Tourplan Pacific Ltd v Australian Tours Management Pty Ltd
[2017] NZHC 2310
•22 September 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2016-404-000650 [2017] NZHC 2310
BETWEEN TOURPLAN PACIFIC LIMITED
First Plaintiff
TOURPLAN CENTRAL SERVICES LIMITED
Second Plaintiff
AND
AUSTRALIAN TOURS MANAGEMENT PTY LIMITED Defendant
Hearing: 22 September 2017 Appearances:
C Elliott QC and S Laing for Plaintiffs
I M Gault and C M Cattin for DefendantJudgment:
22 September 2017
ORAL JUDGMENT OF VENNING J APPLICATION FOR JOINDER
Solicitors: AJ Park, Auckland
Bell Gully, Auckland
Copy to: C Elliott QC, Auckland
TOURPLAN PACIFIC LTD v AUSTRALIAN TOURS MANAGEMENT PTY LTD [2017] NZHC 2310 [22
September 2017]
Application
[1] The plaintiffs seek to join two additional defendants to their current claim against Australian Tours Management Pty Limited (ATM). ATM opposes the application.
Parties
[2] The plaintiffs Tourplan Pacific Limited (TP) and Tourplan Central Services Limited (TCS) are subsidiaries of Tourplan Holdings Limited, a New Zealand company based in Christchurch that carries on business as a developer, producer and licensor of tour planning software for the tourism industry.
[3] TP carries on business as a licensee of the Tourplan Software and is a sub- licensor of the software to end users in the Pacific region. TCS carries on business as owner and licensor of the intellectual property in the Tourplan Software.
[4] ATM carries on business as a tour operator. ATM is or was until recently a wholly owned subsidiary of Kuoni Travel Holding Limited (Kuoni), an international company based in Switzerland that ultimately controls a number of tourism businesses worldwide. Desert Adventures Tourism LLC (DAT) is a company registered in Dubai carrying on business as a destination management company. DAT is or was until recently also a wholly owned subsidiary of Kuoni.
[5] In 2001 an entity known as Australian Tours Management Pty Ltd (the defendant’s predecessor company) entered an agreement with TCS pursuant to which TCS supplied a licence for Tourplan’s Software and associated services to the initial ATM. In 2008 the rights were assigned to the defendant ATM.
[6] In March 2016 the plaintiffs brought proceedings against ATM alleging it had had breached its licence agreement and had breached Tourplan’s copyright. The plaintiffs raised five causes of action in that proceeding:
(a) breach of contract – TP against ATM;
(b) repudiation – TP against ATM;
(c) breach of trust and confidence – TP and TCS against ATM; (d) passing off – TP and TCS against ATM; and
(e) breach of copyright – TP and TCS against ATM.
[7] As the plaintiffs’ claim against ATM has progressed the plaintiffs have discovered further information. On the basis of that information the plaintiffs consider they have claims against Kuoni and DAT and seek to join them.
[8] The plaintiff now alleges that in early 2012 there were discussions between Kuoni and the Tourplan companies for a global software solution for Kuoni’s destination management companies. Ultimately no agreement was reached. The plaintiffs allege that over the next two years Kuoni made what Tourplan says is an infringing software product by substantially copying Tourplan and replicating it. The alleged infringing software product is called or known as Passion. Kuoni then disseminated the software through parts of its destination management business including to ATM.
[9] The plaintiffs allege that Kuoni in conjunction with another third another party, ATM and DAT and/or related companies copied Tourplan’s Software in order to produce the Passion Software and/or authorised, aided and abetted, encouraged and assisted related companies and/or third parties to do the same. They allege ATM and DAT misused confidential information, embedded and tool plan software by communicating to Kuoni and others without authority.
[10] The plaintiffs seek to join Kuoni and DAT to these proceedings. The proposed draft amended statement of claim including Kuoni and DAT as defendants raises five causes of action:
(a) breach of contract – TP against ATM; (b) repudiation – TP against ATM;
(c) breach of trust and confidence – TP and TCS against all three defendants;
(d) breach of copyright – TCS against Kuoni; and
(e) a new cause of action styled as “joint tort feasor” – TCS against ATM
and DAT.
[11] In a separate proceeding the second plaintiff TCS has sued Kuoni and DAT which alleges breach of copyright – TCS against Kuoni; the joint tort feasor cause of action – TCS against DAT; breach of trust and confidence – TCS against Kuoni and DAT. If this application is unsuccessful the Tourplan interests will pursue an application for consolidation with this proceeding. Mr Elliott QC accepts that if the current application is successful in this proceeding to join Kuoni and DAT then those proceedings ought to be struck out or at least stayed.
[12] The application to join is made under r 4.56:
4.56 Striking out and adding parties
(1) A Judge may, at any stage of a proceeding, order that—
(a) the name of a party be struck out as a plaintiff or defendant because the party was improperly or mistakenly joined; or
(b) the name of a person be added as a plaintiff or defendant because—
(i) the person ought to have been joined; or
(ii) the person's presence before the court may be necessary to adjudicate on and settle all questions involved in the proceeding.
(2) An order does not require an application and may be made on terms the court considers just.
(3) Despite subclause (1)(b), no person may be added as a plaintiff without that person's consent.
[13] The plaintiffs rely on both grounds, namely that Kuoni and DAT ought to have been joined and also, in the alternative, their presence is necessary to enable the Court to settle all questions raised in the proceeding.
[14] ATM opposes the plaintiffs’ application on the grounds:
(a) the presence of the proposed defendants, which are both overseas entities, is not necessary to enable the Court to adjudicate upon the exact issues between the parties to or to settle the questions involved in the present proceeding. Mr Gault also noted, given the plaintiffs’ reliance on the first limb of the test, that the tendency has been to treat the first limb as also involving this necessity test;
(b)the defendants also oppose the application on the grounds that the plaintiffs have delayed in bringing the application such that allowing the application will prejudice ATM; and
(c) if the application is allowed the number of parties in the proceeding will increase which will necessarily delay the hearing and that will prejudice ATM by delaying the determination of the proceeding and increasing the costs to ATM and the other parties to the proceeding.
[15] Mr Gault noted the test for joinder is derived from the Privy Council’s decision of Pegang Mining Co Ltd v Choong Sam which requires that jurisdiction first be established on the basis that the rights or liabilities to any party will be directly affected by any order and there is then a secondary discretionary question to be determined.1
[16] The Court of Appeal have recently confirmed the approach to applications for joinder in New Zealand, particularly applications for joinder by the plaintiff, is a liberal one.2 The reason for that was explained by Richmond J in McKendrick Glass
Manufacturing Company Ltd v Wilkinson:3
It is the constant aim of a Court of equity to do complete justice by deciding upon and settling the rights of all persons interested in the subject of the suit,
1 Pegang Mining Co Ltd v Choong Sam (1969) 2 NLJ 52.
2 Newhaven Waldorf Management Ltd v Allen [2015] NZCA 204, [2015] NZAR 1173 at [44]; McKendrick Glass Manufacturing Company Ltd v Wilkinson [1965] NZLR 717 (SC) at 723; Westfield Freezing Co Ltd v Sayer & Company (New Zealand) Ltd [1972] NZLR 137; and Arklow Investments Ltd v Ngai Terangi Iwi Incorporated Society CA42/94, 1 June 1994.
3 McKendrick Glass Manufacturing Company Ltd v Wilkinson, above n 2, at 723, as stated in
Mitford, Pleadings in Suits in the Court of Chancery, 5th ed. (1847) 190.
to make the performance of the order of the Court perfectly safe to those who are compelled to obey it, and to prevent future litigation. For this purpose all persons materially interested in the subject ought generally to be parties to the suit, plaintiffs or defendants, however numerous they may be, so that the Court may be enabled to do complete justice by deciding upon and settling the rights of all persons interested, and that the orders of the Court may be safely executed by those who are compelled to obey them, and future litigations may be prevented.
[17] The threshold for joinder was also described as a fairly low threshold by the Court of Appeal in Beattie v Premier Events Group Ltd.4 Indeed, a cause of action need not necessarily be advanced or lie against the proposed additional defendants.
[18] As noted on the basis of information gained during the course of this proceeding the plaintiffs and TCS in particular now allege that it was Kuoni that authorised the breach of TCS’s copyright and engaged in conduct in its involvement in the development of the Passion Software rather than ATM, so that the plaintiffs’ focus on that cause of action has changed from ATM towards Kuoni.
[19] The issue of whether there has been a breach of copyright and, if so, the party that breached the copyright will be a principal focus of the proceeding. As Mr Gault submitted it is important to bear in mind that copyright exists in the expression of ideas rather than the idea and that similarities between, in this case software programs, does not necessarily support an inference of breach of copyright. Those matters are however for the substantive hearing.
[20] As noted the proposed amended statement of claim includes three causes of action affecting one or both of the proposed additional defendants. The breach of trust and confidence cause of action affects both Kuoni and DAT as well as ATM. The breach of copyright is focused on the claim by TCS against Kuoni, and there is a new claim by TCS against ATM and DAT in relation to what is styled as a breach of “joint tort feasor” cause of action. DAT is the current owner of the Passion Software.
[21] Mr Gault submitted that even as amended the pleading will require the plaintiffs to prove that Passion Software is a copy and that ATM was involved with
the development of that software so that it is unnecessary to join the proposed defendants Kuoni and DAT to determine those questions. The plaintiffs can adequately bring their claims against ATM without joining the proposed defendants. He suggested the claim in relation to copyright had been cosmetically re-ordered.
[22] It is not for the Court on an application such as this to determine the merits of the proposed claim. As Randerson J noted in Bridgeway Projects Ltd v Webb the Court will ordinarily accept the applicant’s factual assertions relevant to the proposed causes of action against the parties to be joined and what is required is a tenable cause of action.5
[23] On the current information before the Court and the state of the draft pleadings I am not able to say that the proposed amended claim against the additional defendants is not at the least tenable. As noted there will be a real issue in this case about whether there has been a breach of copyright and if so the party that was responsible for that.
[24] Given the relatively low threshold for joinder I am satisfied that, given the claims proposed to be pursued against Kuoni and DAT they ought to be joined and also that their presence before the Court will be necessary to adjudicate on and settle all questions involved in the proceeding that flow from the issue of the alleged breach of copyright and responsibility for that.
[25] The issue then is whether in the exercise of its discretion the Court should decline to order joinder. On that issue I note that in its recent decision the Court of Appeal observed that the rule does not impose a bright line jurisdictional threshold but rather applies a flexible standard the application of which will depend on a contextual analysis.
[26] Mr Gault relies on NZX Ltd v Ralec Commodities Ltd and the Court’s decision to decline NZX’s application to join additional defendants in those proceedings. Those proceedings involved claims for damages in respect of pre- contractual misrepresentations and counterclaims for breaches of post-settlement
obligations.6 NZX proposed to join five additional defendants in anticipation of pleading a fifth and additional cause of action. In that case Dobson J held:
[35] … The prospects of the new cause of action should be seen in the context of what it would add to the strengths of NZX’s claims, as it has presented them thus far on the existing causes of action. On that analysis, it is difficult to say that the additional defendants are necessary parties.
[27] The proposed additional defendants in that case were shareholders who were referred to as “consideration recipients”. The principal focus of the claim against the contract was against the contracting parties and guarantors of the vendor’s performance.
[28] The position is different in the present case, where, for example, the breach of copyright is the fundamental important part of the claim and it is now directed against Kuoni, at least on the draft of the proposed amended pleadings. It will be necessary to determine the roles played by Kuoni and DAT, which is apparently the current owner of the Passion Software to determine where any liability may rest in the proceeding if breach is proved.
[29] The principal consideration in relation to the exercise of the discretion is the inevitable further delay that will follow from joinder before the proceeding is determined. I acknowledge that there will be a delay in the event of joinder, perhaps in the nature of 12 months or so. The defendants are likely to raise objection to their joinder to the claim on jurisdictional issues as they are both based overseas.
[30] On the issue of delay Mr Gault suggested the plaintiffs had sufficient information from a very early stage of these proceedings to have sought to have joined Kuoni or DAT if that was indeed their wish.
[31] Mr Elliott QC submits that it was not until December 2016 that the extent of Kuoni’s actual involvement was identified. He made the point that Kuoni was only one of a number of parties within the Kuoni group of companies.
[32] I accept that there will be delay and it could be said that this application could have been brought earlier. Nevertheless it is relevant that delay will likely impact most on the plaintiffs. It is the plaintiffs that bring the claim and allege loss.
[33] This case is still, for reasons it is unnecessary to go into and without laying the blame at the feet of any particular party, at a relatively early stage of the interlocutory process. Discovery and interrogatory orders have only recently been made following an opposed hearing.
[34] To the extent additional costs are incurred there is no suggestion the plaintiffs are not in a position to pay the costs that may be awarded if they are ultimately unsuccessful on their claim against the defendants.
[35] For the above reasons I am satisfied that the application for joinder must succeed. There will be orders accordingly be an order in terms of the application.
Costs
[36] The plaintiffs should have costs on a 2B basis for this application and hearing. Rule 14.8 provides a presumption for costs on an application such as this to be fixed on determination of the application.
Other proceedings
[37] As a consequence of the orders in this case the related proceedings in CIV-
2017-404-1789 are stayed pending further of the Court. In the event that no application for leave to appeal this decision is taken then the proceedings in CIV-
2017-404-1789 will be struck out on 31 October 2017 with no further steps required to be taken by any party.
Further management
[38] For the purposes of further management of this file I direct it is to be assigned to Courtney J. Any applications filed in this proceeding are to be referred to her.
[39] Leave is also reserved to either party to relist the matter before the Judge
through a request of the Registrar.
Venning J
4