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| IN THE COURT OF APPEAL OF NEW ZEALAND |
| CA805/2010 [2011] NZCA 346 |
| BETWEEN SHEPPARD INDUSTRIES LIMITED |
| AND AVANTI BICYCLE COMPANY LIMITED |
| AND SPECIALIZED BICYCLE COMPONENTS INCORPORATED |
| Hearing: 23 June 2011 |
| Court: O'Regan P, Glazebrook and Arnold JJ |
| Counsel: B D Gray QC and T J G Allan for Appellants |
| Judgment: 26 July 2011 at 2.30 pm |
JUDGMENT OF THE COURT
A The appeal is allowed.
BWe answer the preliminary question as indicated in [53] below.
CThe respondent must pay the appellants costs for a standard appeal on a band B basis plus usual disbursements. We certify for two counsel.
REASONS OF THE COURT
(Given by Arnold J)
A mediation gives rise to a disputed settlement
The first and second appellants (collectively Sheppard) distributed bicycles and other cycling products manufactured by the respondent, Specialized Bicycle Components Ltd (Specialized), under a distribution agreement entered into in 1999. In 2007, a dispute arose between them in which Specialized alleged that Sheppard had copied some of its products. The dispute was resolved and the parties entered into a written settlement agreement in August 2009 (the 2009 Deed).
Subsequent to that, Specialized became concerned that Sheppard was copying its cycling gloves and, on 3 December 2009, again issued proceedings against Sheppard alleging copying. On 4 and 8 February 2010 the parties participated in a mediation in respect of this second dispute. The mediation was conducted by the Hon Barry Paterson QC under a written mediation agreement dated 4 February 2010. Sheppard say that the mediation was successful in the sense that the parties reached an oral agreement as to the settlement of the dispute and Sheppard has performed it, at least in part. Specialized denies that. Its stance is that the mediation agreement provides that there can be no settlement unless a written and signed settlement agreement is completed and, as this has not happened, there has been no settlement.
Sheppard filed a statement of defence in the proceedings on 17 March 2010. It pleaded accord and satisfaction, alleging that the parties entered into an oral settlement agreement on 8 February 2010, and estoppel. Sheppard also applied for an order staying the proceeding or otherwise restraining Specialized from continuing with it. In support of the application, Sheppard filed two affidavits. One was from Mr Christopher Darlow, an Auckland practitioner who acted for Sheppard at the mediation, and the other from Mr John Struthers, the managing director of both appellants who was also present at the mediation on 4 February 2010.
In his affidavit, Mr Darlow said that the mediation meetings which took place on 4 and 8 February 2010 dealt with the copying dispute as well as other matters in dispute between the parties. He said that on the afternoon of 8 February 2010 “the parties reached agreement on all issues between them”. He then identified the terms of…
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- Case
- [2011] NZCA 346
- Decision Date
CaseChat Overview and Summary
The Court of Appeal found that it was not possible to contract out of s 57(3)(b), which allows evidence necessary to prove the existence of a settlement agreement. Furthermore, the mediation agreement did not explicitly state that a written and signed settlement agreement was the only way to settle the dispute. The Court of Appeal allowed the appeal, permitting Sheppard to adduce evidence of the mediation to support their contention of a binding oral settlement agreement. The Court of Appeal also held that the respondent must pay the appellants' costs for a standard appeal on a band B basis plus usual disbursements.
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