Paymex.co.nz Limited v Eftpos New Zealand Limited HC Auckland CIV-2011-404-004015

[2011] NZHC 869

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2011-404-004015

BETWEEN  PAYMEX.CO.NZ LIMITED Plaintiff

ANDEFTPOS NEW ZEALAND LIMITED Defendant

Hearing:         6 and 7 July 2011

Appearances: M I S Phillipps for Plaintiff

J H Stevens for Defendant

Judgment:      7 July 2011

JUDGMENT/ORDERS OF VENNING J

This judgment was delivered by me on 7 July 2011 at 5.15 pm, pursuant to Rule 11.5 of the High

Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors:           Ayres Legal, Auckland  [email protected]

Bell Gully, Wellington  [email protected]

Copy to:            M I S Phillipps, Auckland  [email protected]

PAYMEX.CO.NZ LIMITED V EFTPOS NEW ZEALAND LIMITED HC AK CIV-2011-404-004015 7 July

2011

[1]      The plaintiff applies for an interim injunction.  The matter came before the

Court on a Pickwick basis at 5.00 p.m. on 6 July 2011.

[2]      The relationship between the parties is controlled by a merchant agreement. Pursuant  to  that  agreement  the  defendant  processes  the  plaintiff ’s  customers’ payments. The relevant clauses of the agreement are cl 4.1 and 18.

4        What Are Our Obligations To You?

4.1      We will:

a)accept all valid Sales Vouchers and EFT Transactions from you and, subject to the other provisions of this Agreement, credit your Account the next business day the full amount of those transactions (except where transactions are being held in a suspense account, see 4.1b and 4.1c below), as well as the full amount of any valid Mail/Telephone Order Transactions and Electronic Commerce Transactions, when these facilities are approved by us;

b)where we have elected to reroute transactions to a suspense account in accordance with clause 18, raise a credit in a suspense account held in our name for the full amount of any transaction as set out in 4.1a above;

c)if we elect to reroute transactions to a suspense account in accordance  with  Clause  18,  make  the  proceeds  in  the suspense  account  available  to  you  if  you  can  supply evidence, to our satisfaction that:

i)         in  relation  to  a  Delayed  Supply Transaction,  you have supplied the goods or services to which the Sales Voucher or EFT Transaction relates (if part of the goods or services have been supplied then you will only be entitled to the portion of the proceeds due in respect of the part supplied);  or

ii)        more than 12 months have elapsed since the date of the particular Sales Voucher or EFT Transaction;  or

iii)       we agree otherwise.

d)       send you a monthly Statement showing a summary of all

Credit Card transactions during the previous month;

e)provide you with a range of signs and other promotional material free of charge, to be displayed at the point of sale at your retail outlets;

f)        supply you with imprinters (Zip Zap Machines), stationery and other supplies at such cost and terms and conditions that we will notify you of from time to time.

18       Suspense Account

18.1You agree that we, at our sole discretion, may immediately re-route transactions to a suspense account should:

a)        the transactions be a Delayed Supply Transaction;  or

b)       we suspect you of any fraudulent or suspicious activity;  or

c)we receive notice of any claim or dispute in respect of the transactions;  or

d)we receive unclear or conflicting instructions relating to the transactions;  or

e)        you fail to pay any penalty imposed on you by the Card

Schemes in accordance with this Agreement.

18.2For  the  avoidance of  doubt,  you  acknowledge  that you  have  no ownership of these funds until they are transferred to your Account, and that no interest is payable on the funds while they are held in the suspense account.

[3]      The defendant identified suspicious transactions relating to a rogue customer RxPharma24hrs.com and invoked cl 18 to re-route all transactions involving the plaintiff and its customers to a suspense account.  The plaintiff was advised of this late on Monday 4 July 2011.

[4]      The parties then engaged in negotiations but were unable to resolve the issues between them.   The plaintiff says that the effect on its business is dire and seeks interim injunctive relief.

[5]      The defendant argued that cl 18.1 entitled it to re-route all transactions from the plaintiff to a suspense account relying on cl 18.1(b) in particular.  However, the clause can also be interpreted on the basis that cl 18.1(c) applies so that the transactions to be re-routed to the suspense account are limited to those transactions in relation to which there is a specific claim or dispute.  In that event the defendant would not be entitled to re-route all transactions to a suspense account.

[6]      The next issue is the balance of convenience.   Mr Phillipps deposed in his affidavit that the plaintiff’s entire business would likely collapse within a matter of days unless they were able to resume business.

[7]      The balance of conveniences favoured some injunctive relief being granted to

the plaintiff.

[8]      After hearing from counsel, I made the following interim order:

(a)      Restraining the defendant from placing any further transaction funds received from customers of the plaintiff’s clients into a suspense account with the exception of transactions in respect of which there was a claim or dispute or in respect of which the defendant has reasonable grounds to suspect fraudulent suspicious activity.

[9]      I  then  adjourned  the  application  to  2.00  p.m.  on  7  July  for  further consideration and argument if necessary.

[10]     Counsel were able to assist the parties to resolve all issues and confirmed consent to the following orders (which replace the above order):

(a)      Restraining the defendant from placing any further transaction funds received  from  customers  of the plaintiff’s  clients,  into  a suspense account unless those funds are in respect of transactions which the defendant has identified are subject to clause 18.1 of the Merchant Agreement;

(b)      Requiring the plaintiff to provide to the defendant:

(i)all URLs associated with the sub-merchant for each of the transactions re-routed to the suspense account, as detailed in the list provided by the defendant to the plaintiff on 7 July

2011;

(ii)within two weeks all URLs associated with each of the sub- merchants the plaintiff has provided payment gateway services to in the last month;

(iii)within  two  weeks  for  those  sub-merchants  with  no  online interface or URL, provide the name of the business, a description of the nature of the business and the contact details for that business;

(c)      Requiring the defendant to release to the plaintiff all payments made by customers of the plaintiff’s clients, currently held in a suspense account, which transactions are not identified by the defendant  as subject  to  clause  18.1  of  the  Merchant  Agreement,  within  two working days of receipt of the information referred to in paragraph (b)(i) above;

(d)in the event that the defendant places any further transaction funds into a suspense account in accordance with paragraph (a) above, requiring the defendant to contemporaneously or as soon as is practicable provide to the plaintiff all relevant and available details of:

(i)       the particular transactions;  and

(ii)any URLs that the defendant considers may be associated with those transactions;

(e)      These orders be granted on an interim basis and the parties are granted leave to bring an application on four hours notice to the other party:

(i)       for variation or dismissal of all or any of these orders;  and

(ii)      for   additional   orders   relating   to   the   sufficiency  of   the

plaintiff’s undertaking as to damages.

[11]     The substantive proceedings are adjourned through to 2.10 p.m. on 17 August

2011 for an initial teleconference before an Associate Judge.

[12]     Costs are reserved.

Venning J