Ward Equipment Limited v Preston - [2017] NZHC 240

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2016-404-1966 [2017] NZHC 240

BETWEEN
WARD EQUIPMENT LIMITED

First Plaintiff TPL LIMITED Second Plaintiff

AND

MARKUS JOHANNES PRESTON Defendant

PRESTON HIRE (NZ) LIMITED Second Defendant

PRESTON HIRE GROUP NZ LIMITED Third Defendant

MEVON PTY LIMITED (CAN 022 601
363)

Fourth Defendant

Hearing: 13 February 2017

Appearances:

DJG Cox for Plaintiffs
J D McBride and P Hall for Defendants

Judgment:

23 February 2017

JUDGMENT OF FOGARTY J

This judgment was delivered by Justice Fogarty on
23 February 2017 at 10.00 a.m., pursuant to r 11.5 of the High Court Rules

Registrar/Deputy Registrar
Date:

Solicitors:
Rennie Cox, Auckland
Simpson Western, Auckland

WARD EQUIPMENT LIMITED v PRESTON [2017] NZHC 240 [23 February 2017]

Introduction

[1] The first and second plaintiffs commenced these proceedings in August 2016 seeking an injunction to restrain the defendants from carrying on business in New Zealand, selling and hiring Prestons’1 construction equipment products in breach of an exclusive licence agreement by Mevon in favour of Ward Equipment to hire and sell those products. Preston, the parent of Mevon, has entered the market, in competition with Ward its licensee.

[2] Because of the commercial urgency of the matter, Ward obtained from the High Court an Order that the Court first try and adjudge the counterclaim brought by Mevon, that the licence agreement has been brought to an end on reasonable notice. That it was brought to an end when Mevon, on 9 September gave three months’ notice which expired on 8 December 2016. Mevon seek a declaration:

That the licence agreement expires on 8 December 2016, subject to its clauses 10.4, 10.5 and 10.6 and costs.

[3] The issue for determination in this judgment is whether the licence is subject to an implied term that it could be terminated by either party on giving reasonable notice, and second, whether the notice of three months was adequate.

[4] The resolution of this issue in part depends upon an examination of the formation of the licence agreement and the subsequent assignments and amendments thereof. This examination is made also against the common law policy that such a commercial contract has no presumption of permanence. On the contrary, the Courts across the common law world are inclined to infer that such contracts are terminable
on reasonable notice, in the absence of express provisions.2

1 That is, the equipment of all the Preston companies: the first, second and third defendants.
2 Martin-Baker Aircraft Co Ltd v Canadian Flight Equipment Ltd [1955] 2 QB 556, Bernard- Norman Specialities Co Ltd v SC Time Inc (1989) 71 OR (2d) 278, Treen Gloves & Safety Products Ltd v Degil Safety Products (1989) Inc (1990) 33 CPR (3d) 74 (BCSC), Anchor Butter Co Ltd v Tui Foods Ltd [1997] 3 NZLR 107 (HC), Australian Blue Metal Limited v Robert Frank Hughes [1963] AC 74 at 98-99 applied in Paper Reclaim Ltd v Aotearoa International Ltd
[2006] 3 NZLR 188 (CA), Staffordshire Area Health Authority v south Staffordshire Waterworks

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 240
Decision Date: 23 February 2017

CaseChat Overview and Summary

Ward Equipment Limited and TPL Limited commenced proceedings against Markus Johannes Preston, Preston Hire (NZ) Limited, Preston Hire Group NZ Limited, and Mevon Pty Limited, seeking an injunction to restrain the defendants from carrying on business in New Zealand, selling and hiring Prestons’ construction equipment products in breach of an exclusive licence agreement by Mevon in favour of Ward Equipment to hire and sell those products. The primary issues for the court were whether Mevon could terminate the licence agreement, and if so, whether the three months' notice period was adequate. The court found that Mevon had the power to terminate the agreement, and that a three months' notice period was reasonable. The court also considered the obligations between the licensor and licensee upon termination, finding that Mevon was entitled to the declaration subject to certain clauses and costs. The final orders were that Mevon did have the power to give notice terminating the agreement and that Mevon should have given three months' notice.

Orders