Shanghai Julianneng Trading Co Limited v Miraka Limited

[2020] NZCA 442

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA

 CA242/2020
 [2020] NZCA 442

BETWEEN	SHANGHAI JULIANNENG TRADING CO LIMITED Applicant
AND	MIRAKA LIMITED Respondent

Court:	Miller and Courtney JJ
Counsel:	M R Crotty and L H Mau for Applicant L A O’Gorman and A N Birkinshaw for Respondent
Judgment: (On the papers)	21 September 2020 at 3 pm

JUDGMENT OF THE COURT

The application for special leave to appeal is dismissed.

____________________________________________________________________

REASONS OF THE COURT

(Given by Courtney J)

Introduction

1. Shanghai Julianneng Trading Co Ltd (formerly Milk New Zealand (Shanghai) Co Ltd or “MNZ”) and Miraka Ltd (Miraka) are parties to a supply and purchase agreement for UHT milk (the Agreement).  They are in dispute about the interpretation and effect of Minimum Volume obligations and liquidated damages provisions in the Agreement.  The dispute was the subject of an arbitration by the Hon Robert Fisher QC.  The Arbitrator awarded Miraka common law damages of $5,941,000 (the Award Amount). 

2. On appeal, the High Court confirmed the award to the extent that MNZ remained liable to pay damages in the sum of the Award Amount.[1]  Walker J refused leave to appeal the decision.[2]  MNZ seeks special leave to appeal.[3]

   [1]Milk New Zealand (Shanghai) Co Ltd v Miraka Ltd [2019] NZHC 2713 at [100].

   [2]Milk New Zealand (Shanghai) Co Ltd v Miraka Ltd [2020] NZHC 697.

   [3]Arbitration Act 1996, sch 2, cl 5(6).

3. The principles that apply to an application for special leave are those set out in Cooper v Symes, which were approved by this Court in Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd:[4]   

   (a)The appeal must raise some question of law … capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the costs and delay of the further appeal.

   (b)On a second appeal, the Court of Appeal is not engaged in the general correction of error.  Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. 

   (c)Not every alleged error of law is of such importance either generally or to the parties, as to justify further pursuit of litigation that has been twice considered and ruled upon by a Court. 

Application for special leave

[4]Cooper v Symes (2001) 15 PRNZ 166 (HC) at [12]; approved in Downer Construction (New Zealand) Ltd v Silverfield Developments Ltd [2007] NZCA 355, [2008] 2 NZLR 591 at [33].

1. MNZ’s proposed questions of law are whether the High Court:

   a)   applied the wrong standard of review;

   b)   erred in finding that the Agreement did not exclude the right to common law damages in circumstances where:

   i)the parties had agreed on a liquidated damages framework;

   ii)compensation based on actual damages was proposed and expressly rejected during negotiations; and

   iii)the peak month and seasonal shortfall obligations for milk supply overlap; and

   c)   erred in in law in finding that MNZ’s compliance with its notification obligations was a condition precedent to Miraka’s Minimum Volume obligations. 

2. MNZ submits that these questions meet the pre-requisites for special leave because:

   a)   the determination of one or more of the questions will substantially affect the rights of the parties as the Award Amount is substantial;

   b)   the questions of law are of significant precedent value to the parties as the Agreement will continue to govern the trading relationship between them;

   c)   the case law in New Zealand on the standard of review to be applied for appeals against arbitral decisions is unclear;

   d)   a determination by this Court on one or more of the questions of law will have important precedential effect as regards the standard of review, as well as the interpretation and effect of liquidated damages provisions in the context of a supply agreement; and

   e)   there is no particular urgency surrounding the determination of the underlying disputes.

3. We agree that, in an appropriate case, the standard of review in an appeal under the Arbitration Act 1996 is a question that would justify consideration by this Court.  In particular, it would be helpful to consider the effect of cases decided in other jurisdictions since Bryson v Three Foot Six Ltd.[5]  However, we are not satisfied that consideration of this issue would alter the outcome in the present case.  It is apparent that Walker J did not simply defer to the Arbitrator’s conclusions but conducted her own assessment on the correct interpretation of the agreement.  As a result, consideration of the standard of review adopted in the High Court will not lead to any different conclusion. 

   [5]Bryson v Three Foot Six Ltd [2005] NZCA 34, [2005] 3 NZLR 721.

4. The questions of interpretation do not concern any error in understanding of legal principles or the general law and therefore fall outside this Court’s primary function on a second appeal of clarifying the law and determining whether it has been properly construed and applied by the court below.  Granting leave in this case would be contrary to the principle that arbitral awards should be final.[6]

   [6]Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 (CA) at [51]–[52].

5. In summary, we do not consider that the proposed appeal has a reasonable prospect of success.  It is not in the interests of justice for Miraka to be put to the expense and delay of another appeal, given than both the Arbitrator and the High Court reached the same conclusions on the questions of interpretation.

Result

1. The application for special leave to appeal is dismissed.

Solicitors:
Russell McVeagh, Auckland for Applicant
Buddle Findlay, Auckland for Respondent