Old NGL Limited v Good Food Trading Company Limited

[2017] NZHC 2983

IN THE HIGH COURT OF NEW ZEALAND

TAURANGA REGISTRY

I TE KŌTI MATUA O AOTEAROA TAURANGA MOANA ROHE

CIV 2017-470-000105

[2017] NZHC 2983

BETWEEN

OLD NGL LIMITED

Plaintiff

AND

GOOD FOOD TRADING COMPANY LIMITED

First Defendant

AND

JAMES DAVID BLENNERHASSETT

Second Defendant

AND

JOANNE MARY BLENNERHASSETT

Third Defendant

Hearing:

30 November 2017

Appearances:

L Wong for the Plaintiff

R K Potter for Defendants

Judgment:

4 December 2017

JUDGMENT OF ASSOCIATE JUDGE CHRISTIANSEN

This judgment was delivered by me on

04.12.17 at 3:30pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar Date……………

OLD NGL LIMITED v GOOD FOOD TRADING COMPANY LIMITED AND BLENNERHASSETT [2017]

NZHC 2983 [4 December 2017]

[1]        The plaintiff (Old NGL) applies for summary judgment upon its statement of claim, and to strike out the counterclaim of the first defendant (GFTC).

Statement of claim

[2]        Old NGL was previously known as Nosh Group Limited. GFTC carries on business as a grocery retailer in Tauranga. The second and third defendants are directors and shareholders of GFTC.

[3]        On 16 March 2016, Old NGL granted GFTC a licence to operate a Nosh Food market in Mt Maunganui. The second and third defendants guaranteed GFTC’s obligations.

[4]Relevant clauses of the franchise agreement include:

(a)Clause 17:

(i)GFTC was to pay an Ongoing Franchise Fee of $1.5 per cent plus GST of the business turnover (excluding GST) for two years and thereafter at 2 per cent plus GST per week.

(ii)GFTC would make contributions to the Marketing Fund at 3 per cent plus GST of the business turnover each week.

(iii)GFTC to pay OLD NGL an administration levy at 2 per cent plus GST of the franchisees turnover, weekly to cover the costs of administrative support provided.

(iv)The administration levy, unlike the ongoing Franchise Fee and GFTC’s contribution to the marketing fund, was reviewable and may be adjusted.

[5]        Clause 12 provided the full indemnity from GFTC for any costs, losses, liabilities, proceedings or expenses incurred in connection with any breach by GFTC of its obligations.

[6]        Clause 24 permitted Old NGL to terminate the agreement if the default continued for more than 20 working days.

[7]        Earlier and on 21 December 2015 Old NGL lent to GFTC at $144,535.69, and the parties entered into a loan agreement. That provided, inter alia:

(a)Interest of 15 per cent per annum would accrue on a daily basis on any repayment sum overdue.

(b)That the loan would be repaid by specified instalments each month for 13 months.

[8]Old NGL pleads:

(a)It paid for stock purchases on behalf of GFTC totalling $43,319.37.

(b)It pleads that as at 24 February 2017 GFTC owed Old NGL franchise fees totalling $32,001.50.

(c)GFTC is indebted to it for advertising levies totalling $87,651.07 as at 24 February 2017.

(d)GFTC owes it $703.64 for other (re charges).

[9]        Old NGL claims that as at 28 June 2017 the total amount outstanding and overdue was $219.702.45.

[10]      Evidence on behalf of Old NGL is provided by the affidavit of Mr Morton dated 28 June 2017.

[11]      Mr Morton is an executive director of Veritas Investments Limited, the ultimate holding company of Old NGL. He provides details of amounts owed for stock purchases on behalf of GFTC, of franchise fees and advertising levies and recharges. His evidence confirms the amount of the loan that is unpaid.

[12]      He notes that in correspondence between solicitors for the parties GFTC’s solicitors by letter of 27 January 2017 asserted there had been a force majeure as a result of negativity surrounding the brand.

[13]      On 14 September 2017, new solicitors and counsel were engaged on behalf of Old NGL.

Statements of defence and CFTC’s counterclaim

[14]      It denies it is liable to pay an administration levy because the relevant agreement clause referred to has been deleted by Schedule 10 of that agreement.

[15]      It is denied that the statement of claim correctly describes the amounts due for specific amounts.

[16]GFTC wants further particulars of the total amount of $219,702.45 claimed.

[17]      Regarding Old NGL’s claims of breaches of the franchise agreement, it is pleaded for the defendants that the terms of clause 7.1(e) by which Old NGL would arrange for payment for supply of goods and services on behalf of GFTC were subject to there being sufficient funds in the franchise account.

[18]      GFTC asserts this clause imposed an obligation on Old NGL to ensure that the final status of other franchisees for whom procurement was arranged by the plaintiff, did not affect GFTC’s ability to purchase stock from suppliers. GFTC says Old NGL breached those obligations because it failed to pay suppliers for stock purchased by, or on behalf of other franchisees for whom procurement was arranged by Old NGL. GFTC says it sustained losses as a result. Those losses, yet to be quantified, are the subject of the counterclaim.

Opposition to summary judgment

[19]      That was filed on 23 November just five working days prior to the hearing upon the summary judgment application. Leave was sought and an affidavit by the

third defendant Ms Blennerhassett, was filed in support. That affidavit explained personal reasons for the opposition being filed late.

[20]      Leave was granted to oppose in the circumstances. No prejudice was caused to the plaintiff. Also, and for reasons then provided to counsel, the Court has concerns about the sufficiency of the statement of claim that has been pleaded. In that regard and as the Court noted it was not clear on what basis the stock purchaser’s claim had been pleaded; that the statement of claim had referred to the category of charges i.e. franchise fee, marketing contributions, and administration levy, but there was no reference in those to a stock purchaser’s arrangement.

Considerations

[21]      Although the defendants challenge the amount claimed for the loan debt it is clear that there is a loan debt due, and that as at the date of the Court hearing, this amounted to $39,716.04.

[22]      Regarding the claims for advertising levies and franchise fees, it appeared to the Court that there was insufficient evidence to show how the sums were calculated

– reliance instead being placed upon a bare statement of an amount claimed to be due.

Conclusions

[23]      The late filing of evidence on behalf of the defendants in opposition to the summary judgment application may have affected the ability of Old NGL to provide affidavit evidence in response.

[24]      There is satisfactory evidence that a certain repayment sum is still owing upon the loan repayment claim.

[25]      It is appropriate to enter judgment in that loan repayment sum of $39,716.04 and there is an order accordingly.

[26]      Regarding the balance of Old NGL’s claims, the Court directs the hearing be adjourned for call again on 19 March 2018 at 2:15pm and in that regard the following timetable orders shall apply:

(a)Any further evidence on behalf of Old NGL is to be filed and served by 9 February 2018.

(b)Any evidence in reply is to be filed and served by 23 February 2018.

(c)Any further submissions on behalf of the plaintiff are to be filed and served by 9 March 2018.

(d)Any further opposition submissions are to  be  filed  and  served  by 16 March 2018.

Associate Judge Christiansen