Precast NZ Limited v Anystep Limited
[2017] NZHC 506
•20 March 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2014-404-3171 [2017] NZHC 506
BETWEEN PRECAST NZ LIMITED
Plaintiff
AND
ANYSTEP LIMITED First Defendant
PETER JOSEPH EVANS Second Defendant
AND
PAUL TREVOR CANE Third Party
Hearing: 17 March 2017 Counsel:
MJ Fisher and KG Ng for plaintiff and third party
B Gustafson and TP Refoy-Butler for defendantsJudgment:
20 March 2017
JUDGMENT OF FITZGERALD J [On application for discovery]
This judgment was delivered by me on 20 March 2017 at 10.14 am, 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 506 [20 March 2017]
Introduction
[1] On Friday afternoon, Mr Fisher made an oral discovery application on behalf of Precast for documents relating to the transfer of the intellectual property in the Anystep Moulding System to an overseas party, which is said to be PAP Limited (a company domiciled in the Isle of Man). The application arose out of cross examination of Mr Evans, who in response to questions concerning the current ownership of the intellectual property, confirmed it is now held by PAP Limited. Mr Evans also gave evidence that the arrangement with PAP Ltd took into account the Licence Agreement between Anystep and Precast.
Approach
[2] The application falls to be determined under r 8.19 of the High Court Rules
2016, namely whether an order for particular discovery ought to be made after the proceeding has commenced. A four stage approach is adopted when considering such an application:1
(a) First, are the documents sought relevant and if so, how important will they be?
(b)Second, are there grounds for believing that the documents sought exist?
(c) Third, is discovery proportionate?
(d) Fourth, weighing and balancing these matters, in the Court’s
discretion applying r 8.19, is an order appropriate?
[3] In this case, Mr Gustafson has confirmed that there is at least one document evidencing the transfer of the intellectual property to PAP Ltd. The primary matters for my consideration are accordingly, whether the document or documents are relevant, and if so, if an order for discovery is appropriate.
[4] In terms of relevance, relevance is determined by the pleadings. As observed by Kós J in Robert v Foxton Equities Limited, “a document should be discovered if it is relevant to matters which will actually be in issue before the Court.”2
Submissions
[5] In advancing the application, Mr Fisher took me through the various iterations of the pleading on the topic of ownership of the intellectual property. It is not necessary to traverse those matters in detail. It is sufficient to record that as of the second amended statement of defence and counterclaim dated 2 December 2016, the pleaded position by the first defendant was that Anystep does not own the intellectual property rights in the Anystep Moulding System, but does have the exclusive right from the owner of those rights to use those rights in New Zealand (see paragraph 1.1 of the second amended statement of defence and counterclaim dated 2 December 2016).
[6] Presumably in response to this pleading, paragraph 4 of Precast’s current statement of claim (dated 13 March 2017), pleads that “to the extent any person other than the first defendant has any intellectual property interest in the Anystep Moulding System such interest is subject to the rights, title and interest of Precast NZ under the Licence Agreement”. By way of the third amended statement of defence and counterclaim dated 15 March 2017, that pleading is denied by Anystep.
[7] One further document on the Court file is relevant to note at this stage. In Anystep’s second affidavit of documents sworn by Mr Evans on 2 August 2016, Mr Evans deposed that:
(a) Anystep Technology Ltd, who previously owned the intellectual property, has been removed from the Companies Register;
(b)Anystep Holdings Ltd does not own the intellectual property nor has ever owned it; and
(c) The intellectual property is now owned by an offshore company, PAP Limited.
[8] Mr Fisher submitted that the documents are relevant because if no relevant rights to the intellectual property are held by Anystep, then this proceeding serves no useful purpose. Mr Fisher further elaborated that if the first defendant does not have any intellectual property rights in the system, “the Court is not serving any useful purpose in this case”.
[9] In terms of the timing of the application, Mr Fisher submitted that on the basis of the earlier iterations of the pleadings, discovery was not necessary. Mr Fisher submitted that the importance of discovery of the document or documents arose out of the answers given by Mr Evans on cross examination on Friday.
[10] Mr Gustafson submitted that the document or documents are not relevant, not being relevant to any of the pleaded breaches, and there being no pleaded breach by Anystep of clause 8.1 of the Licence Agreement. Mr Gustafson also raised a practical issue, in that, on the basis of his client’s instructions, there is only a hard copy of the document, which is presently in London, and not easily obtained. However, his instructions are that the document confirming the transfer of the intellectual property contains an unfettered right on Anystep to use the intellectual property rights in New Zealand, save for those rights terminating in the event of Anystep ceasing to carry on business (i.e. similar to the terms of clause 6.2.2 of the Licence Agreement between Precast and Anystep).
Analysis
[11] I have considered the current pleadings, and the matters that I must determine in this proceeding. Paraphrasing from the pleadings, the issues for determination are as follows:
(a) Firstly, on Precast’s claim against Anystep:
(i) The proper interpretation of a number of aspects of the
Licence Agreement, and in particular, the interpretation of the
word “knows” in clause 2.2 (and in particular, whether it extends beyond actual knowledge) and whether there ought to be various implied terms in this context, including the concept of constructive knowledge;
(ii)Whether Anystep knew at the time of selling a mould to Ancon that the mould was to be sold or transferred to McIntosh in Ashburton;
(iii)Whether Anystep breached the Licence Agreement in the context of the sale of the mould by Ancon to McIntosh in Ashburton;
(iv)Whether Anystep breached the Licence Agreement by failing to provide certain rubber extrusions to Precast;
(v)Whether Anystep breached the Licence Agreement by purporting to terminate it by way of its letter dated 29 January
2016;
(vi)If there is any breach, should an injunction be granted in the terms sought by the plaintiff (namely prohibiting Anystep from, in essence, selling or facilitating the sale of an Anystep mould to any third party in circumstances where Anystep knows or ought to know that the mould is to be on-sold into New Zealand); and
(vii)If there is any breach, should an order be made permitting Precast to bring a claim for damages, arising out of any claim against it by Bradford, at a later point in time?
(b) Secondly, the issues arising on Anystep’s counterclaim against Precast
and Mr Cane personally:
(i)The proper interpretation of the Licence Agreement, and in particular, whether it contains a duty not to sub-licence to third parties (other than to those three companies within the Stresscrete group of companies), and the proper interpretation of clause 8.2, concerning assignments by Precast;
(ii) The scope of Mr Cane’s duties as a director of Anystep;
(iii)Whether Precast breached the support clause in respect of either or both of the alleged failure to provide the Reid’s List to Anystep, and the alleged failure to provide the contact details of a potential South African contact or customer to Anystep;
(iv)Whether Mr Cane breached his duties as a director of Anystep as a result of the same conduct;
(v)If Precast breached the support clause, what damages, if any, ought to be awarded to Anystep;
(vi)If Mr Cane breached his duties as director of Anystep, what damages, if any, ought to be awarded to Anystep;
(vii)Whether Precast breached the Licence Agreement as a result of either or both of the Bradford and Balcrom sub-licences;
(viii)Whether the Licence Agreement was validly terminated, as a result of Anystep’s 25 August 2015 termination letter and an alleged failure to remedy within 30 days of that letter; and/or by way of Anystep’s later termination letter of 29 January
2016; and
(ix) If there has been a breach of the Licence Agreement by
Precast, whether Anystep is entitled to an account of profits in
respect of that breach, and if so, should that be determined by an account pursuant to Part 16 of the High Court Rules?
[12] While I accept that paragraph 4 of the second amended statement of claim is denied by Anystep, I am not satisfied that the document or documents sought are relevant to any of the issues that I am required to determine in this proceeding. In particular, the documents are not relevant to any of the parties’ claims against each other, and the particular matters I must determine in relation to each of those claims, as summarised earlier. There is no pleaded claim of a breach by Anystep of clause
8.1 of the Licence Agreement.
[13] Further, whether or not any judgment I issue in this proceeding is of utility to Precast, given the transfer of the intellectual property to PAP Limited, does not make the documents relating to that transfer relevant to any matters that fall to be determined by me. I further observe that, irrespective of the transfer of the intellectual property to PAP Limited, any relief granted to Precast in the terms sought would, in my view, be of utility to Precast, in that it seeks injunctive relief directly against Anystep in New Zealand, which relief is not affected or undermined by the intellectual property transfer.
[14] I also have concerns as to the timing of the application. As noted earlier, Precast has been on notice since August 2016 that, first, the intellectual property is owned by an offshore company, and second, the identity of that offshore company. I accept that the pleading of 2 December 2016 confirms that Anystep is not the owner of the intellectual property. That does not alter the fact, however, that that fact had been apparent to Precast since the August 2016 discovery affidavit. I note, however, that if I had been satisfied that the documents were relevant the timing of the application would not necessarily have been determinative of the application. As noted, however, I simply do not consider the document or documents relevant to matters in issue in this proceeding.
Result
[15] For these reasons, I do not consider it appropriate to order that the document
or documents be discovered and Precast’s discovery application is accordingly declined.
Fitzgerald J
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