Pickering v Detection Services Pty Limited - [2020] NZSC 35

IN THE SUPREME COURT OF NEW ZEALAND

I TE KŌTI MANA NUI

SC 138/2019
[2020] NZSC 35

BETWEEN	CHRISTOPHER LORRAINE PICKERING First Applicant
AQATAR LIMITED Second Applicant
AND	DETECTION SERVICES PTY LIMITED First Respondent
DETECTION SOLUTIONS PTY LIMITED Second Respondent

Court:	Glazebrook, O’Regan and Ellen France JJ
Counsel:	A R B Barker QC and G B Lewis for Applicants M A Corlett QC and R D Butler for Respondents
Judgment:	17 April 2020

JUDGMENT OF THE COURT

A The application for leave to appeal is dismissed.
B The applicants must pay costs of $2,500 to the respondents.

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REASONS

The applicants seek leave to appeal against a decision of the Court of Appeal,[1] which had dismissed their cross-appeal against a decision of the High Court.[2]

Background

[1]Detection Services Pty Ltd v Pickering [2019] NZCA 575 (Gilbert, Duffy and Wylie JJ) [CA judgment].

[2]Detection Services Ltd v Pickering [2018] NZHC 3310, [2019] NZAR 515 (Woolford J) [HC judgment].

Mr Simmons, who lives in Sydney, is the founder of the Detection Services group of companies which specialise in detecting leaks in water pipes. The group comprises the two respondent companies, both based in Australia, and two related New Zealand companies. As in the Courts below, we call them collectively Detection Services.
The first applicant, Mr Pickering, lives in Auckland. He is the founder of the second applicant, Aqatar Ltd, a company incorporated in New Zealand in January 2010. Mr Pickering has expertise in computer software development.
Mr Simmons and Mr Pickering are in dispute over the ownership of a new computer-controlled leak detection system. The High Court found that this was designed and built for the exclusive use of Detection Services in a joint venture between the parties, formed some time before December 2008.[3]
[3]HC judgment, above n 2, at [26], [36] and [38(e)].
In late 2009, Mr Pickering was employed as the general manager of Detection Services. He took up this position from January 2010, reporting to Mr Simmons as managing director. Mr Pickering developed and built in New Zealand, mostly in his own time, a prototype of the new system with technical assistance from Detection Services in Australia.
Mr Pickering met the cost of the development from his own resources on the basis that Detection Services would reimburse him for these costs and pay reasonable recompense for his time.[4] Mr Pickering was to retain the intellectual property rights in the computer software and interface.[5]
[4]At [38(d)].
[5]At [38(b)].
Upon completion of the prototype in mid-2011, Mr Simmons sought urgent delivery of it to Australia. Mr Pickering then 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.
The parties were unable to reach agreement. Mr Simmons terminated Mr Pickering’s employment as general manager of Detection Services. Mr Pickering placed the system in storage.
Detection Services subsequently developed a new system and issued proceedings claiming the costs of developing the…

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 Pty Limited

Details

AGLC: Pickering v Detection Services Pty Limited [2020] NZSC 35
Case: [2020] NZSC 35
Decision Date: 17 April 2020

CaseChat Overview and Summary

The Supreme Court of New Zealand dismissed an application for leave to appeal by Christopher Lorraine Pickering and Aqatar Limited against a decision of the Court of Appeal, which had dismissed their cross-appeal against a decision of the High Court. The Court of Appeal had dismissed Detection Services Pty Limited's appeal against the High Court's decision that the parties were in a joint venture, and that both parties had breached their fiduciary duties. However, the Court of Appeal found that the obligations breached were contractual in nature, not fiduciary, and therefore the clean hands doctrine did not apply. The Court of Appeal also found that Mr Pickering had breached his obligations under the joint venture by claiming sole ownership of the system, refusing to disclose third party costs, and refusing to deliver the system to Detection Services.

The applicants sought leave to appeal on the basis that the Court of Appeal had misunderstood the High Court's decision and that the appeal raised issues of general commercial importance concerning the equitable doctrine of clean hands. The applicants argued that the Court of Appeal had failed to properly consider the nature of the doctrine and how it applies where the conduct giving rise to its application arises out of the same transaction that is the basis of a plaintiff's claim. The applicants also argued that the Court of Appeal had failed to properly consider whether the contractual equivalent of the doctrine of clean hands applies in the same way, and whether the defence must be positively pleaded or whether the doctrine is part of the Court's discretion in the exercise of granting equitable relief.

The Court found that the issues in this proposed appeal were largely factual, and no issue of general or public importance or commercial significance arose. The Court also found that nothing raised by the applicants suggested a risk of a miscarriage of justice. The Court therefore dismissed the application for leave to appeal and ordered the applicants to pay costs of $2,500 to the respondents.

The Court's decision highlights the importance of properly understanding the nature of the equitable doctrine of clean hands, and how it applies in cases where the conduct giving rise to its application arises out of the same transaction that is the basis of a plaintiff's claim. The Court also highlights the importance of properly considering whether the contractual equivalent of the doctrine of clean hands applies in the same way, and whether the defence must be positively pleaded or whether the doctrine is part of the Court's discretion in the exercise of granting equitable relief.

Orders