Moldauer v Constellation Brands Inc

[2009] NZCA 324

IN THE COURT OF APPEAL OF NEW ZEALAND

CA262/2009
[2009] NZCA 324

BETWEENEDWIN MOLDAUER

Applicant

ANDCONSTELLATION BRANDS INC

First Respondent

ANDCANANDAIGUA WINE COMPANY

Second Respondent

Hearing:21 July 2009

Court:Hammond, Robertson and Baragwanath JJ

Counsel:G J Thwaite for Applicant

M S Cole and W J R Kiewik for Respondents

Judgment:24 July 2009 at 11 am

JUDGMENT OF THE COURT

A        The application for leave to appeal is dismissed.

BThe respondent will have standard costs on a band A basis, and usual disbursements.

REASONS OF THE COURT

(Given by Hammond J)

Introduction

[1]       Mr Moldauer worked for a wine company in California, USA.  His employment came to an end.  A settlement was reached between him and his former employer.  Mr Moldauer then sought to advance other issues to arbitration.  Ultimately, his attempt to have his former employer submit to arbitration was stayed by order of a New York Court.

[2]       Mr Moldauer then issued proceedings in the Auckland District Court in New Zealand.  Without seeking the leave of the Court, he served the respondent companies in the United States.

[3]       In passing, we were not provided with a copy of the statement of claim in the District Court, but it appears from the early portion of the District Court Judge’s judgment that not only were employment benefits being sought, but also (unspecified) punitive damages.  There may be a query therefore as to whether the claim was even within the jurisdictional limit of the District Court.  Mr Thwaite said that, if necessary, the excess amount over the District Court jurisdiction would be abandoned.

[4]       The respondents protested the jurisdiction of the District Court.  They applied to the Court to dismiss the proceeding, under r 139 of the District Courts Rules 1992.  Judge R Joyce QC upheld the protest and dismissed the proceedings: DC AK CIV-2005-004-001686 10 August 2007.

[5]       Mr Moldauer appealed against that decision to the High Court.  Rodney Hansen J dismissed the appeal: HC AK CIV 2007-404-005589 16 December 2008.

[6]       Mr Moldauer then applied for leave to appeal against the judgment of Rodney Hansen J, to this Court.  On 8 April 2009, Rodney Hansen J dismissed that application.

[7]       Mr Moldauer now applies for leave from this Court to appeal against the judgment of Rodney Hansen J by way of a second appeal, under s 67 of the Judicature Act 1908.  The application is therefore one in which the applicant must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the costs and delay of the further appeal: Waller v Hider [1998] 1 NZLR 412 (CA); Snee v Snee (1999) 13 PRNZ 609 (CA).

The service out rule

[8]       Rule 242 of the District Courts Rules provides that in certain circumstances a plaintiff in a District Court proceeding in New Zealand can serve a statement of claim out of New Zealand without leave.  Without going into unnecessary detail, the grounds relied upon to serve out of New Zealand without leave in this case were as follows:

·     Under r 242(b) relating (broadly) to whether a contract was made or entered into New Zealand or through an agent in New Zealand or was to be wholly or in part performed in New Zealand or was by its terms or by implication to be governed by New Zealand law.

·     Under r 242(f) where any relief is sought against any person domiciled or ordinarily resident in New Zealand.

·     Under r 242(j) where the person to be served has submitted to the jurisdiction of the Court.

The High Court decision

[9]       Following the orthodox principles in Kuwait Asia Bank EC v National Mutual Life Nominees Limited [1990] 3 NZLR 50 (CA), Rodney Hansen J concluded that there were no grounds on which Mr Moldauer could serve the respondents under r 242 (at [27]). Even if Mr Moldauer had been able to bring his proceeding within the rule, and the Judge thought he could not, the High Court Judge considered that the District Court was correct to set aside service because Mr Moldauer had not demonstrated a good arguable case and/or forum conveniens.  On the latter point, the Judge regarded Mr Moldauer’s only link with New Zealand as his residence there: “all other factors favour the United States as the most convenient forum” (at [53]).

The application to this Court

[10]     Mr Thwaite argues that the five questions articulated by him (the meaning of residency or domicile of an overseas company; the application of s 332 and 334 of the Companies Act 1993; the meaning of submission to jurisdiction in the context of service of proceedings; the relevance of the merits in a case where service is effected on a New Zealand company; and whether the Court is entitled to regard what Mr Thwaite sees as legal formalities) are capable of, and merit, bona fide and serious argument.  He submits:

In respect to each issue, case law in this area appears thin or non-existent.  Resolution of the issue would be in the interest of the appellant, as then there could be jurisdiction as of right in the District Court.  The significance of jurisdiction outweighs the consideration of costs to respondents, which are part of the large Constellation Group, and have been able to engage attorneys in California for litigation against the appellant. It is also in the interest of the court system, as clarifying the law.  Proper clarification of the law would be of interest to all potential litigants, who are facing disputes with foreign-based companies that have actively involved themselves in the New Zealand market, particularly for financial services.  Given that the appellant and respondent have been involved in continuing litigation in the United States arising from the employment, delay would not be an adverse factor.

[11]     Mr Cole opposed each of these propositions.

Disposition

[12]     The application for leave to appeal is dismissed.  It is sufficient to dispose of the application to hold, as we do, that the endeavour to serve out of New Zealand was not authorised under r 242.

[13]     There is no basis on which it can be said that the respondents submitted to the jurisdiction of the Court.

[14]     The other ground, broadly stated, upon which Mr Thwaite relied was that there was a sufficient presence of the respondents’ interests in New Zealand to amount to residence.  The High Court Judge proceeded on the well-established principle that there must be (at least) the carrying on of business at a definite and fixed place, and for more than minimal time (see Adams v Cape Industries Plc [1990] Ch 433 at 530-544; Collins (gen ed), Dicey, Morris and Collins on the Conflict of Laws (14ed 2006) at [14-059]).  Such things as had been “done” in New Zealand fell short of that standard (see Rodney Hansen J at [19]). 

[15]     It has not been shown the Judge was wrong in his factual determination.  As to the law, he proceeded on an entirely orthodox basis.  We do not see it as being necessary or appropriate to review the well-established principle as to the test of “residence”, for a corporation.

Conclusion

[16]     The application for leave to appeal is dismissed.

[17]     The respondent will have standard costs on a band A basis, and usual disbursements.

Solicitors:
Gregory J Thwaite, Auckland for Applicant
Simpson Grierson for Respondents