Muollo v Creative Engineering Design Limited CA240/04 - [2005] NZCA 403

IN THE COURT OF APPEAL OF NEW ZEALAND

CA240/04

BETWEEN JUSTINE MUOLLO Appellant

ANDCREATIVE ENGINEERING DESIGN LIMITED
Respondent

Hearing: 30 November 2005
Court: Anderson P, Chambers and Robertson JJ Counsel: B A Gibson for Appellant
No appearance for Respondent

Judgment: 8 December 2005 at 10am

JUDGMENT OF THE COURT

The appeal is allowed and all orders against the appellant in the High Court are

quashed.

REASONS

(Given by Robertson J)

Introduction

[1] Ms Muollo appeals against that part of the decision of Keane J, delivered in the High Court in Auckland (Creative Engineering Design Ltd v Muollo & Ors HC AK CP509-SD02 29 July 2004), in which judgment was entered against her
personally in favour of the respondent Creative Engineering Design Ltd (CEDL) in

MUOLLO V CREATIVE ENGINEERING DESIGN LIMITED CA CA240/04 8 December 2005

the sum of $53,276.00 for misleading and deceptive conduct in breach of the

Fair Trading Act 1986, plus interest of $7,906.88 and costs and disbursements of

$74,959.47.

[2] Ms Muollo was a director of Giusti’s Limited and Giusti’s (2002) Limited (jointly referred to as GL), companies which carried on business as producers and distributors in Wellington. By the time judgment was entered, Giusti’s (2002) Limited had changed its name to Unibic Limited. CEDL obtained judgment against Unibic Limited for $200,187.57 including interest and costs independently, but concurrently, with the judgment against Ms Muollo for $136,142.35.

[3] Although identifying the exact details of the contract or arrangements between GL and CEDL was far from easy, it was always common ground that Ms Muollo could only be answerable directly to CEDL under the Fair Trading Act
1986.

The background

[4] The case (which involved a seven day hearing in the High Court) concerned a claim made by CEDL in respect of the design and manufacture of a machine for making biscuits in the shape of spoons. Although there were issues about who owned the intellectual property, the significant issue before the High Court was whether the trays and press which CEDL designed to form the biscuits for baking, were designed and manufactured on time, to price and were fit for the purpose intended.

[5] During the late 1990s, Ms Muollo conceived the idea of an edible spoon. She sketched a design and experimented with recipes. She employed a Palmerston North company to improve her design, to manufacture some hand-operated moulds and subsequently a rudimentary manual machine.

[6] Having tested the market and satisfying herself that there was potential, Ms Muollo had various contacts with a number of companies about advancing the

project until eventually, in February 2002, she was introduced to Mr Scheib of

CEDL. A business relationship developed.

[7] The terms of the contract between the respective companies could only be inferred from the conduct and numerous statements of the parties both in written and oral form since they never concluded a comprehensive agreement. As things panned out, the contractual arrangements evolved in conjunction with the various steps in developing the machine.

[8] Included in…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Muollo v Creative Engineering Design Limited CA240/04

Details

AGLC: Muollo v Creative Engineering Design Limited CA240/04 [2005] NZCA 403
Case: [2005] NZCA 403
Decision Date: 8 December 2005

CaseChat Overview and Summary

In the Court of Appeal of New Zealand, Ms. Justine Muollo appealed against a decision made by Keane J in the High Court, which found her personally liable for $53,276.00 for misleading and deceptive conduct in breach of the Fair Trading Act 1986, along with interest, and costs and disbursements. Ms. Muollo was a director of companies that carried on business as producers and distributors in Wellington. The appeal centred on the High Court's finding that Ms. Muollo's email to CEDL on 27 July 2002 constituted misleading and deceptive conduct contrary to the Fair Trading Act. The Court of Appeal held that the High Court judgment contained errors in assuming that Ms. Muollo's email was a contractual promise or undertaking by her personally, and that there was no evidential foundation for finding that Ms. Muollo was intent upon immediate advantage only. The Court of Appeal found that there was no evidential basis for the finding of a personal breach of the Fair Trading Act, and thus the appeal must be allowed and all orders made against Ms. Muollo in the High Court were quashed. The orders against CEDL remained undisturbed.

This case highlights the importance of distinguishing between contractual promises and promises under the Fair Trading Act, as well as the need for evidence to support findings of misleading or deceptive conduct. The Court of Appeal's decision provides guidance on how such cases should be assessed and the standards that must be met for a finding of misleading or deceptive conduct under the Fair Trading Act.

Orders