Partmaster Limited v Mount Shop Limited - [2015] NZHC 281

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3218 [2015] NZHC 281

BETWEEN
PARTMASTER LIMITED

Plaintiff

AND

MOUNT SHOP LIMITED Defendant

Hearing: 23 February 2015

Counsel:

S E Cameron for the Plaintiff
G P Muller for the Defendant

Judgment:

25 February 2015

JUDGMENT OF MUIR J

This judgment was delivered by me on 25 February 2015 at 4.30 pm, pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar

Solicitors: Cook Morris Quinn, Auckland
Smith & Partners, Waitakere, Auckland

PARTMASTER LTD v MOUNT SHOP LTD [2015] NZHC 281 [25 February 2015]

Introduction

[1] The plaintiff applies for an order setting aside the defendant’s statutory demand. It does so on the basis of an alleged set-off arising out of discussions and correspondence in 2012 and 2013 whereby it says the defendant agreed to provide a minimum rebate of four per cent on purchases.

[2] There is no dispute in terms of quantification. If the rebate applies it is acknowledged that the plaintiff has paid the defendant all that it is owed.

[3] Similarly there is no issue as to the solvency of the plaintiff. The disputed amount, totalling $115,577.96, has been paid into the plaintiff’s solicitor’s trust account and undertakings are available. The sum of $115,577.96 covers all matters in dispute between the parties. The statutory demand itself relates to a September
2014 invoice, but a subsequent invoice was issued in October 2014 making for a total amount payable of $196,504.91. Against this, the plaintiff says it is entitled to a rebate of $115,577.96. On 9 December 2014 it paid to the defendant the undisputed amount of $80,926.95.

[4] The hearing was, as the Court of Appeal suggests is appropriate in these cases, “short and to the point”.1 I am enjoined to adopt a similar approach in respect of the judgment.

Factual background

[5] This can be briefly stated. The plaintiff (“Partmaster”) and the defendant

(“Mount Shop”) are both automotive parts suppliers. For the period 2005 to October

2014 Partmaster was a distributor of Mount Shop products. Mount Shop had both a warehouse and retail store but primarily sold wholesale to retail distributors such as Partmaster.

[6] In 2012 Partmaster decided to implement supplier agreements with all of its suppliers. Among concessions sought from such suppliers were “rebates” on
purchases. Mr Cook for the plaintiff deposes that, while arrangements vary slightly

1 Industrial Group v Bakker [2011] NZCA 142, (2011) 20 PRNZ 413 at [25].

between market participants, the general practice within the industry is that all distributors are invoiced the same price. Suppliers then provide a rebate on sales. This practice avoids competitors finding out what price other distributors are paying for product as all distributors pay the same or similar invoice (or list price) and the “discount” is provided by the rebate which is usually only known by the chief financial officer and general manager of the respective companies.

[7] A preliminary meeting was held between the plaintiff’s Mr Cook and the defendant’s Mr Toia 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.

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Details

Case: [2015] NZHC 281
Decision Date: 25 February 2015

CaseChat Overview and Summary

Partmaster Limited sought to set aside a statutory demand made by Mount Shop Limited, claiming a set-off due to an alleged agreement on a minimum rebate of four per cent on purchases. The total disputed amount, including a September 2014 invoice, was $115,577.96, which had been paid into the plaintiff's solicitor's trust account. The key legal issue was whether there was a fairly arguable basis for the plaintiff's claim of an agreed rebate or estoppel preventing the defendant from denying it.

The court found that it was fairly arguable that the defendant's email of 11 October 2012 constituted an offer to pay a rebate of at least four per cent, which was accepted by conduct, and that estoppel applied. The plaintiff reasonably relied on the defendant's commitment to a rebate when redirecting business to it. The court noted that the plaintiff's failure to enforce the rebate immediately did not preclude it from making the claim now. The court also found that the plaintiff's email of 10 April 2013 did not negate the existence of an agreement. The court concluded that the plaintiff had made out a fairly arguable case for setting aside the statutory demand.

The court ordered that the statutory demand be set aside and that the disputed amount be held in an interest-bearing deposit pending resolution of the dispute. Costs were awarded to the plaintiff on a 2B basis.

Orders