New Zealand Association of Credit Unions v Finzsoft Solutions (New Zealand) Limited

[2019] NZHC 3198

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2019-404-002618

[2019] NZHC 3198

BETWEEN

NEW ZEALAND ASSOCIATION OF CREDIT UNIONS

Applicant

AND

FINZSOFT SOLUTIONS (NEW ZEALAND) LIMITED

Respondent

Hearing:	4 December 2019
Appearances:	T Fitzgerald and S Cooper for Applicant W Irving and M Brengauz for Respondent
Judgment:	4 December 2019

ORAL JUDGMENT OF WYLIE J

[Ex parte interim relief]

Solicitors/counsel:

Bell Gully, Auckland

Russell McVeagh, Auckland

NEW ZEALAND ASSOCIATION OF CREDIT UNIONS v FINZSOFT SOLUTIONS (NEW ZEALAND) LTD [2019] NZHC 3198 [4 December 2019]

The application

[1]                 The applicant, the New Zealand Association of Credit Unions, trading as Co- op Money NZ (Co-op Money), seeks an interim order on an ex-parte basis. It seeks an order that the respondent, Finzsoft Solutions (New Zealand) Ltd (Finzsoft) not take any steps to implement a notice of termination of a master services agreement between Co-op Money and Finzsoft pending further order of the Court or an arbitral tribunal constituted under the master services agreement.

[2]                 Notwithstanding that the order is sought on an ex-parte basis, the application was served on Finzsoft’s solicitors. Finzsoft has not as yet taken any formal steps but its solicitors have engaged in the matter on a limited basis. I am grateful to them for that.

Background

[3]The background is relatively straightforward.

[4]                 Co-op Money is an association of credit unions. It provides banking and payment product services to credit unions (both members and non-members) and to other customers. It provides these services by purchasing them from third party suppliers on a wholesale basis and then reselling them to its members and customers. Its members and customers then use those services to provide services for their own customers.

[5]                 The application relates to the provision of mobile banking services. Co-op Money purchases these services from Finzsoft under a master services agreement. It comprises two documents – an agreement dated 31 March 2014 and a further agreement dated July 2015. Both govern the parties’ relationship. Finzsoft provides mobile banking services to Co-op Money under the agreements. Co-op Money resells the mobile banking services to its members and customers. It currently supplies the mobile banking services to six credit unions; three are members and three are not. These credit unions then provide the services to their retail banking customers. The mobile banking services are accessed via an “app” that customers download onto their mobile devices. The app provides the customers of each of the credit unions with a

number of functions, including access to bank account information, account balance information, automatic payment information, money transfer options and account statement information. There are approximately 10,000 retail customers who use the mobile app regularly. They log in around 340,000 times per month. The affidavit evidence suggests that the mobile app has become a “channel of choice” for a significant number of the customer credit unions’ “Mum and Dad” customers.

[6]                 Co-op Money has experienced a number of membership changes over the years. When the first master services agreement was signed in March 2014, it had 17 members. In July 2015, when the new master services agreement was signed, it had 13 members. In March 2019, when it gave notice renewing the master services agreement, it had 10 members.

[7]                 Co-op Money primarily raises equity by issuing base capital notes. In an economic sense, such notes are similar to shares. They rank equally between themselves and rank after creditors in a winding up.

[8]                 Recently, one of Co-op Money’s members, Credit Union Baywide (Baywide) entered into a series of transactions with the other then members of Co-op Money, which resulted in Baywide acquiring 100 per cent of Co-op Money’s base capital notes. Prior to this acquisition, Co-op Money had seven members. Following the acquisition, four members resigned. As a result, there are presently three members of Co-op Money – Baywide and two others. The other two members have entered into a separate agreement with Baywide whereby they have agreed to resign from Co-op Money if they are requested to do so. At present however they retain their membership and the associated voting rights.

[9]                 Co-op Money is subject to the Friendly Societies and Credit Unions Act 1982. Section 106(8) of that Act provides that on every matter which is determined by vote, every member shall be entitled to vote, and shall have one vote only.

[10]              It is clear from the affidavits filed that the Baywide acquisitions are a first step in a restructuring of Co-op Money into a corporate organisation.

[11]              The acquisitions by Baywide were announced to the market on 22 November 2019. On the same day, Finzsoft gave notice terminating the master services agreement effective as from 12.00 pm on 29 November 2019.

[12]              Notice was given pursuant to clause 15.4(d) in the first master services agreement. It provides as follows:

15.3 Finzsoft’s right to terminate: Finzsoft may terminate this Agreement by written notice to the Customer if: …

(d) there is a material change in the effective control of the Customer or effective management of the Customer is transferred to any person who does not exercise such control or management as at the date of this Agreement;

[13]              Co-op Money’s application was filed on 29 November 2019. After considering the papers, I convened a telephone conference with both Mr Fitzgerald for Co-op Money, and Mr Irving, for Finzsoft. As a result of that conference, Mr Irving, on behalf of his client, undertook to the Court and to Co-op Money, that it would not take any steps to implement the termination notice it has given under the master services agreement between the parties pending further order of the Court. I recorded that undertaking in a minute issued on 29 November 2019, and I directed that there was to be a hearing today – 4 December 2019 – to further consider the issue.

[14]              In the interim, Mr Fitzgerald has filed further affidavits, confirming that Co- op Money has funds available either itself, or from Baywide, to meet the undertaking as to damages offered by it in support of the application. Mr Fitzgerald advised me that an undertaking by Baywide to support Co-op Money if necessary has been signed by Baywide. He told me that the undertaking will be signed by Co-op Money later today. Mr Irving responsibly accepted that the documents demonstrate that Co-op Money has the ability to meet its undertaking as to damages.

[15]              Against this background, I turn to consider whether or not I should grant the interim relief sought by Co-op Money.

Dispute resolution provisions

[16]              The first master services agreement puts in place provisions for dispute resolution. In short, a party claiming a dispute gives written notice to the other, who then has five business days to designate its representative to attend a meeting with a person of similar authority from the other party. The parties’ representatives are required to meet promptly, to discuss the matter and to negotiate in good faith to resolve the dispute. If no agreement is reached within 20 business days, either party to the dispute is entitled to give notice in writing to the other requiring that the despite be finally resolved by arbitration under the Arbitration Act 1996 (the Act).

[17]              There are existing disputes between Co-op Money and Finzsoft. In particular, there is a dispute over the moneys payable by Co-op Money to Finzsoft under the master services agreements. That dispute has progressed through the dispute resolution provisions and is now subject to arbitration, due to proceed to hearing on 10 and 13 December 2019. This existing arbitration does not extend to the validity of the notice of termination given by Finzsoft.

[18]              Co-op Money, by letter dated 28 November 2019, gave notice under the first master services agreement invoking the dispute resolution processes in relation to the notice of termination given by Finzsoft. Finzsoft replied on the same day advising, inter alia, that it will write to Co-op Money “in relation to its authorised representative as required by clause 14.1”. As I understand it from counsel, Finzsoft has not as yet nominated its authorised representative, but the five day period within which it is required to do so, does not expire until tomorrow. For obvious reasons, an arbitrator has not as yet been appointed to consider the dispute in relation to the notice of termination given by Finzsoft.

[19]              For the sake of completeness, I record that Co-op Money has also given notice to terminate the agreements. That notice was given pursuant to clause 15.1 of the first agreement. It comes into effect on 28 June 2020.

Jurisdiction to grant interim measures

[20]Clause 14.4 of the master services agreement provides as follows:

Condition precedent: subject to any right any party may have to apply to a court for any interim or preliminary relief in respect of the dispute, completion or termination of a negotiation as set out in this section shall be a condition precedent at the commencement of arbitration under clause 14.3.

[21]              As can be seen, the first master services agreement expressly contemplates that this Court has jurisdiction to grant interim or preliminary relief. This is consistent with the Act.

[22]              Under the Act, and pursuant to s 6(1)(a), the provisions of sch 1 apply in respect of arbitrations. This Court’s power to grant interim relief under the Act derives from art 9(1) in sch 1 to the Act. It provides as follows:

(1)It is not incompatible with an arbitration agreement for a party to request, before or during arbitral proceedings, from a court an interim measure and for a court to grant such measure.

[23]              As I noted in an earlier judgment,1 the purpose of an interim measure is to maintain or restore a state of affairs pending the determination of the underlying dispute. It is a holding or temporary order.2 The words “interim measure” are defined in the Act as follows:

interim measure means a temporary measure (whether or not in the form of an award) by which a party is required, at any time before an award is made in relation to a dispute, to do all or any of the following:

(a)maintain or restore the status quo pending the determination of the dispute:

(b)take action that would prevent, or refrain from taking action that is likely to cause, current or imminent harm or prejudice to the arbitral proceedings:

(c)provide a means of preserving assets out of which a subsequent award may be satisfied:

(d)preserve evidence that may be relevant and material to the resolution of the dispute:

(e)give security for costs

The reference to the status quo in para (a) of the definition is relevant in this case.

1      Smith Elements & Controls Ltd v EPI Group Ltd [2018] NZHC 336.

2      Safe Kids in Daily Supervision Ltd v McNeill [2012] 1 NZLR 714 (HC) at [26]–[27].

[24]              Notwithstanding art 9, the Court will be loath to grant interim relief unless it is either impossible or impracticable for the arbitral tribunal to deal with the matter. The purpose of Court imposed interim measures is to compliment and facilitate arbitrations, and not to encroach on the powers of arbitrators or act as a substitute for them.3 The Court and the arbitral tribunal are not “jurisdictional competitors”.4

[25]              Commentators have suggested that the Courts should defer to the arbitral tribunal unless there are compelling reasons for it to grant the interim measures sought.5 It may, for example, be appropriate for a Court to grant interim measures where the tribunal has not been formed, where the interim measures are sought against a non-party (an arbitral tribunal has no power to make interim orders against a non- party),6 where it is sought to enforce interim measures outside the jurisdiction, or where the place of the arbitration is in a foreign jurisdiction.7 It is only if the situation demands that the Court should grant an interim measure of protection, as opposed to an arbitrator.8

[26]              The Courts have a discretion whether or not to grant an interim measure and they will generally be reluctant to express views on the merits, or take steps that might be seen as intruding on the arbitrator’s domain.9

3      Channel Tunnel Group Ltd v Balfour Beatty Construction Ltd [1993] AC 334, [1993] 1 All ER 664 (HL) at 688; Sensation Yachts Ltd v Darby Maritime Ltd HC Auckland CIV-2005-404-1908, 16 May 2005 at [22].

4      Smith Elements & Controls Ltd v EPI Group Ltd, above n 1; David AR Williams and Amokura Kawharu Williams & Kawharu on Arbitration (2nd ed, LexisNexis, Wellington, 2017) at [9.4.3].

5      At [9.4.3].

6      Worldwide Holidays Ltd v Liu [2018] NZHC 3443 at [40].

7      Williams and Kawharu, above n 4, at [9.4.4].

8      David A R Williams Laws of New Zealand Arbitration (online ed) at [36].

9      Coastal Tankers Ltd v Port Wellington Ltd HC Wellington CP32/99, 18 February 1999; Marnell Corrao Associates Inc v Sensation Yachts Ltd (2000) 15 PRNZ 608 (HC). Here, interim measures were granted because, although the arbitral tribunal had been appointed, its ability to provide urgent interim measures was questionable, since the dates on which the tribunal would be able to convene had not been settled, and secondly, the hearing before the Court had occupied two days, and the Court decided not to require the parties to go through the time, expense or re-argue the application. The Court also took the view that the nature of the application did not have the effect of usurping the decision-making power of the arbitral tribunal; Mike Pero Real Estate Ltd v Tauranga Realty Ltd [2015] NZHC 1162; Pathak v Tourism Transport Ltd [2002] 3 NZLR 681 (HC) at [40]; Williams and Kawharu, above n 4, at [9.6]; Phillip Green and Barbara Hunt Green & Hunt on Arbitration Law & Practice (online looseleaf ed, Thomson Reuters, 2017) at [ARSch1.17A.02].

[27]              In this case I am being asked to grant interim relief by restraining Finzsoft from acting pursuant to the notice of termination it has given pending further order of the Court or such arbitral tribunal as shall be appointed. As yet, no arbitrator has been appointed to deal with the dispute in relation to the termination notice. The parties are only at the first stage in implementing the disputes resolution process they have agreed to be bound by. I do not consider that if I grant interim relief, I will be usurping the decision making power of any arbitral tribunal that might ultimately be appointed if the dispute cannot be resolved by negotiation. Any risk in that regard can be minimised if I am careful to avoid expressing a view on the merits of the dispute. The interests of a large number of third parties are in play – member credit unions and non- member credit unions, and in both cases, their customers. They will not be parties to any arbitration. In my judgment, this is a situation where the Court should not be shy when exercising the power conferred on it under both the master services agreements and the Act.

Should interim relief be granted in this case?

[28]Relevantly, article 9(2) of the first schedule to the Act provides as follows:

(2) For the purposes of paragraph (1), the High Court or … has the same powers as an arbitral tribunal to grant an interim measure under article 17A for the purposes of proceedings before that court, and that article and article 17B apply accordingly subject to all necessary modifications.

[29]Articles 17A and 17B provide as follows:

17A     Power of arbitral tribunal to grant interim measure

Unless otherwise agreed by the parties, the arbitral tribunal may, at the request of a party, grant an interim measure.

17B     Conditions for granting interim measure

(1)If an interim measure of a kind described in subparagraph (a), (b), or (c) of the definition of that term in article 17 is requested, the applicant must satisfy the arbitral tribunal that—

(a)harm not adequately reparable by an award of damages is likely to result if the measure is not granted; and

(b)the harm substantially outweighs the harm that is likely to result to the respondent if the measure is granted; and

(c)there is a reasonable possibility that the applicant will succeed on the merits of the claim.

(2)If an interim measure of a kind described in subparagraph (d) of the definition of that term in article 17 is requested, the applicant must satisfy the arbitral tribunal of the matters specified in paragraph (1)(a) to (c), but only to the extent that the arbitral tribunal considers appropriate.

(3)If an interim measure of a kind described in subparagraph (e) of the definition of that term in article 17 is requested, the applicant must satisfy the arbitral tribunal that the applicant will be able to pay the costs of the respondent if the applicant is unsuccessful on the merits of the claim.

(4)A determination by the arbitral tribunal on the matter specified in paragraph (1)(c) does not affect its discretion to make any subsequent determination.

[30]              The application falls to be determined by applying the tests set out in art 17B.10 The approach taken by the Court has been to reverse the considerations specified in art 17B(1) and deal first with whether or not there is a reasonable possibility that the applicant will succeed on the merits of the claim.11 I consider that issue first.

[31]              Co-op Money maintains that there has been no material change of effective control. It argues first that there has been no change of control as a result of Baywide acquiring all of the base capital notes. It says that it has three members, each of which has a vote in meetings, and that no single member has overall control. In the alternative, it says that even if there has been a change of control, there has been no material change in effective control. As a further alternative argument, it says that even if clause 15.3(d) has been engaged, Finzsoft has not validly exercised its power under the clause, because the exercise of the right to terminate cannot be exercised capriciously or for an improper purpose. Here, it says that there is no proper purpose for the purported exercise of the right, and that the apparent purpose appears to be to cause maximum disruption to Co-op Money’s preparation for the mediation hearing

10 See Safe Kids in Daily Supervision Ltd v McNeill, above n 2, at [18].

11 Safe Kids in Daily Supervision Ltd v McNeill, above n 2, at [30]–[31]; Solid Energy New Zealand Ltd v HWE Mining Pty Ltd HC Hamilton CIV-2010-419-904, 5 August 2010 at [33]; Discovery Geo Corp v STP Energy Pte Ltd [2012] NZHC 3549, [2013] 2 NZLR 122 at [54].

scheduled for 10 and 13 December next week. It also says that Finzsoft is obliged to give reasonable notice, and that the period of notice given – five working days – is unreasonably short.

[32]              As I have noted, the application has been filed on an ex-parte basis. I have not had the benefit of contrary affidavits from deponents for Finzsoft. Mr Irving filed brief submissions, and I have considered those. Further, a letter from Finzsoft’s solicitors is annexed to the affidavits filed by Co-op Money in the proceedings. The stance in that letter is that ownership of Co-op Money has been effectively transferred to Baywide, and that a change in ownership is a paradigm case of a change of control. It is argued that even if the description of members’ voting entitlements advanced by Co-op Money is correct, there has nevertheless been a material change of control. It is noted that prior to the Baywide purchase, when Co-op Money had seven members, each of the remaining three exercised one seventh of the management power of Co-op Money, but that they now exercise one third of the management power of Co-op Money. It is also asserted that any two of the three current members of Co-op Money can now exercise majority control of Co-op Money, whereas they could previously exercise only two sevenths of the management power. Finzsoft asserted that it was entitled to terminate the master services agreement in these circumstances and that any failure by Co-op Money to consider the potential consequences of the acquisition by Baywide of the base capital notes is not its concern. It is argued that there is nothing in clause 15.3(d) that suggests that Finzsoft’s interests must be adversely affected by any material change in control, and that in any event, whether or not Baywide’s acquisition of the base capital notes is adverse to Finzsoft’s interests, is a matter for it. It is argued that the master services agreement does not prescribe any notice period and that Finzsoft was entitled to terminate the agreement when it served the notice. It has said that it allowed one week for the termination to take effect so that Co-op Money could make alternative arrangements.

[33]              Co-op Money points to cl 14.6 in the first master services agreement. It provides as follows:

Continuation of performance: For the avoidance of doubt, the existence of a Dispute shall not relieve any party from its obligations under this Agreement and, notwithstanding the Dispute, each party shall continue to perform such

obligations in accordance with this Agreement to the maximum extent possible (having regard to the nature of the Dispute).

Co-op Money says that it has invoked the disputes resolution process, and that Finzsoft is obliged to continue to perform its obligations under the master services agreement to the maximum extent possible until the dispute is resolved either by negotiation or by an arbitral award. Finzsoft says that cl 14.6 does not apply. It does not argue that the existence of the dispute relieves it from its obligations. Rather, it asserts that what it says is a material change in effective control of Co-op Money has given it the right to terminate, which it has exercised. It says that the application of cl 14.6 as contended for by Co-op Money, would put a stop to its right to terminate under cl 15.

[34]              Both parties are seeking to rely on the terms of the first master services agreement. The parties disagree as to the meaning to be given to the relevant termination provisions.

[35]              Traditionally, the Courts in New Zealand applied the “plain meaning” rule – if the words of an agreement were plain and unambiguous as they stood, they were treated as speaking for themselves and evidence of context was not admitted to show that the parties intended something different. More recently, the Courts have become more willing to receive evidence of surrounding circumstances for the purpose of interpreting written agreements. Such evidence can sometimes have the effect that what prima facie seems the most obvious meaning of the words used, is displaced by a secondary, less obvious meaning. The Courts have held that evidence of the context in which a contract was entered into can be admitted, because it is always possible that what appears to be the plain meaning of the document may, on further examination, turn out not to be.12

[36]              This modern approach was best articulated by Lord Hoffmann in Investors Compensation Scheme Ltd v West Bromwich Building Society.13 He said as follows:14

… I do not think that the fundamental change which has overtaken this branch of the law … is always sufficiently appreciated. The result has been, subject

12     See generally Jeremy Finn, Stephen Todd and Matthew Barber Burrows, Finn and Todd on the Law of Contract in New Zealand (6th ed, LexisNexis, Wellington, 2018) at [6.3.1].

13     Investors Compensation Scheme Ltd v West Bromwich Building Society [1998] 1 WLR 896 (HL).

14     At 912.

to one important exception, to assimilate the way in which such documents are interpreted by judges to the common sense principles by which any serious utterance would be interpreted in ordinary life. Almost all the old intellectual baggage of “legal” interpretation has been discarded. The principles may be summarised as follows:

(1)Interpretation is the ascertainment of the meaning which the document would convey to a reasonable person having all the background knowledge which would reasonably have been available to the parties in the situation in which they were at the time of the contract.

(2)The background was famously referred to by Lord Wilberforce as the “matrix of fact,” but this phrase is, if anything, an understated description of what the background may include. Subject to the requirement that it should have been reasonably available to the parties and to the exception to be mentioned next, it includes absolutely anything which would have affected the way in which the language of the document would have been understood by a reasonable man.

(3)The law excludes from the admissible background the previous negotiations of the parties and their declarations of subjective intent. They are admissible only in an action for rectification. The law makes this distinction for reasons of practical policy and, in this respect only, legal interpretation differs from the way we would interpret utterances in ordinary life …

(4)The meaning which a document (or any other utterance) would convey to a reasonable man is not the same thing as the meaning of its words. The meaning of words is a matter of dictionaries and grammars; the meaning of the document is what the parties using those words against the relevant background would reasonably have been understood to mean. The background may not merely enable the reasonable man to choose between the possible meanings of words which are ambiguous but even (as occasionally happens in ordinary life) to conclude that the parties must, for whatever reason, have used the wrong words or syntax …

(5)The “rule” that words should be given their “natural and ordinary meaning” reflects the common sense proposition that we do not easily accept that people have made linguistic mistakes, particularly in formal documents. On the other hand, if one would nevertheless conclude from the background that something must have gone wrong with the language, the law does not require judges to attribute to the parties an intention which they plainly could not have had …

(Citations omitted)

[37]              This statement of the law was adopted in New Zealand in Boat Park Ltd v Hutchinson.15 It has recently been relied on in numerous contractual interpretation

15     Boat Park Ltd v Hutchinson [1999] 2 NZLR 74 (CA) at 81-82.

cases since. Recently, in Firm PI 1 Ltd v Zurich Australian Insurance Ltd,16 the Supreme Court declined to reconsider the principles of contractual interpretation, and referred again to Lord Hoffmann’s approach as representing the position in New Zealand.

[38]              It follows that the exercise of interpreting contractual provisions involves identifying what the parties meant through the eyes of a reasonable reader. That meaning is most likely to be gleaned from the language used,17 but the Courts will also look at the contract as a whole, and in context, because the words used by the parties must be set in that context. The Courts are prepared to look at the factual matrix, even if the words of the contract seem clear at first sight.18 The context of an agreement will usually operate as a cross-check, but the plain meaning of a provision is provisional, and is always susceptible to being altered by context.19 Pre-contractual negotiations, if they shed an objective light on meaning, can be relevant and admissible, but not if they are simply evidence of subjective intention.20

[39]              Both parties allege that the provisions on which they seek to rely are plain on their face. I cannot however, consistent with the relevant authorities, be confident that that will ultimately prove to be the case. In order to interpret the first master services agreement, the arbitral tribunal may well have to have regard to the evidence of those who were involved in its lead up, to the factual context in which the agreements were entered into, and perhaps to the parties’ negotiations. The correct interpretation of the relevant termination provisions – cl 15.3(d) and cl 14.6 – could well fall to be assessed by reference to these matters.

[40]              For present purposes, I accept that there is a reasonable possibility that Co-op Money will succeed on the merits of its claim – particularly in regard to cl 14.6. The validity of the termination notice has been put in issue by Co-op Money and it has invoked the disputes resolution processes set out in the first master services agreement. Finzsoft has indicated that it will engage in those processes by appointing its

16     Firm PI 1 Ltd v Zurich Australian Insurance Ltd [2014] NZSC 147, [2015] 1 NZLR 432 at [60].

17     Arnold v Britton [2015] UKSC 36, [2015] AC 1619 at [17].

18     Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [4] per Blanchard J, at [22] per Tipping J, at [64] per McGrath J.

19     At [24] per Tipping J.

20     At [20] per Tipping J.

representative for the negotiations. On the face of it, cl 14.6 would seem to apply. The position regarding the validity of the termination notice is not so clear. It will have to be determined by the arbitral tribunal and the merits of that dispute are best left to it.

[41]              I now turn to the issue set out in art 17B(1)(b) – likely harm. The potential harm to Co-op Money and to the various third parties with which it trades, (if Finzsoft is allowed to act on the termination notice), in my judgment, substantially outweighs the harm that is likely to result to Finzsoft if it continues to provide the required services pursuant to the master services agreements.

(a)Unless interim relief is granted, Finzsoft will withdraw Co-op Money’s right to access the mobile banking platform which Co-op Money in turn provides to its members and customers. Co-op Money’s customers will lose mobile banking functionality. In practical terms, this will mean that thousands of “Mum and Dad” credit union customers will be unable to access their bank accounts via their mobile apps over the Christmas period. This will cause significant disruption to a number of persons and entities who will not be parties to any arbitration. This disruption would have severe effects for not only Co-op Money but also for its customers. If Co-op Money is not able to deliver mobile banking services to its customers, then it is likely that it will suffer reputational harm and financial loss. The “Mum and Dad” customers will be less likely to use credit unions associated with Co-op Money, and the credit unions are less likely to purchase banking services from Co-op Money. There would likely be adverse publicity for Co-op Money.

(b)In contrast, there is no obvious loss to Finzsoft. It will still be entitled to payment for the services it provides, albeit under sufferance. In financial terms, Finzsoft is likely to be better off if the master services agreement remains on foot pending further order of the Court. There is no additional work required from Finzsoft to maintain the mobile services. The app is already in place, and as I understand it from the affidavits filed, it is hosted and maintained by Co-op Money.

[42]              Turning to art 17B(1)(a), the harm that will likely be suffered by Co-op Money, is not, in my view, readily reparable by an award of damages in the event that Co-op Money ultimately succeeds before the arbitral tribunal. The financial consequences would be difficult to assess accurately. There would be a number of intangibles, for example, the likelihood that Co-op Money’s revenue stream would decrease and the risk that it would lose further business opportunities because of its inability to provide reliable mobile banking services. The losses to individuals, and third party customers of Co-op Money would be even more difficult to ascertain. Co-op Money’s liability for those losses would no doubt be in dispute. All of these problems are made worse and harder to mitigate by the fact that the Christmas period is looming. Co-op Money’s credit union customers, and in turn their customers, need to be able to access mobile banking services over the Christmas period.

[43]              Accordingly, I grant interim relief, largely in the terms sought. I order that Finzsoft is not to take any steps to implement the notice of termination of the master services agreement given by it to Co-op Money on 22 November 2019, pending further order of this Court.

[44]              Co-op Money initially proposed that the restraint should remain in place pending further order of this Court, or of the arbitral tribunal which may be constituted under the master services agreement. I am not prepared to cede the jurisdiction of this Court over orders made by it to an arbitral tribunal. The resolution of the dispute between the parties will be for an arbitral tribunal if negotiations between the parties are successful. If those negotiations are successful, or once any arbitral tribunal has ruled on the dispute, then the parties can apply to this Court for whatever consequential orders are required in relation to the interim relief I am granting.

[45]The interim relief is given on conditions:

(a)Co-op Money is to take all reasonable steps to ensure that the dispute resolution provisions contained in the first master services agreement are implemented expeditiously;

(b)the application has proceeded on an ex-parte basis. Leave is reserved to Finzsoft to seek to apply to set aside the interim order on five working days’ notice. Finzsoft can also seek to set aside the interim order if Co-op Money does not comply with the first condition requiring that it act expeditiously.

[46]              I decline Co-op Money’s request that I should order Finzsoft to pay Co-op Money’s costs. It seems to me that such an order would be premature. Any costs order should await resolution of the dispute between the parties.

Wylie J