MB Technology Ltd v Orbis Blockchain Technologies Ltd
[2024] NZHC 1469
•5 June 2024
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
COMMERCIAL PANEL
CIV-2020-404-1541
[2024] NZHC 1469
BETWEEN MB TECHNOLOGY LTD
Plaintiff
AND
ORBIS BLOCKCHAIN TECHNOLOGIES LTD
First defendant
DAVID SHU-HAN YU
Second defendantDANIEL JOHN CROTHERS
Third defendantContinued overleaf
Hearing: 31 May 2024 Appearances:
J S Cooper KC and S A Barker for MB Technology Ltd M Heard for Orbis Blockchain Technologies Ltd
AJB Holmes for Mr Yu and Mr Crothers
C P Browne and J J Gosha for Ecomi Technology Pte LtdDate of judgment:
5 June 2024
JUDGMENT OF JAGOSE J
This judgment was delivered by me on 5 June 2024 at 3.30pm.
Pursuant to Rule 11.5 of the High Court Rules.
………………………… Registrar/Deputy Registrar
Counsel/Solicitors:
J S Cooper KC, Auckland
AJB Holmes, Barrister, Auckland Buddle Findlay, Wellington
Lee Salmon Long, Auckland Koo Telle Lawyers, Auckland Wilson Harle, Auckland
MB TECHNOLOGY LTD v ORBIS BLOCKCHAIN TECHNOLOGIES LTD [2024] NZHC 1469 [5 June 2024]
ECOMI TECHNOLOGY PTE LTD
Fourth defendant
DENISE MULLINGS
Fifth defendant
JAHANZAIB KHAN
Sixth defendant
[1] This judgment requires to be read in conjunction with my 1 June 2022 judgment,1 and the Court of Appeal’s 7 March 2024 judgment upholding it.2
[2] My earlier judgment dismissed the first (Orbis) and fourth (Ecomi) defendants’ applications (and Orbis’ application for summary judgment on its counterclaims) to strike out the plaintiff’s (MB Technology) first cause of action in this proceeding as barred by a settlement agreement between the parties. I do not repeat the applicable interpretative principle,3 accepted by the Court of Appeal.4
Background
[3]Clause 1.1 of the settlement agreement relevantly provided:
The Parties hereby irrevocably and unconditionally agree, without any admission as to liability, to a full and final settlement of all claims as between the Parties in respect of, arising directly or indirectly out of, or in connection with the Singapore Action and the New Zealand Ecomi Action, and the allegations made in the Singapore Action and the New Zealand Ecomi Action however so arising, on the terms and conditions of this Settlement Agreement. For the avoidance of doubt, this clause does not apply to the New Zealand Orbis Action.
The “New Zealand Orbis Action” is this proceeding.
1 MB Technology Ltd v Orbis Blockchain Technologies Ltd [2022] NZHC 1257.
2 Ecomi Technology Pte Ltd v MB Technology Ltd [2024] NZCA 47.
3 MB Technology Ltd v Orbis Blockchain Technologies Ltd, above n 1, at [13]–[14].
4 Ecomi Technology Pte Ltd v MB Technology Ltd, above n 2, at [51].
Defendants’ applications for strike-out and summary judgment
[4] The second (Mr Yu) and third (Mr Crothers) defendants now apply for MB Technology’s second and third causes of action to be struck out (and for leave to apply for summary judgment on their defences). And Orbis seeks leave also now to bring a further application for strike-out of the third cause of action.
[5] For those defendants,5 Antony Holmes and Michael Heard respectively submit the Court of Appeal’s judgment is to be understood only as determining this proceeding’s first cause of action survived settlement. They argue — on the Court of Appeal’s interpretation of the settlement clause, in which the clause’s non- application to this proceeding only arises in the event of doubt as to its operative scope
— this proceeding’s second and third causes remain to be construed settled. And that is because the second and third causes of action are said incontrovertibly to be claims arising directly or indirectly out of or in connection with the settled proceedings and/or the allegations made in them. Accordingly there is no room for any doubt as may otherwise have engaged the settlement clause’s ‘clarification’ the settlement does not apply to this proceeding.
Discussion
[6] As I said at the outset of the hearing, the defendants’ arguments must overcome the very substantial obstacle my earlier judgment was upheld by the Court of Appeal and accordingly is binding on all defendants, even although the judgments directly addressed only Orbis’ and Ecomi’s applications to strike out the first cause of action.
[7]My earlier judgment found:6
The … parties’ settlement — of “claims” relating to the discontinued proceedings against Ecomi, and of “allegations” made in them — “does not apply” to this proceeding. The settlement’s non-application to this proceeding is expressed to avoid doubt, inferring there was some doubt to be avoided. The ‘relevant context’ is this proceeding against Orbis was to be the subject of settlement discussion. The doubt was if the settlement captured some or all of this proceeding. By its express non-application, it did not.
5 For simplicity, this judgment’s references to “the defendants” mean Orbis, Mr Yu and Mr Crothers. The fourth, fifth and sixth defendants took no active part on the present applications.
6 MB Technology Ltd v Orbis Blockchain Technologies Ltd, above n 1, at [15].
I also explained:7
Objectively considered, the settlement agreement’s reference to this proceeding is to this proceeding at the time of the settlement agreement, which also sought to hold this proceeding to a “standstill” for a period of settlement discussion. Absent settlement, at least those claims relating to MB Technology’s investment in Orbis remained at large. But the parties’ objective intention for, and the commercial purpose of, the settlement agreement wholly is undermined if its settled claims nonetheless may be raised in this proceeding. In any emanation other than at the time of the settlement agreement, the settlement continues to apply to this proceeding, providing at least a defence against repetition in this proceeding of the claims relating to and the allegations made in the discontinued proceedings.
These are not mere obiter comments, but part of my substantive reasons for dismissing Orbis’ and Ecomi’s strike out applications.
[8]The Court of Appeal upheld my decision:8
The Judge’s interpretation meets the objective of interpreting the settlement clause as a cohesive whole. Specifically, the operative part of the clause is interpreted in such a way that it does not bring the Orbis Action within the scope of the clause … . Further, the Judge’s interpretation is also consistent with the factual and contractual context we have set out … , in that the scope of the settlement is focussed on the Singapore Action and the New Zealand Ecomi Action, and the allegations (whether in the pleadings or other documents) that are material to the disposition of those proceedings.
[9] The Court of Appeal accepted the first cause of action was not barred by the settlement agreement for the reasons I explained,9 including:10
The discontinued proceedings and this proceeding are relatively distinct: the former related to MB Technology’s compensation in OMI tokens (or reimbursement) for its advisory and exchange listing services to Ecomi; the latter relates to MB Technology’s share subscription and transfer investments in Orbis, for which it also was to acquire OMI tokens as a ‘bonus’ for such investment.
[10] Any decision I make now on the defendants’ applications before me must be consistent with all that reasoning. Mr Holmes’ contention Ecomi and Orbis are to be considered separate components of a singular whole does not address the settlement agreement’s distinction between Ecomi- and Orbis-related proceedings. And it is too
7 MB Technology Ltd v Orbis Blockchain Technologies Ltd, above n 1, at [16].
8 Ecomi Technology Pte Ltd v MB Technology Ltd, above n 2, at [64].
9 At [68], referring to [38].
10 MB Technology Ltd v Orbis Blockchain Technologies Ltd, above n 1, at [18].
late now so to contend, when their distinction was a foundation stone to my judgment, not appealed by Mr Yu or Mr Crothers.
[11] The Court of Appeal repeatedly found the parties’ intention was not to settle this proceeding and it was not settled.11 Unlike the first cause of action (the subject of my earlier judgment), brought post-settlement in replacement of the original first and second causes of action in this proceeding, the second and third causes presently at issue are this proceeding’s original third and fourth causes.
[12] Those latter causes allege MB Technology’s investment in Orbis was obtained by particularised representations made by Mr Yu and Mr Crothers between August and November 2018. They essentially are the same representations as were alleged in the settled proceedings to entitle MB Technology to compensation from Ecomi. The defendants argue, because “the same misrepresentation is alleged in both proceedings”, it is open to them to seek strike out of the second and third causes of action (or summary judgment on their defences), subject to any requirement for leave.
[13] The defendants rely on the Court of Appeal’s explanations the settlement clause’s first sentence encompasses:12
and:13
… not only the claims that have been formally pleaded in the settled proceedings, but also any other claims that could potentially arise out of the allegations that underpin those claims
… to the extent that the first sentence of the settlement clause is ambiguous, the second sentence provides guidance as to how any such ambiguity should be resolved. Specifically, any interpretation of the first sentence that would result in the Orbis Action being included in the scope of the settlement should be avoided, if reasonably possible
to argue, because there is no ambiguity the first sentence encompasses the second and third causes of action, the second sentence has no operation. (At least to that extent, the latter is a rerun of Ecomi’s unsuccessful argument before the Court of Appeal.)14
11 Ecomi Technology Pte Ltd v MB Technology Ltd, above n 2, at [4], [25] and [61(c)].
12 At [67].
13 At [59].
14 At [44] and [45(b)].
[14] The defendants particularly rely on the Court of Appeal’s difference with my “cumulative” interpretation,15 to explain “[i]t will be sufficient … if a claim arises directly or indirectly out of, or in connection with any one of” the settled actions or allegations made in them.16 Because the same representations are relied on for the second and third causes in this proceeding as were alleged in the settled proceedings, the second and third causes are argued unambiguously to fall within the settlement clause’s first sentence as settled.
[15] My earlier judgment explained “an ‘allegation made’ in a proceeding is one which demands response in the proceeding; if proven, would establish a material fact for the proceeding’s disposition”.17 The Court of Appeal agreed.18 Hence the Court of Appeal’s disaggregated interpretation referred to at [14] above still is to be understood purposively as referring to the settled proceedings; as the Court of Appeal emphasised, a broader interpretation “would result in the Orbis Action being brought within the scope of the settlement, which was clearly not intended”.19 That same understanding is to be brought to the Court of Appeal’s example of precluded claims.20 The purposive approach is highlighted by the Court of Appeal’s explanation:21
[T]he focus of the settled proceedings was MB Technology’s investment in, and adviser relationship with, Ecomi, focussing on alleged breaches of the Advisor Agreement, Exchange Listing Agreement and the Investor Agreement. The subject matter of the Orbis Action was (and is) MB Technology’s investment in Orbis.
[16] Even identically particularised representations pleaded in this proceeding as were pleaded in the settled proceedings are not precluded by the settlement clause. That is because, in this proceeding, the representations are not claims arising directly or indirectly out of, or in connection with, any of the settled proceedings or the allegations made in them; it is only that the claims separately arising in this proceeding are based on the same particularised representations.
15 At [65].
16 At [66].
17 MB Technology Ltd v Orbis Blockchain Technologies Ltd, above n 1, at [21], citing Dairy Containers Ltd v NZI Bank Ltd (1991) 4 PRNZ 529 (HC) at 540.
18 Ecomi Technology Pte Ltd v MB Technology Ltd, above n 2, at [66].
19 At [66].
20 At [67].
21 At [68].
[17] A ‘claim’ is an aggregation of material facts contended to establish a party’s entitlement to relief in law.22 That a representation was made is not a material fact in itself; the material fact is a representation made to an end alleged in the proceeding. In the settled proceedings, they are representations alleged to have induced MB Technology’s investment in, and adviser relationship with, Ecomi. In this proceeding, they are representations alleged to have induced MB Technology’s investment in Orbis and accordingly are not caught by the settlement clause.
[18] Given that conclusion, I do not otherwise address if I should exercise my discretion to grant leave (or, indeed, strike-out). There is room to consider the applications at least belated, as more desirably brought for determination in conjunction with my earlier judgment than within a few months prior to substantive trial. For the reasons I have explained, I do not consider the Court of Appeal’s judgment afforded grounds for further such applications.
Result
[19]The applications are dismissed.
Costs
[20] Costs are reserved for determination on short memoranda each of no more than five pages — annexing a single-page table setting out any contended allowable steps, time allocation and daily recovery rate — to be filed and served by MB Technology within ten working days of the date of this judgment, with any response or reply to be filed within five working day intervals after service.
—Jagose J
22 Juken New Zealand Ltd v Red Stag Timber Ltd [2023] NZCA 242, referring to ISP Consulting Engineers Ltd v Body Corporate 89408 [2017] NZCA 160, (2017) 24 PRNZ 81 at [21] (citing Ophthalmological Society of New Zealand Inc v Commerce Commission CA168/01, 26 September 2001 at [22]–[24]; and Transpower New Zealand Ltd v Todd Energy Ltd [2007] NZCA 302 at [61(a)], citing Letang v Cooper [1965] 1 QB 232 at 242–243 (CA)). Similarly, Enright v Newton [2020] NZCA 529, [2021] 2 NZLR 412 at [43], also referring to Paragon Finance plc v DB Thakerar & Co [1999] 1 All ER 400 (CA) at 405–406.
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