NZX Limited v Ralex Commodities Pty Limited HC Wellington CIV-2011-485-001299
[2011] NZHC 1653
•22 November 2011
IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY
CIV-2011-485-001299
BETWEEN NZX LIMITED Plaintiff
ANDRALEC COMMODITIES PTY LIMITED First Defendant
ANDRALEC INTERACTIVE PTY LIMITED Second Defendant
ANDGRANT DAVIS THOMAS Third Defendant
ANDGRANT THOMAS NOMINEES PTY LIMITED
Fourth Defendant
ANDDOMINIC LUKE PYM Fifth Defendant
ANDPYM FAMILY PTY LIMITED Sixth Defendant
Hearing: 15 November 2011
Counsel: B R Latimour with B M Cash, T M Horder and E M Greig for
Plaintiff
T J North SC with E G Madden, J K Scragg and A E E O'Driscoll for
Defendants
Judgment: 22 November 2011
In accordance with r 11.5 I direct the Registrar to endorse this judgment with the delivery time of 3.45pm on the 22nd day of November 2011.
RESERVED JUDGMENT OF GENDALL J
NZX LIMITED V RALEC COMMODITIES PTY LIMITED HC WN CIV-2011-485-001299 22 November 2011
[1] The plaintiff (NZX) has brought these proceedings seeking damages against the defendants, being Australian registered companies as residents, said to arise out of its purchase of a business of the first and second defendants pursuant to a sale agreement entered into on 5 October 2009.
[2] The defendants have filed a notice of appearance under protest to the jurisdiction of this Court. NZX‘s interlocutory application to set aside that notice was to be heard by the Associate Judge but because of his unavailability I have heard it.
[3] NZX is a substantial company registered, and carrying on business, in
New Zealand. It entered into an agreement with the first and second defendants on
5 October 2009 to purchase all the business of the first and second defendants (then known as Clear Commodities Pty Ltd and Clear Interactive Pty Ltd) described hereafter as Clear. It is pleaded that the contract was to purchase Clear‘s business of designing and building software solutions and developing and operating commodities training platforms. The third defendant (Mr Thomas) was a director and shareholder of both Clear companies and of the fourth defendant (Grant Thomas Nominees Pty Ltd), which was a shareholder of both Clear companies. The fifth defendant, Mr Pym, was a director of the Clear companies and a director and shareholder of the sixth defendant (Pym Family Pty Ltd), which was itself a shareholder of the Clear companies.
[4] Consideration was A$7 million with additional payments in cash and shares if certain targets were met, and additional A$6 million in NZX shares if a business tool known as “Agri-Portal” was complete and operating to NZX satisfaction within three years. The plaintiff‘s claim encompasses five causes of action alleging, as against the Clear companies, breach of warranties contained in the sale agreement; against all defendants, breach of obligations regarding supporting the ongoing business acquired by NZX; misrepresentation inducing the plaintiff and damages under the Contractual Remedies Act 1979; misleading and deceptive conduct in breach of the Fair Trading Act 1986; and against Messrs Thomas and Pym and their associated companies (Grant Thomas Nominees Pty Ltd and Pym Family Pty Ltd) claims under guarantees given by those parties in the agreement.
[5] All the defendants, based in Australia, have been served without leave being obtained. Accordingly, r 6.29 of the High Court Rules applies (set out in [7]). The defendants filed an appearance under protest to jurisdiction, which is based upon the grounds that the proceeding should be dismissed; the plaintiff does not have a good arguable case, that its claims fall within r 6.27; there are no serious issues to be tried on the merits; New Zealand is not an appropriate forum for trial; the plaintiff‘s claims have already been determined in the County Court of Victoria in Australia; related parties are likely to be joined who reside in Australia; the plaintiff has not and is not likely to suffer loss or damage; the real and substantial connection of the plaintiff‘s claim is Australia; and the appropriate forum is in Australia. Those grounds contained in the notice were substantially expanded in written and oral submissions that I have heard over the course of a full day.
[6] As a consequence of the appearance under protest, the plaintiff has applied to set the notice aside. An extensive number of affidavits have been filed (10 as to substance on behalf of the plaintiff encompassing approximately 118 pages and 260 pages of exhibits) and seven on behalf of the defendants encompassing at least 338 pages and 460 pages of exhibits. They illustrate a major dispute.
[7] Rule 6.29 of the High Court Rules applies because the proceedings were served without leave and that rule provides the Court must dismiss the proceeding unless the plaintiff establishes:
(a) that there is—
(i) a good arguable case that the claim falls wholly within 1 or more of the paragraphs of rule 6.27; and
(ii) the court should assume jurisdiction by reason of the matters set out in rule 6.28(5)(b) to (d); or
(b) that, had the party applied for leave under rule 6.28,—
(i) leave would have been granted; and
(ii) it is in the interests of justice that the failure to apply for leave should be excused.
[8] So I turn to r 6.27 which provides, where relevant, that an originating document may be served out of New Zealand without leave:
6.27 When allowed without leave
...
(2) ...
(b) when a contract sought to be enforced or rescinded, ... otherwise affected or interpreted in any proceeding, or for the breach of which damages or other relief is demanded in the proceeding—
(i) ... (ii) ...
(iii) was to be wholly or in part performed in
New Zealand; or
(iv) was by its terms or by implication to be governed by
New Zealand law.
...
...
(j) when the claim arises under an enactment and either—
(i) any act or omission to which the claim relates was done or occurred in New Zealand; or
(ii) any loss or damage to which the claim relates was sustained
in New Zealand; or
(iii) the enactment applies expressly or by implication to an act or omission that was done or occurred outside New Zealand
in the circumstances alleged; or
(iv) the enactment expressly confers jurisdiction on the court over persons outside New Zealand (in which case any
requirements of the enactment relating to service must be
complied with).
(k) when the person to be served has submitted to the jurisdiction of the court.
[9] Any starting point in determining where a jurisdiction to entertain a claim pursuant to a contract must involve consideration of what if anything the contract itself provides, and what the parties envisaged or intended should be the governing law and jurisdiction. A term sheet (dated 4 September 2009 from which the agreement for sale and purchase resulted) described the governing law as follows:
Governing law –
This term sheet and any agreement arising as a result of it shall be governed by the laws of New Zealand, and the parties shall submit to the non- exclusive jurisdiction of the courts of Australia and New Zealand.
[10] The agreement itself dated 5 October 2009 provides in cl 18.11:
Governing law: This Agreement is governed by, and construed in accordance with, the laws of New Zealand (without giving effect to the principles of conflicts of law). The Vendors and the Purchaser submit to the non-exclusive jurisdiction of the courts of New Zealand and of Victoria in respect of all matters arising out of this Agreement.
[11] It is perhaps not surprising therefore that the plaintiff should believe that it could elect the New Zealand jurisdiction and issue and serve the proceedings without leave. But the Court is required to take a two-stage approach requiring separate consideration of whether in respect of each cause of action there was a good arguable case that the claim falls wholly within r 6.27 (that is service overseas without leave) and whether the Court should assume jurisdiction by reason of the matters set out in r 6.28(5)(b) – (d), namely whether there is a serious issue to be tried on the merits, whether New Zealand is the appropriate Court, and whether there are other relevant
circumstances to support an assumption of jurisdiction.[1]
[1] Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 (CA) (leave refused [2011] NZSC 20).
[12] It is beyond doubt that there is a good arguable case that the plaintiff‘s claim falls within one or more of the paragraphs of r 6.27 because by its express terms the contract is to be governed by New Zealand law. The plaintiff also contends that the defendants have submitted to the jurisdiction of this Court by reason of the express provision in cl 18.11 of the agreement. That, too, must be correct, although the acceptance of jurisdiction is “non-exclusive” to both New Zealand and Victorian Courts.
[13] Not all causes of action are “contractual” because the fourth and fifth causes of action seek statutory remedies under the Contractual Remedies Act 1979 and Fair Trading Act 1986, arising out of alleged representations and conduct made in New Zealand with loss or damage sustained in New Zealand. The Fair Trading Act
1986 does apply to foreign parties to the extent that their misleading conduct occurs in New Zealand.[2] Those causes of action clearly fall within r 6.27(2), whether under
(b), (j) or (k).
[2] At [104].
[14] The real and crucial issue, and the argument which encompassed a whole day, was whether the Court should assume jurisdiction by reason of the matters set out in r 6.28(5)(b) – (d).
[15] So I turn to r 6.28(5). This provides:
The court may grant an application for leave if the applicant establishes that–
(a) the claim has a real and substantial connection with New Zealand;
and
(b) there is a serious issue to be tried on the merits; and
(c) New Zealand is the appropriate forum for the trial; and
(d) any other relevant circumstances support an assumption of jurisdiction.
Does the claim have a real and substantial connection with New Zealand
(r 6.28(5)(a))?
[16] The Court of Appeal in Wing Hung Printing Co Ltd said that this is assumed to be established where the party effecting service has shown a good arguable case that the claim falls within one or more of the matters discussed in r 6.27.[3] But because the parties made submissions on the issue, I make the following comments.
[3] At [36].
[17] NZX contends that its claim clearly has such a connection. It is a New Zealand company that acquired from overseas interests a business which it operates through an assignment to its subsidiary NZX Holdings No. 4 Pty Ltd. The contract was negotiated in New Zealand and the claim relates to alleged representations and actions that occurred in New Zealand leading up to the formation of the contract. The claim is to be determined, by virtue of the terms of the agreement, according to New Zealand law including the provisions of the Contractual Remedies Act and the Fair Trading Act. Counsel advise that there is no equivalent Contractual Remedies Act provisions in Victoria.
[18] The company which operates the business is an Australian subsidiary of NZX (NZX Holdings No. 4 Pty Ltd) and the defendants contend that this, together with
the fact that the claims relate to a business and its management in Australia with Australian employees and the customers is significant. They argue that the claim seeks to measure a performance of an Australian business against the plaintiff‘s forecast and modelling arising in its own due diligence process. If any loss has been suffered the defendants say that must be by NZX Holdings No. 4 Pty Ltd, the Australian company.
[19] It is further submitted by the defendants that their advisors, accountants and witnesses reside in Australia and any alleged breaches if they relate to performances the Australian business must have occurred in Australia. Further, documentary evidence was exchanged electronically from Australia with a majority of relevant witnesses, including experts residing there. The defence contends that the individual defendants, Messrs Thomas and Pym, reside in Melbourne, are self-employed and would suffer unfair advantage if the claims were to be heard in New Zealand.
[20] In terms of r 6.28(5)(a), I am persuaded by the plaintiff that its claim has a real and substantial connection with New Zealand, which is neither fleeting nor peripheral. It derives, at the very least, from the fact that the plaintiff resides in New Zealand, that the contract was in large measure completed through actions or events in New Zealand, and that the parties expressly agreed and the plaintiff seeks as choice, that New Zealand law is to be applied to the contract, including New Zealand statutory provisions. Indeed, the evidence appears to be that during the negotiations of the contract it was the defendants‘ legal advisors at the meeting who proposed to NZX that there be the non-exclusivity jurisdiction provision in favour of New Zealand and Victorian Courts, and that the contract be governed by New Zealand law. I am satisfied that the plaintiff has established the requirements of r 6.28(5)(a).
Is there a serious issue to be tried on the merits (r 6.28(5)(b))?
[21] The greater part of counsels‘ argument and submissions dealt with this. The plaintiff contends that the affidavit evidence provides a sufficiently strong factual basis to support the legal rights pleaded. The defendants‘ counsel, in summary, submitted that each cause of action was doomed to failure, whether on the matter of
legal or factual analysis. He sought to persuade the Court that there was no serious issue, identified in the pleadings and affidavits, to be tried.
[22] There has to be a sufficient and plausible factual basis for applying the legal principles. It is more than speculative or conjectural. But the Court‘s inquiry is not to be widened into disputed questions of fact.[4] As the Court of Appeal said in Wing Hung Printing Co Ltd:[5]
The serious issue to be tried test to be applied at the second stage of the inquiry was described by Lord Goff in Seaconsar as whether “at the end of the day, there remains a substantial question of law or fact or both, arising on the facts disclosed by the affidavits, which the plaintiff bona fide desires to try”.[6]
[4] Baxter v RMC Group plc [2003] 1 NZLR 304 (HC).
[5] At [42].
[6] Seaconsar Far East Ltd v Bank Markazi [1994] 1 AC 438 (HL) at 452D.
[23] The test does not envisage a mini-trial. A plausibility requirement does not mean the Court can determine credibility issues where there is contest in the affidavits except in exceptional cases where the Court may be satisfied the claim is meritless and the objective evidence shows one version of events as untenable. But, as was said by the Court of Appeal in Harris v Commerce Commission,[7] this will be comparatively rare.
[7] Harris v Commerce Commission [2009] NZCA 84, (2009) 12 TCLR 379 at [61].
[24] Although the previous test was whether a plaintiff had a “good arguable case”, the comments of the Court of Appeal in Stone v Newman in my view are still apt when applying the present “serious issue to be tried” test (if, in truth, it is significantly different).[8] There, the Court of Appeal said:[9]
[8] Stone v Newman (2002) 16 PRNZ 77 (CA).
[9] At [24] – [26].
The requirement that there be a good arguable case on the merits is in part directed at ensuring that a claim against a foreign resident defendant is not speculative. It must be borne in mind, however, in assessing that factor that, as the Court pointed out in its substantive decision in Kuwait Asia Bank (p51), Rule 131 makes no explicit provision for trial of issues of fact or discovery in relation to questions raised under the rule. Indeed a trial of the jurisdiction issue in most cases would subvert the purpose of the policy behind Rule 131. The general expectation is rather that protests concerning jurisdiction under Rule 131 are to be decided at the outset of the case on affidavit evidence. To some extent the picture the Court has of the case may accordingly at this stage be incomplete in important respects.
In that context the focus of the Court in considering an application to dismiss for want of jurisdiction under Rule 131 must be on the allegations made in the statement of claim and the affidavit evidence the plaintiff has put forward in support of them. The Judge will of course have regard to the plausibility of that evidence, in light of all the material before the Court, including that in the defendant's affidavits. But in considering whether the plaintiff's account meets the required standard the Court should take into account the inability of the plaintiff to obtain for discovery at this stage especially in relation to matters that might be within the exclusive knowledge of the foreign defendant. On the other hand where the principal documentary evidence in the case appears to be available and the plaintiff's assertions contradicting it vague or improbable, a Judge is certainly not required to accept uncritically the factual assertions on which it is submitted on behalf of a plaintiff that there is a good arguable case.
We do not think it constructive to be more specific as to what constitutes a good arguable case in this context. In particular we do not regard the gloss that “the plaintiff is probably right upon it”, offered in the judgment of the Court of Appeal in Attock Cement Co Ltd v Romanian Bank for Foreign Trade [1989] 1 WLR 1147 at p1155, as helpful in New Zealand. What is a good arguable case is a straightforward test which comes down to a matter of judgment, in all the circumstances, having regard to the principle of restraint concerning a foreign citizen resident overseas.
First cause of action – breach of warranties
[25] The first cause of action involves a claim for breach of warranties summarised by NZX‘s counsel as representations as to “alliance” between Clear and a bulk handler of grain (Grain Corp); volumes to be traded; costs to be incurred; information technology available; and there being no existing disputes of substance in which Clear was involved. The defendants contest each of these allegations as having no factual, or legal, foundation.
[26] The plaintiff contends that some of these representations are as to the existence of current fact (the IT, future volume and “no disputes” representations). Representations as to future state of affairs are actionable in law if they contain as the plaintiff says an implied representation as to a current fact because a false forecast is a misrepresentation in that it says that present facts are such that the future
forecast will logically follow.[10] The damages claim was made pursuant to s 6 of the
Contractual Remedies Act and was based upon loss of funding and loss of profits whereas the defendants say no loss could have occurred because if the
representations did not eventuate additional payments, based upon those would not have been made. The plaintiff says, however, that had there been a proper basis for the representations the turnover would likely have been achieved and the business would have been worth significantly more than the amount to be paid out on the
“earn out” basis. The defendants submitted that the plaintiff had not produced evidence to show that the representations were false, untrue, incomplete or inaccurate, and if made resulted in damage.
[10] New Zealand Motor Bodies Ltd v Emslie [1985] 2 NZLR 569 (HC) at 595.
[27] I do not accept that there is no serious issue to be tried on the merits in respect of this cause of action. Whether or not warranty representations made were false and inaccurate is clearly a disputed issue which can only be determined after discovery, full hearing, cross-examination and argument based upon factual findings. This cause of action does not fall into the category of speculation or conjecture. The defendants may succeed, but it is not possible to conclude serious issues require to be tried on the merits. The plaintiff has satisfied me that this is established.
Second cause of action – breach of obligations to assist and support the ongoing business
[28] The plaintiff alleges that Messrs Thomas and Pym hindered and frustrated the ongoing business.
[29] The plaintiff‘s position regarding breach of obligations to the ongoing business of Clear may depend to a large extent upon the Court implying terms into the agreement, which counsel says are logically to be implied from words used and relies upon cl 9.6 of the agreement which places obligations on the defendants to
“use their commercially reasonable endeavours to ensure the ongoing team dedicated to the Businesses has adequate and appropriate capability”. The plaintiff pleads that it was an implied term that the defendants would support and not frustrate or hinder the plaintiff‘s management and direction of the business. Whether or not such a term can be implied will be a question of law and if so the issue of whether it was breached would be dependent upon facts and all the evidence following cross- examination. The estoppel-type defence raised by the defendants (and discussed below) would require careful consideration, evidence, and legal argument.
[30] The defendants contend that this cause of action has been determined by a proceeding in the County Court of Victoria in which Mr Thomas claimed against NZX moneys owing to him under a settlement agreement following upon Mr Thomas‘ resignation from his employment with the plaintiff. Pursuant to that agreement the plaintiff agreed to release and discharge Mr Thomas from claims arising out of the resignation. In the County Court proceedings, the plaintiff counterclaimed that Mr Thomas had acted in a manner which adversely affected the productivity of the plaintiff which resulted in it incurring additional costs. In the course of the trial there was a consent judgment entered against the plaintiff for payment of costs and interest. Accordingly, the defendants contend that there is
“considerable overlap” between the plaintiff ‘s counterclaim and amended statement of claim and the second cause of action is simply an attempt to re-litigate the same issues. Counsel says that “Anshun” estoppel[11] prevents the plaintiff from now alleging or raising matters which should have been raised at that time. It says the plaintiff cannot now be permitted to reopen the matter.
[11] Port of Melbourne Authority v Anshun Proprietary Ltd (1981) 147 CLR 589 – where a party was stopped from raising an indemnity agreement because it had been unreasonable to not raise it in an earlier action, and the judgment in the earlier case was inconsistent with the judgment sought in the present action.
[31] On behalf of the plaintiff, Mr Latimour submitted that there is no overlap. The settlement agreement related only to claims by Mr Thomas as an employee and the specific matters contained in the counterclaim were different to present allegations, and it did not release that defendant from the claims made here as to, for example, pre-contractual misrepresentations. The allegations contained in the plaintiff‘s counterclaim in the County Court counsel says were quite different to those made in the current proceeding with the counterclaim being related upon breach of the settlement agreement not to act in a particular way and the plaintiff‘s stance in the County Court ended up on the basis only of accepting that Mr Thomas had not breached that settlement agreement.
[32] I do not think that the plaintiff‘s second cause of action can be described, as counsel does, as “hopeless” or untenable, although clearly Mr Thomas‘ argument
may be pursued. That, however, is dependent upon very much more evidence, and
argument being more advanced than is presently before the Court. A serious issue to be tried does exist, and it is rather more than speculative or remote.
Third cause of action based upon the guarantees
[33] This cause of action is based upon Messrs Thomas and Pym and their companies being liable as guarantors to identify NZX for loss by reason of a failure by Clear companies to perform obligations under the agreement. If there has been a breach of any of the warranties by Clear so as to be liable then the plaintiff would be entitled to enforce the guarantee provisions. The defendants‘ position is that the plaintiff would be time barred because the agreement provides in cl 17.2(c) “each several guarantee shall only apply in respect of claims made by the Purchaser within
18 months of the date of this Agreement” and the agreement being made on
5 October 2009, and the proceedings issued on 5 July 2011 means that no claim was made within 18 months.
[34] For its part the plaintiff contends that the defendants were clearly notified of the claims by letter of 9 December 2010, that is a little over two months after the date of the agreement. NZX then wrote stating that it considered:
The information provided by the Guarantors and Vendors in connection with the determination of those targets in cl 3 of the Third Schedule of the SPA, including forecasts, projections, models, revenues and costs information ..., was materially misleading and inaccurate.
...
NZX gives [the companies] as Vendors and each of the Guarantors notice that it reserves all its rights and remedies under the SPA and at law.
[35] Counsel for the defendants submits that is not expressed as a notice or claim under the guarantee and the expression “to make a claim” requires a demand for something due, an assertion of a right to something, and more than a mere expression of dissatisfaction without a demand for compensation. Counsel refers to
a number of authorities.[12] Clearly, there is a contest as to whether this letter
[12] Such as Reid Crowther & Partners Ltd v Simcoe & Erie General Insurance Co [2003] 1 SCR 252.
sufficiently complies with cl 17.2 of the agreement so as to avoid the limitation bar,
and I am not prepared to rule, as a matter of law, at this stage whether the defendants‘
submission is correct.
[36] I am satisfied that there is a serious issue to be tried on the merits on this cause of action bearing in mind, naturally, that it remains dependent upon there being any liability arising out of breach of warranty or otherwise on the part of Clear.
Fourth cause of action – misrepresentation
[37] The fourth cause of action relates to allegations of misrepresentation and damages are sought under the Contractual Remedies Act 1979. Counsel for the defendants submits those causes of action are hopeless, no evidence having been produced to show representations were false at the time they were made, or that if false were ever relied upon as pleaded. As pleaded the plaintiff‘s claim, however, is that various information provided and misrepresentations made were not true when provided and what arose after the event was simply fact as to what the plaintiff says was evidence pointing to the budget forecast being wilding inaccurate.
[38] Section 6 of the Contractual Remedies Act provides that misrepresentations whether innocent or fraudulent which induce a party to enter into a contract are actionable. It will be a matter of evidence, expert and otherwise, at trial whether any misrepresentations were false, and if so whether the plaintiff was thereby induced to enter the contract – and suffered damage. I am satisfied that there is a serious issue to be tried on the merits.
Fifth cause of action – Fair Trading Act 1986
[39] Under s 9 of the Fair Trading Act misleading or deceptive conduct may afford a remedy to the plaintiff.
[40] The plaintiff alleges that the defendants engaged in misleading and deceptive conduct in pre-contractual negotiations, or that each assisted others in doing so, and damages are sought under s 43(2)(d) of the Fair Trading Act. The claim is that the sale in New Zealand was “in trade” for the purposes of s 9 and that Messrs Thomas
and Pym are liable on the basis they acted on behalf of the Clear companies. The defence position is, as with the fourth cause of action, that no evidence has been produced to show falsity of the representations and that a forecast which does not come true does not provide a basis for misleading or deceptive conduct. Further, that no loss or damages occurred or will occur and, even if so, that must be suffered by the operator of the Australian business, NZX Holdings No. 4. The defendants say the claim seems to be brought in anticipation of loss which has not yet occurred.
[41] In my view these are all matters involving substantial dispute as to facts and as to the law and it is not appropriate nor possible for a mini-trial to be conducted, despite the lengthy submissions made by Mr North SC as to the eventual merits of this cause of action. If there has been misleading or deceptive conduct made in breach of the Fair Trading Act, then the Court has a wide discretion in assessing damages which differs to general claims for misrepresentation in breach of contract. On this cause of action the plaintiff has met the onus that it involves serious issues to be tried on the merits. Generally speaking, I repeat the Court had been inundated with a very large number of affidavits, documents, exhibits, and heard extensive argument over a full day. That might illustrate the fact that serious issues exist to be tried on the merits. The test is not that there be a prima facie case and I am satisfied the plaintiff has met the burden on it of establishing the requirements under r 6.28(5)(b).
[42] The Court must still be satisfied the plaintiff has established that New Zealand is the appropriate forum for the trial and whether there are other relevant circumstances which support an assumption of jurisdiction.
General comments
[43] The submissions made on behalf of the defendants, as to be expected from senior counsel, were wide-ranging, comprehensive and thorough. Much of them, however, related to the merits of the various causes of action as pleaded and defence counsel‘s submission was that none of these could succeed. After full trial that may well prove to be the case but it is not something which I can assess at this stage. I have taken into account the submissions as to the weakness of the plaintiff‘s case but
I am not satisfied that the plaintiff has failed to establish there were serious issues to be tried on the merits. So too, complaints that damages are not quantified or pleaded are matters that can be dealt with by claims for further particulars when further expert and other evidence is available. The plaintiff accepts that at a later date the particulars as to damages will need to be given and it is not uncommon in New Zealand proceedings such as these for initially quantum not to be defined.
Is New Zealand the appropriate forum for the trial (r 6.28(5)(c))?
[44] The defendants submit that a trial in New Zealand would cause Messrs Thomas and Pym undue and unnecessary expense, and many witnesses would be required to travel from Australia. There are already some proceedings afoot in the Supreme Court of Victoria brought by Mr Pym which it is said involve considerable overlap with the subject matter of the present proceedings. Counsel points to the fact that there were proceedings by Mr Thomas against NZX in the Magistrate‘s Court at Melbourne and also in the County Court of Victoria which have been resolved, and which, apart from illustrating the weakness of NZX‘s case, show that it submitted to those proceedings without objection to the jurisdiction of the Australian Courts.
[45] The Magistrate‘s Court proceedings in Victoria, brought after this claim was filed, are not relevant to this proceeding which has been accepted by the defendants in its stay submissions successfully opposing a temporary stay. Mr Thomas has deposed to similar effect.
[46] The County Court proceedings which concluded in favour of Mr Thomas were, it seems, based upon a settlement agreement of claims arising under his employment contract relating to that, and not upon the original agreement for sale and purchase, although that appears to be disputed by defence counsel.[13]
[13] See [30] – [32].
[47] Counsel for the defendant contends that the plaintiff had submitted to the jurisdiction of the Australian Courts by participating in those County Court
proceedings and filing a counterclaim. But it appears that this was only in relation to
the claim for breach of a separate and later individual settlement agreement as between the plaintiff and Mr Thomas. I do not accept that it could be seen to be an acceptance of jurisdiction to consider claims pursuant to the agreement for sale and purchase. No doubt matters that occurred in the course of those proceedings will be the subject of evidence and cross-examination at any trial and might eventually result in favourable findings not as to jurisdiction but on merits, for the defendant. Further, there is considerable dispute as to whether issues determined in that proceeding by agreement, are such as to afford a defence in these proceedings, akin to estoppel, on the part of Mr Thomas. They may do so but NZX‘s counsel contend that the allegations contained in the counterclaim in those proceedings are not the allegations made in the second cause of action in these proceedings. The disposition of those proceedings related to the claim under a separate individual settlement agreement, and clearly there is scope for argument.
[48] The Supreme Court claim by Mr Pym was filed three months after this proceeding. The plaintiff says that he and the defendants cannot take advantage of later bringing a claim in that jurisdiction, where there are overlapping factual issues, so as to bolster a claim that New Zealand is not an appropriate forum for the plaintiff‘s earlier commenced claim. NZX says that threatened counterclaims can properly be brought and determined in the context of the present New Zealand proceedings. The Supreme Court proceedings of Mr Pym relate to the termination of his employment contract and allege breach of its terms, but in addition misleading or deceptive representations made to him during due diligence process which induced him to enter into the employment contract.
[49] The latest Supreme Court claim filed by Mr Pym is not something that entitles him or the defendants to resist dismissal of their notice of opposition to jurisdiction. Whilst of course it is open to a party to the agreement to elect to issue proceedings in the Australian Court, nevertheless by doing so this cannot prevent an opposing party electing jurisdiction a New Zealand Court in proceedings which are commenced earlier. There is authority for the proposition that a non-exclusive
jurisdiction clause contractually binds a party to accede to the agreed jurisdiction.[14]
It is clear there was a common understanding that the parties had a right to elect either of New Zealand or Australian jurisdiction and the plaintiff having first elected the New Zealand Courts as it was entitled to do – in relation to this agreement for sale and purchase – that is the jurisdiction that binds the party unless it is established there is a more appropriate forum. I am satisfied that that is not the case.
[14] Breams Trustees Ltd v Upstream Downstream Simulation Services Ltd [2004] EWHC 211 (Ch);
Sabah Shipyard (Pakistan) Ltd v Pakistan [2002] EWCA Civ 1643.
[50] I do not think much can be made of the assertion on behalf of the plaintiff that the proceedings would be more expensive to pursue in a Victoria Court. It might marginally be so but wherever they are pursued, inevitably, with the issues and amounts involved, there will be considerable costs incurred. Likewise, the question of expenses of witnesses travelling across the Tasman whether to Australia for trial or to New Zealand for trial is neutral. Both sides will have witnesses who, wherever the trial takes place, will have to travel. Trans-Tasman airfares are incurred by whoever may travel and would be recoverable as witness disbursements by the successful party. Viewed broadly I am satisfied that a New Zealand High Court is that which could most suitably try this case in the interests of all parties and for the ends of justice. Not only bearing in mind the matters to which I referred but in particular the specific agreement of the parties as to the jurisdiction. As Asher J observed in Worldwide NZ LLC v Quay Park Arena Management Ltd there is a
“reality of the intimacy of trans-Tasman business dealings”[15] and the defendant
[15] Worldwide NZ LLC v Quay Park Arena Management Ltd [2008] 1 NZLR 106 (HC) at [68].
companies in its notice to shareholders said:[16]
The Board is of the view as an integrated trans-Tasman company we can achieve much more than two separate entities.
[16] Newsome affidavit, exhibit ‗A‘ at 220.
[51] I do not see that any complaint over increased costs or inconvenience aids one party rather than the other.
[52] Accordingly, in my judgment the provision of r 6.28(5)(c) has been established by the plaintiff.
Other relevant circumstances to support an assumption of jurisdiction
(r 6.28(5)(2)(d))
[53] As is apparent from the foregoing a very relevant circumstance must be the agreement as to non-exclusive jurisdiction of New Zealand and Victoria Courts. I have already discussed this in the context of a New Zealand Court being the appropriate forum.
[54] The plaintiff submits that, in any event, as a fallback position they rely upon r 6.29(1)(b) that if the plaintiff had applied for leave under r 6.28 it would have been granted and it is in the interests of justice that failure to apply for leave should be excused. If leave had been sought and all the material now presented had then been before the Court, I am satisfied that leave would have been granted especially given the precise agreement between the contracting parties as to the law to be applied and the non-exclusive jurisdiction clause. Failure to apply for leave is excusable on the basis that the plaintiff and its advisors believed, on reasonable grounds, that leave was not required because under r 6.27 an originating document may be served out of New Zealand without leave where a contract the breach for which damages or other relief is sought “was by its terms or by implication to be governed by New Zealand
law”.[17]
[17] Rule 6.27(2)(b)(iv).
[55] But, I have dealt in any event, however, with the application to set aside the notice and granted it under rr 6.28 and 6.29.
Conclusion
[56] I have meant no disservice to the submissions of Mr Latimour and Mr North SC in not setting them out in full and precise detail (the plaintiff runs to 38 paragraphs and the defendants encompass 84 pages and 294 paragraphs). As I have said, much of the submissions from the defendants especially, related to submissions as to the merits of each cause of action. At this level the Court cannot venture far into the merits once it has found, as I have, that on the material before the Court that
at this stage there is clearly serious issues to be tried on the merits. That might well
be self-evident from the volume of affidavits and exhibits and documentary material already filed. In my judgment it would be wrong to dismiss the plaintiff‘s application, with the result that the proceedings would be dismissed in their entirety, when it exercises its contractual right to bring proceedings in the New Zealand Court and to apply New Zealand law when it has satisfied all the other prerequisites contained in the rules.
[57] The application to set aside the notice under protest to jurisdiction is granted. It is set aside. The defendants are to file statements of defence within 30 days of being notified of this judgment. Thereafter the Registrar is to convene an initial case management conference under r 7.2, but time limit for such first conference under r 7.3 does not apply. The first case management conference by telephone with the Associate Judge is to be held within 35 working days of the filing of statements of defence by all defendants.
[58] The plaintiff is entitled to costs and disbursements against the defendants on this successful application and these are fixed on a category 2B basis. I certify for
second (one only) counsel.
J W Gendall J
Solicitors:
Bell Gully, Wellington for Plaintiff
Duncan Cotterill, Wellington for Defendants
0
4
1