, third and sixth causes of action. The plaintiffs do not wish to pursue their claims against the first defendant and/or the third defendant in arbitration and submit that they cannot be forced to enter into a contractual relationship with the first and/or third defendant.

2      Mayhew & Anor v Future Mobility Solutions Ltd & Ors [2019] NZHC 3302.

[9]                 Finally, the plaintiffs submit that the defendants are unreasonably and unjustifiably delaying the arbitration.

Discussion

[10]              I am going to dismiss the application. Interim injunctions are temporary measures intended to preserve the parties’ rights and positions as fairly as possible so that the final judgment will be effective after the issues have been fully canvased at trial.

[11]              In the substantive proceeding, there is no cause of action relating to any arbitration. The Court is therefore not seized of any dispute about arbitration. Interim measures cannot be granted to protect the defendants’ position as there is no position to protect.

[12]              Furthermore, in my view, the defendants, in effect, seek a mandatory injunction compelling the plaintiffs to take part in a wider arbitration process than is agreed in the contract between them and the second defendant, Sealegs International Limited. Mandatory injunctions are granted only rarely and in exceptional circumstances. None have been demonstrated here.

[13]              Associate Judge Smith made it plain in his judgment that the plaintiffs were free to agree to refer disputes against all the defendants to arbitration if they chose to take up the defendants’ offer to do so. They cannot be compelled to do so.

[14]              That, in my mind, is sufficient to dispose of the application, but there are other hurdles the defendant has failed to overcome. There has been no undertaking as to damages filed, although counsel for the defendants indicated that the defendants would be happy to file such an undertaking if required by the Court.

[15]              As to the balance of convenience, I am of the view that the defendants could be compensated by way of damages for any wasted time and expenditure suffered by them in the interim, if in some way they succeeded in an action compelling the plaintiffs to enter into arbitration with the first defendant, Future Mobility Solutions Ltd, and the second defendant, Mr McKee-Wright.

[16]In my view, the overall justice of the position also favours the plaintiffs.

[17]              Having dismissed the application, an award of costs is appropriate. Having heard brief submissions from counsel, I direct that the defendants are to pay the plaintiffs increased costs on a 2B basis plus 50 per cent or actual costs, whichever is the lesser, on the basis that the application lacked merit.

[18]              Finally, Mr Henry advised the Court that he had instructions to appeal against any dismissal of the application and sought for an interim order to protect the defendants’ position. In the circumstances, I am going to refuse to make any interim order as I am advised that the arbitration will be quite unlikely to be held before October 2020. If and when an appeal is filed against this judgment, then Mr Henry can apply to the Court of Appeal for a stay of the arbitration pending its judgment.

Woolford J