Pickering v Detection Services Limited - [2021] NZCA 382

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

CA649/2020
[2021] NZCA 382

BETWEEN	CHRISTOPHER LORRAINE PICKERING First Appellant AQATAR LIMITED Second Appellant
AND	DETECTION SERVICES LIMITED First Respondent DETECTION SOLUTIONS LIMITED Second Respondent DETECTION SERVICES PTY LIMITED Third Respondent DETECTION SOLUTIONS PTY LIMITED Fourth Respondent STEPHEN CARL JOHN SIMMONS Fifth Respondent

Hearing:	26 July 2021
Court:	Goddard, Thomas and Wylie JJ
Counsel:	I C Bassett and S N Zellman for Appellants M A Corlett QC and R D Butler for Respondents
Judgment:	16 August 2021 at 11.00 am

JUDGMENT OF THE COURT

AThe appeal is dismissed.
BThe appellants must pay the respondents costs for a standard appeal on a band A basis, increased by 25 per cent, with usual disbursements. We certify for second counsel.

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REASONS OF THE COURT

(Given by Goddard J)

Background

The joint venture

Mr Simmons is the founder of the Detection Services group of companies, which specialises in detecting leaks in water pipes. The group includes the four respondent companies. We will refer to Mr Simmons and the companies collectively as “Detection Services”.
Mr Pickering has expertise in computer software development. He is the founder of the second appellant, Aqatar Ltd (Aqatar).
Detection Services and Mr Pickering entered into a joint venture to develop a new computer-controlled leak detection system.

The prototype

A prototype for the leak detection system was designed and built by Mr Pickering, with some input from Detection Services. Mr Pickering met the cost of the development from his own resources.
By mid-2011 the prototype was ready to be shipped to Detection Services (in Australia) for testing and further refinement. The parties intended that it would then be put to commercial use by Detection Services.

The relationship breaks down

In mid-2011 Detection Services sought urgent delivery of the prototype. However Mr Pickering claimed sole ownership of the entire system, and refused to deliver it to Detection Services until agreement was reached on price and other terms governing its future use. No agreement was reached. The relationship broke down irretrievably. Mr Pickering placed the system in storage, where it remains.
Detection Services subsequently developed a new leak detection system, which differed in a number of respects from the system developed by Mr Pickering.

High Court proceedings

In 2015 Detection Services issued proceedings against Mr Pickering and Aqatar in the High Court. Detection Services claimed the costs of developing their new system, and profits said to have been lost in the interim while that new system was developed. Mr Pickering and Aqatar counterclaimed in contract for the costs they incurred in developing the original system.
At trial in the High Court, all of these claims were dismissed.[1] Woolford J accepted that there was a joint venture between the parties to design and build a leak detection system for use by Detection Services.[2] The terms of the joint venture included:[3]
(a)The leak detection system would be jointly owned by the parties throughout the development process.
(b)Mr Pickering would…

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.

Continue reading Pickering v Detection Services Limited

Details

AGLC: Pickering v Detection Services Limited [2021] NZCA 382
Case: [2021] NZCA 382
Decision Date: 16 August 2021 at 11.00 am

CaseChat Overview and Summary

The appeal in Pickering v Detection Services Limited was heard by Goddard, Thomas, and Wylie JJ of the Court of Appeal of New Zealand. The case involves a dispute between Mr. Christopher Lorraine Pickering and Detection Services Limited, a group of companies specializing in detecting leaks in water pipes, regarding a joint venture to develop a new computer-controlled leak detection system. The joint venture aimed to design and build a system for use by Detection Services, with Mr. Pickering retaining intellectual property rights to the initial phase of development. However, the relationship between the parties deteriorated when Mr. Pickering refused to deliver the prototype system, claiming sole ownership and seeking agreement on price and terms for its future use.

The legal issues before the Court were whether Detection Services was entitled to compensation for the costs incurred in developing a replacement system and the appropriate method of calculating the damages. The Court held that Detection Services was entitled to compensation for the reasonable costs incurred in mitigating the loss caused by the non-delivery of the prototype system. The Court found that the prototype was not a "dud" or commercially not viable, as argued by Mr. Pickering. Instead, the prototype required further development but was substantially complete. The Court also rejected the argument that the expenditure by Detection Services was merely capital expenditure rather than a loss, stating that Detection Services could claim for the costs reasonably incurred in replacing the asset of which they had been wrongfully deprived.

The Court dismissed Mr. Pickering's appeal and ordered him to pay the respondents' costs for a standard appeal on a band A basis, increased by 25 per cent, with usual disbursements. The Court certified for second counsel and provided instructions for the solicitors involved in the case.

Orders