National Plant and Equipment Pty Limited v P Mundy Heavy Equipment Limited

[2019] NZHC 2879

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-2443

[2019] NZHC 2879

BETWEEN

NATIONAL PLANT AND EQUIPMENT PTY LIMITED

Plaintiff

AND

P MUNDY HEAVY EQUIPMENT LIMITED

Defendant

Teleconference:	5 November 2019
Appearances:	D R Kalderimis and D Street for the plaintiff C Lord for the defendant
Judgment:	5 November 2019

JUDGMENT OF JAGOSE J

The judgment was delivered by me on 5 November 2019 at 5.00pm.

Pursuant to Rule 11.5 of the High Court Rules

……………………………… Registrar/Deputy Registrar

Solicitors/Counsel:

Chapman Tripp, Wellington

Craig Griffin & Lord, Auckland

NATIONAL PLANT AND EQUIPMENT PTY LIMITED v P MUNDY HEAVY EQUIPMENT LIMITED [2019] NZHC 2879 [5 November 2019]

[1]    The plaintiff’s without notice application for preservation orders came before me as duty judge this morning, and I directed it be determined after hearing from counsel by telephone conference at 2.15 pm today.

[2]    The application was foreshadowed to the defendant on 1 November 2019, absent satisfactory undertakings, to be made on 4 November 2019. The defendant’s new solicitor, Christopher Lord, identified then he was seeking instructions. The application was therefore made, on a Pickwick basis given Mr Lord’s engagement.1

Background

[3]    The plaintiff (“NPE”) has been in negotiations for much of this year to acquire six Komatsu trucks from a Brazilian company (“U&M”), through the defendant (“PMHE”).

[4]    Agreement was reached on 13 September 2019 for acquisition of the vehicles at a total price of US$13.2 million, on terms including payment of “10% upon P[urchase] O[rder] (Non refundable)”. PMHE subsequently issued an invoice for the purchase price, on terms including payment of “10% immediately – non refundable”. No payment then was made (even if a purchase order issued).

[5]    On 25 September 2019, U&M advised NPE the vehicles no longer were available to it, except as a back-up to another (accepted) offer. On 27 September 2019, NPE paid PMHE US$1.32 million. On 19 October 2019, PMHE advised NPE the vehicles “are sold” to the other purchaser. On 21 October 2019, NPE sought refund of its payment. In subsequent correspondence, PMHE said to NPE:

You defaulted on our contract by not paying the deposit on time. The invoice

[I]   issued to you says non refundable, had you paid the deposit on time we would not be in this position.

and later:

You were told [by] me and U&M there were other buyers, you chose to roll the dice.

1      Pickwick International Inc (GB) Ltd v Multiple Sound Distributors Ltd [1972] 1 WLR 1213 (Ch).

My invoice said non-refundable, you paid late and missed your chance to purchase.

[6]    NPE claims PMHE is liable to it for the US$1.32 million, as money had and received.

Preservation orders

[7]    Under rule 7.55 of the High Court Rules 2016, NPE seeks an order the US$1.32 million, as a fund to which NPE claims a right in the proceeding, be paid into court.

[8]    The payment is of a fund, an identifiable sum of money to which PMHE itself had no ultimate entitlement (but rather as stakeholder for either U&M or NPE). On NPE’s case, it is a prime candidate for a restitutionary claim, such being “to correct normatively defective transfers of value, usually by restoring the parties to their pre- transfer positions”.2

[9]    NPE says the US$1.32 million knowingly was paid to PMHE, no longer non- refundably to secure the vehicles’ availability from U&M, but refundably as a show of NPE’s good faith as a back-up purchaser. Whether the latter is true must depend on trial, but the former certainly must be true. At the time of the payment, the vehicles no longer were available to NPE. Yet, in the face of NPE’s assertion the payment was refundable, PMHE relies only on the terms of sale.

[10]   At the hearing, Mr Lord explained he had been instructed to engage counsel, and sought a few days’ adjournment for that purpose. He observed PMHE’s back accounts had been “frozen”, he presumed in response to NPE’s solicitors’ notification of the dispute to the bank. (The bank confirmed after the hearing it had “suspended transacting on accounts relating to the dispute”.) But Mr Lord could not advise of the contents of the accounts; neither could he offer any undertaking in the interim.

[11]   The fungibility of money means there is a meaningful risk the fund may be dissipated simply in the ordinary course of commerce, in which PMHE engages. The

2      Investment Trust Companies v Revenue and Customs Commissioners [2017] UKSC 29, [2018] AC 275 at [42].

bank’s suspension is not subject to NPE’s consent. Such together provide good reason for making the primary orders sought. PMHE will have leave to apply on short notice to the duty judge for their discharge.

[12]   I am not prepared to make the subsidiary information order sought by NPE. Such is not necessary for preservation purposes. Neither am I prepared to award NPE costs at this juncture, but will reserve them.

Result

[13]In reliance on NPE’s undertaking as to damages, I:

(a)grant the orders numbered 1.1 and 1.2 in NPE’s application dated 4 November 2019;

(b)reserve PMHE leave to apply on short notice to the duty judge for the orders’ variation or rescission; and

(c)reserve costs for determination in conjunction with the proceeding.

—Jagose J