Medtronic New Zealand Limited v Finch

[2013] NZHC 1252

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2012-004-7408 [2013] NZHC 1252

BETWEEN  MEDTRONIC NEW ZEALAND LIMITED

Plaintiff

ANDGREGORY DALE FINCH Defendant

Hearing:                   7 May 2013

Counsel:                  P F Dalkie for Plaintiff

P Rice for Defendant

Judgment:                29 May 2013

JUDGMENT OF KATZ J [Application for summary judgment]

This judgment was delivered by me on 29 May 2013 at 4:30 pm

Pursuant to Rule 11.5 High Court Rules

Registrar/Deputy Registrar

Solicitors:

McDonald Law, Auckland

Carter & Partners, Auckland

MEDTRONIC NEW ZEALAND LIMITED v GREGORY DALE FINCH [2013] NZHC 1252 [29 May 2013]

Introduction

[1]      Medtronic  New  Zealand  Limited  (“Medtronic”)  sells  medical  items  and devices including orthopaedic implants.  Gregory Finch is an orthopaedic surgeon. Medtronic alleges that Mr Finch is indebted to it in the sum of $1,080,633.08 for medical items he has purchased.  It seeks summary judgment for that amount.

[2]      Mr Finch’s defence is that he never contracted with Medtronic.   He says it was  his  company,  Finch  Orthopaedics  Limited  (now  Redding  Services  Limited (in liquidation)) (“Company”) that was the contracting party.  The key issue I must determine  is  whether  it  is  arguable  that  the  contracting  party  was  in  fact  the Company, rather than Mr Finch personally.  If so, Mr Finch will have an arguable defence and the summary judgment application must fail.

Approach to summary judgment application

[3]      Part  12  of  the  High  Court  Rules  deals  with  applications  for  summary judgment.   Rule 12.2 of the High Court Rules requires that a plaintiff satisfy the Court that a defendant has no defence to a cause of action in the statement of claim or to a particular part of any such cause of action.  The obligations imposed by the rule have been examined in numerous cases.  The correct approach to an application for  summary judgment  by a  plaintiff  was  recently summarised  in  Krukziener  v

Hanover Finance Ltd where the Court said:[1]

[1] Krukziener v Hanover Finance Ltd [2008] NZCA 187, [2010] NZAR 307 at [26].

The question on a summary judgment application is whether the defendant has no defence to the claim; that is, that there is no real question to be tried: Pemberton v Chappell [1987] 1 NZLR 1 (CA) at 3. The Court must be left without any real doubt or uncertainty. The onus is on the plaintiff, but where its evidence is sufficient to show there is no defence, the defendant will have to respond if the application is to be defeated: MacLean v Stewart (1997) 11

PRNZ 66 (CA). The Court will not normally resolve material conflicts of evidence  or  assess  the  credibility  of  deponents.  But  it  need  not  accept

uncritically evidence that is inherently lacking in credibility, as for example

where the evidence is inconsistent with undisputed contemporary documents or other statements by the same deponent, or is inherently improbable: Eng

Mee Yong v Letchumanan [1980] AC 331 (PC) at 341. In the end the Court’s

assessment of the evidence is a matter of judgment. The Court may take a robust and realistic approach where the facts warrant it: Bilbie Dymock Corp Ltd v Patel (1987) 1 PRNZ 84 (CA).

[4]      A court is not required to accept uncritically any or every disputed fact: Eng Mee  Yong  v  Letchumanan.[2]      In  essence,  the  inquiry is  whether  or  not  the person’s  assertion  passes  the  threshold  of  credibility:  Pemberton  v  Chappell;[3]

Orrell v Midas Interior Design Group Ltd.[4]

Is it arguable that the debt was owed by the Company rather than Mr Finch personally?

[2] Eng Mee Yong v Letchumanan [1980] AC 331 (PC).

[3] Pemberton v Chappell, above n 2.

[4] Orrell v Midas Interior Design Group Ltd (1991) 4 PRNZ 608 (CA) at 613.

[5]      Medtronic submitted that the evidence clearly establishes that the debt to

Medtronic is owed by Mr Finch personally.  In particular, Medtronic submitted that: (a)      invoices show that Mr Finch was always the entity invoiced;

(b)      Mr Finch made part payments of the debt from his personal visa card;

(c)      Mr Finch has made various statements to the effect that the debt would be paid and these statements must be construed as an admission of debt;

(d)Mr Finch has also made admissions of the debt by part payment and also in emails where he acknowledged the debt without specifically stating that it was a Company rather than a personal debt;

(e)      the claim that the Company was the debtor was only made at a late stage, once solicitors had become involved.   Mr Finch did not raise that issue prior to receiving legal advice;

(f)       the Company went into liquidation on 24 August 2012.  The debt is

not referred to in the liquidator’s statement of affairs.

[6]      There appears to be no dispute that the debt owing.  The sole issue is whether it is Mr Finch personally who owes the debt, or the Company.   At this summary

judgment stage I am not required to resolve that issue.  Rather, the issue before me is whether Medtronic has established that Mr Finch does not have an arguable defence that it is the Company, rather than him, which is the debtor.

[7]      In my view, based on the basis of the evidence before the Court, Mr Finch does have an arguable defence to the claim that he is personally liable for the debt to Medtronic. There is clear evidence to support his claim that the debtor was the Company rather than him. Accordingly there is a serious question to be tried, which can only be resolved at trial.

[8]      In particular, I note that Mr Finch’s evidence was that he established the Company on his return to New Zealand (from Australia) in 2006, to run every aspect of his surgical practice.   His evidence was that it was the Company, not him, that entered into all relevant contracts relating to his surgical practice.   Although he cannot   recall   the   precise   details   of   his   conversations   with   Medtronic’s representatives six years ago (when they approached him inviting him to use Medtronic’s products) he deposed that they were given the same information that he gave to all sales representatives.  This was that he was trading as a company and that any supply contract would be with his company.  Mr Finch deposed that it was the common practice of orthopaedic surgeons in 2006 (and now) to operate through a company.  He suggested that Medtronic would have been well aware of this (albeit this comment is speculation, not evidence).

[9]      Mr Finch further deposed that payment of Medtronic’s invoices was always made by the Company (and not through his personal bank account or visa cards). Documentary evidence was produced which indicates that this assertion is at least arguable and possibly strongly so.  Further, he deposed that the debt to Medtronic was included in the Company’s list of creditors and accounted for in the company’s financial statements and GST returns.

[10]     Mr Finch denied ever admitting that the debt was owed by him personally. Any “acknowledgment” that the debt was owing and that he would try and make arrangements for its payment was not an admission of personal liability.   On the contrary, Mr Finch referred to an email to Medtronic on 26 July 2012, in which he

made it clear that any net sale proceeds from the sale of the family home would be loaned to the business to repay the debt.   Although counsel for Medtronic endeavoured to suggest that the “business” referred to was in fact Mr Finch in his personal capacity, that appears to be a somewhat strained interpretation of the email. The email appears on its face to support Mr Finch’s defence that the Company was the relevant debtor, not him personally.

[11]     Counsel  for  Mr  Finch  also  noted  that  Medtronic  had  not  disputed  the statements in Mr Finch’s affidavit to the effect that Medtronic sales representatives would have been aware and been told that he was trading through a company.  There was no evidence from the relevant Medtronic representatives, deposing as to their own recollection of events.   Rather, Medtronic sought to challenge (through submissions) Mr Finch’s evidence on the issue, on the basis that is was vague and insufficiently specific.  The consequence is that the only evidence currently before the Court as to the discussions which took place at the outset of the contract is that of Mr Finch.   His evidence on the issue is far from determinative.   However, when considered together with other evidence before the Court, it is clearly arguable that the Company rather than Mr Finch was the contracting party.

Conclusion

[12]     The sole defence in this case is that Mr Finch is not Medtronic’s debtor, the Company  is.    Has  Medtronic  established  that  that  defence  is  not  reasonably arguable?   In my view it has not. Accordingly there is a serious question to be tried, which can only be resolved at trial.

Result

[13]     The application for summary judgment is dismissed. [14]      Costs are reserved.

Katz J