Precast NZ Limited v Anystep Limited - [2017] NZHC 1371

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-3171 [2017] NZHC 1371

BETWEEN
PRECAST NZ LIMITED

Plaintiff

AND

ANYSTEP LIMITED First Defendant

PETER JOSEPH EVANS Second Defendant

AND

PAUL TREVOR CANE Third Party

Hearing: 13 to 17 and 20 to 22 March 2017

Counsel:

MJ Fisher and KJ Ng for plaintiff and third party
B Gustafson and TP Refoy-Butler for defendants

Judgment:

21 June 2017

JUDGMENT OF FITZGERALD J

This judgment was delivered by me on 21 June 2017 at 4 pm, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date……………

Solicitors: Claymore Partners Ltd, Auckland (B Langdon) Morrison Mallett, Wellington (M Morrison)

Precast NZ Limited v Anystep Limited [2017] NZHC 1371 [21 June 2017]

Contents

Introduction ..........................................................................................................[1] Factual background .............................................................................................[8] Precast NZ’s claims against Any Step - introduction......................................[34]
Sale of Mould to McIntosh
Introduction ......................................................................................................[36]
Clause 2.2 - interpretation ...............................................................................[39] Is there an implied term of constructive knowledge?.......................................[43] McIntosh sale - facts ........................................................................................[51] Did Any Step breach clause 2.2? .....................................................................[94]

Alleged failure by Any Step to supply rubber extrusion strips to Precast
NZ in January 2016
Introduction ....................................................................................................[100]
Is Any Step obliged to supply rubber extrusion strips?..................................[104] Was there a breach of the obligation to supply rubber extrusion strips? ...... [113] What relief, if any, ought to be granted?........................................................ [114]

Any Step’s counterclaim - introduction ......................................................... [117]

Breach of Support Clause
Introduction .................................................................................................... [118]
Interpretation of Support Clause ...................................................................[122] Breach of Support Clause - facts ...................................................................[130] What “hat(s)” was Mr Cane wearing when dealing with Mr Lawley
and the South African contact? ................................................................[169]

Breach as result of Bradford and/or Balcrom agreements
Introduction ....................................................................................................[182]

Did Precast NZ assign its rights to Bradford and Balcrom?
Introduction ....................................................................................................[188]
What is the difference between assignments and licences? ...........................[189] Determining whether there is an assignment or sub-license .........................[195] Were the arrangements with Bradford/Balcrom an assignment or a
sub-licence? .............................................................................................[201]

Is there a duty not to sub-license?
Introduction ....................................................................................................[206]
Duty not to sub-license - analysis ..................................................................[208]

Any Step’s claim against Mr Cane personally
Introduction ....................................................................................................[227]
Breach by Mr Cane - analysis........................................................................[230] Result .................................................................................................................[239] Concluding observations .................................................................................[242] Costs ..................................................................................................................[244]

Introduction

[1] The plaintiff (“Precast NZ") and the defendant (“Any Step”) are parties to an exclusive licence agreement (“Agreement”) in respect of a system or mould to make concrete precast stairs (“Mould”). The third party (“Mr Cane”) is a director of Precast NZ and for a period of time was also a director of Any Step.

[2] The Agreement was entered into on 22 December 2009, although it has an effective commencement date of 15 May 2009. It has a 25-year term (with a 25-year right of renewal). Pursuant to the Agreement, Any Step granted Precast NZ the exclusive right to use and sell the Mould in New Zealand. No royalties are payable by Precast NZ. Rather, Precast NZ agreed to support Any Step in its overseas marketing initiatives (the relevant contractual clause referred to as “the Support Clause”). It is not in dispute that Any Step’s primary…

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: [2017] NZHC 1371
Decision Date: 21 June 2017

CaseChat Overview and Summary

Precast NZ Limited (Precast NZ) and Anystep Limited (Any Step) were parties to an exclusive licence agreement for the sale of a system or mould to make concrete precast stairs (Mould). Precast NZ sued Any Step for breach of contract, alleging that Any Step supplied a Mould to a third party knowing it was to be on-supplied to a New Zealand-based precaster, failed to supply rubber extrusion strips requested by Precast NZ in January 2016, and terminated the Agreement on 29 January 2016. Any Step counterclaimed, alleging that Precast NZ breached the Agreement by entering into sub-license agreements with Bradford and Balcrom, and that Mr Cane breached his fiduciary duties as a director of Any Step by failing to pass on information he received from Mr Lawley of Reid on 1 November 2012 and details of a South African contact.

The court found that Any Step did not breach clause 2.2 of the Agreement by supplying a Mould to Ancon, which then sold it to McIntosh, as there was no evidence that Any Step knew or was wilfully blind to the on-sale to McIntosh. Any Step was found to have breached its obligation to supply rubber extrusion strips to Precast NZ in January 2016, and a declaration was made that Any Step must supply the strips on its usual terms of trade. Precast NZ's claims against Any Step were otherwise dismissed, as was Any Step's counterclaim against Precast NZ and Mr Cane. The court found that Mr Cane did not breach his fiduciary duties as a director of Any Step by failing to pass on the Reid information and details of the South African contact.

The court made a declaration that the Agreement obliged Any Step to supply rubber extrusion strips to Precast NZ when requested, on Any Step's usual terms of trade. Precast NZ's claims against Any Step were dismissed, as were Any Step's claims against Precast NZ and Mr Cane. The court noted that the Agreement contained a mandatory dispute resolution clause, requiring mediation of any disputes and, if not resolved through that forum, arbitration.

Orders