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TTAH Limited v Koninkluke Ten Cate NV [2015] NZCA 348 (5 August 2015)

Last Updated: 20 August 2015

IN THE COURT OF APPEAL OF NEW ZEALAND
BETWEEN
 First Appellant TT INVESTORS LIMITED Second Appellant
AND
 First Respondent ROYAL TEN CATE USA INC Second Respondent TEN CATE UK LIMITED Third Respondent
Hearing:
1 July 2015
Court:
Stevens, Miller and Venning JJ
Counsel:
D M Salmon and E D Nilsson for Appellants R B Lange and G K Holm-Hansen for Respondents
Judgment:


JUDGMENT OF THE COURT

  1. The appeal is allowed. The order of the High Court striking out the first cause of action is quashed. The order of the High Court declining the appellants’ review of the decision of Associate Judge Sargisson striking out the third cause of action is quashed.
  2. The first and third causes of action are both reinstated. The finding of the High Court to the effect that New Zealand is the forum non conveniens is set aside. The proceeding is remitted to the High Court for hearing.
  1. Costs in the High Court are to be determined in that Court in the light of this judgment.
  1. The respondents must pay the appellants one set of costs on a standard appeal on a band A basis and usual disbursements. We certify for second counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Stevens J)

Introduction

[1] This appeal concerns whether two causes of action in a proceeding brought by the appellants in the High Court in New Zealand ought to have been struck out. This was the outcome of a strike out application made by the respondents,[1] and a subsequent application for review of that decision to Keane J by both parties.[2]
[2] The first claim on appeal is for default interest of approximately $2.3 million, on the sum of $7.715 million, which was allegedly paid late. This payment was for the third tranche of the consideration due on the sale of the appellants’ business to the respondent companies. The second is for a declaration that the appellants are not liable in respect of the respondents’ substantive warranty claims, and for damages of $511,704, being the amount set-off from the primary payment due to the appellants in relation to those warranty claims.
[3] The appellants (whom we will call Tigerturf) contend the first cause of action (the claim for default interest) and the third cause of action (the declaration sought in respect of the warranties) should not have been struck out.[3] The respondents (together Ten Cate) seek to maintain the striking out of those two claims, contending Tigerturf’s argument on the first is untenable, and upholding the third on grounds other than those relied upon in the High Court.

Background

[4] In March 2009 Ten Cate entered into an acquisition agreement with two of the Tigerturf companies to acquire the shares in Tigerturf’s three operating subsidiaries in New Zealand, the United Kingdom and the United States of America.[4] The acquisition was to occur in three tranches. At the outset, in March 2009, Ten Cate paid for and acquired 49 per cent of the shares in the business. The remaining two tranches were to be transferred by way of two put/call options. The first was exercised in April 2010 (Option I), following which Ten Cate paid for and acquired a further 31 per cent of the shareholdings in the subsidiaries. These claims arise in relation to the acquisition of the third tranche payable under Option II.
[5] The agreement between the parties provided that Option II was exercisable by Tigerturf between 31 March 2011 and 14 April 2011.[5] As with Option I, the purchase price was to be determined through mechanisms under the agreement tied to business performance. In early March 2011, the parties agreed to waive the pricedetermining process under the agreement and simply applied the minimum purchase price of $7,715,000. Tigerturf formally exercised its put option under Option II on 31 March 2010. As the purchase price had already been determined by agreement, the Option II settlement date became 14 April 2011.
[6] In September 2010, Ten Cate had notified Tigerturf of a number of alleged breaches of warranty under the acquisition agreement. The majority of these related to alleged failures by Tigerturf to disclose contingent liabilities relating to potential end-user claims. Tigerturf denied the claims. The agreement between the parties contained a provision allowing Ten Cate to request to set-off half of the alleged warranty amount from the Option II purchase price. If Tigerturf declined that offer, following negotiation, a process of expert determination was set in train to assess the bona fides and chances of reasonable success of those warranty claims.[6] Half of the alleged warranty was to be paid into a stakeholder’s account, pending substantive resolution of the claim.
[7] The day after Tigerturf formally exercised Option II, Ten Cate made a request to Tigerturf for set off of its warranty claim, which was of a quantum exceeding the agreed Option II purchase price (being a proposed NZ$26,659,549). Tigerturf rejected that request for set-off on 12 April 2011.[7]
[8] Ten Cate did not settle the purchase price on 14 April 2011, the date prescribed by the acquisition agreement. Neither did Ten Cate pay the amount into a stakeholder’s account. Given the warranty claim exceeded the purchase price payable, Ten Cate contended nothing was payable for the shares on the settlement date. Tigerturf wrote to Ten Cate on 15 April 2011 noting the default and claiming default interest under the agreement.
[9] The warranty claims were then referred for expert determination to Robert Fisher QC. A formal expert determination agreement was executed on 19 August 2011. Due in part to the size and nature of the claims, the matter was not heard by Mr Fisher until 23 May 2012. The decision was delivered on 25 January 2013, holding that Ten Cate had satisfied the relevant threshold of proof (that the claims were bona fide and had a reasonable chance of success) only in respect of a small number of its claims, totalling $1,023,409.
[10] On 1 March 2013, Ten Cate paid Tigerturf the sum of $7,203,296, following which the remaining 20 per cent of shares in the operating subsidiaries were transferred. The balance of $511,704 (being 50 per cent of the breach of warranty claim in respect of which Mr Fisher had determined had satisfied the threshold test) was paid into a stakeholder’s account on 20 March 2013. That amount remains in the stakeholder’s account.[8]
[11] Parallel to the expert determination process, both parties commenced proceedings in different jurisdictions. On 9 December 2011, Ten Cate commenced proceedings against Tigerturf for breach of warranties under the agreement, in the United States District Court for the Western District of Texas, in Austin, Texas (Texas proceeding). Tigerturf, in turn, commenced the present proceeding on 22 December 2011, originally seeking payment of the Option II purchase price.[9]
[12] Tigerturf has challenged the Texas proceedings on jurisdictional grounds. In February 2013, the District Court dismissed the proceeding on the basis of forum non conveniens. Ten Cate challenged that decision. The United States Court of Appeals for the Fifth Circuit set the District Court decision aside in March 2014 and remitted the case to the District Court for reconsideration on a number of issues. The parties have made submissions on these matters and the District Court has reserved its decision.
[13] Following the original decision by the United States District Court to dismiss the Texas proceeding, and following the outcome of the expert determination process, Tigerturf amended its pleading in the High Court of New Zealand to comprise the following three causes of action:

The High Court proceedings

Initial strike-out claim

[14] Following the amendment to Tigerturf’s pleadings, Ten Cate sought to strike out Tigerturf’s first and third causes of action. In relation to the first cause of action, Ten Cate advanced its strike out both on the basis of issue estoppel and that Tigerturf’s claim was untenable on the face of the agreement.[11] Associate Judge Sargisson dismissed Ten Cate’s application on the first cause of action. She declined to strike the cause of action on the basis of contractual interpretation of the agreement, stating:[12]

Clearly what the parties intended by the terms of clause 30.4 is central to the argument about default but plainly there are wider issues of mixed fact and law that bear on that argument and the questions of correct interpretation of the agreement, not the least being whether there has been waiver or modification of the settlement date provision. Exactly what the parties intended by these provisions ... [will] require careful consideration which is beyond the scope of the cases that each side has presented in this strike out application and is, in any event, inappropriate in the context of strike out.

[15] In respect of the third cause of action, Ten Cate (following its concession that there was jurisdiction to make a declaration), contended it was an abuse of process as it duplicated the (then dismissed) Texas Proceeding; or that no declaration would ever be necessary if the Texas court refused to assume jurisdiction, because Ten Cate would bring its claim in New Zealand.
[16] Associate Judge Sargisson allowed the application in relation to the third cause of action. She found first that there were insufficient facts pleaded to support the cause of action and further that the cause of action was an abuse of process, as it amounted to a duplication of the Texas Proceeding.[13]
[17] Both parties sought review in the High Court.

Judgment on review

[18] On review, Keane J disagreed with the Associate Judge’s conclusion on the question of contractual interpretation in relation to the first cause of action. He considered that this dispute had arisen because the terms of the agreement failed to deal with the contingency that the set-off amount would not be known until after the settlement date. Accordingly, he was satisfied:[14]

... [A] more purposive analysis is required, which may require recourse to context. It may include how the set off procedure was given effect by agreement after the settlement dates, not to establish any estoppel or waiver by Tigerturf, but to throw into relief how workable the liability to pay the prescribed share price on settlement date actually was.

[19] Justice Keane then analysed the relevant contractual provisions and concluded:[15]

The premise on which cl 30.4 was drafted, that the setoff when disputed would be resolved before settlement date, just as it would where the vendor acceded to a request for set off, has proved unworkable.

To make it workable, as Tigerturf wishes, TenCate would come under a liability to pay the full share price on settlement date, if only to avoid a liability for default interest, but that ignores the set off determination procedure and the fact that the sum setoff is held by an independent stakeholder. Whereas, if the settlement date is deferred until after the determination is made, that is consistent with the right of setoff, although it delays the date for payment.

These options must be set against the concrete example this case supplies. The put option required TenCate to settle within 14 days at the nominated share price. The setoff process which TenCate and Tigerturf joined in completing took 21 months. Until it was complete neither knew whether the setoff claimable would exceed the price payable for the shares on settlement date, or would not succeed at all, or would succeed in some part.

I therefore conclude that the only way consistent with the terms of the agreement, and practicality, is to read cl 30.4 subject to cl 30.3.2 so that TenCate’s liability to pay the share price, less any setoff, only crystallises within a reasonable time after the expert’s decision.

I am also satisfied that TenCate’s interpretation is tenable and Tigerturf’s interpretation is not and I see no need for that issue to be deferred until a full trial. There has been no suggestion that there is any context which would lead to any different conclusion. Tigerturf’s first cause of action must be struck out as untenable on a plain reading of the contract.

[20] In relation to the third cause of action, Keane J did not address the sufficiency of the pleadings. However, following the hearing but before delivery of the judgment, the Fifth Circuit delivered its judgment, remitting the proceeding back to the District Court for consideration of the availability of US witnesses in a New Zealand proceeding. Justice Keane considered that this had “resurrected” the Texas Proceeding; he accordingly upheld the Associate Judge’s finding that the Texas Proceedings was an abuse of process, and refused to allow a review of the decision to strike out the third cause of action.[16] He also went further, contending that New Zealand was not the appropriate forum in which to litigate the issue.
[21] Justice Keane subsequently granted leave to Tigerturf to appeal to this Court.[17]

The relevant contractual provisions

[22] The framework and terms of the agreement are of importance to the appeal. The following aspects of the agreement are not in dispute:
[23] The agreement provides for payment of the purchase price in cl 4.3 and cl 4.4 as follows:

4.3 Payments: Subject only to clause 30 or any other express right of setoff conferred by this agreement, the Purchaser shall pay all amounts payable under this agreement in cash or in immediately available funds in such manner as the Vendor may reasonably stipulate:

4.3.1 free of any restriction or condition;

4.3.2 free of and (except to the extent required by law) without any deduction or withholding on account of any tax; and

4.3.3 without any deduction or withholding on account of any other amount, whether by way of setoff, counterclaim or otherwise.

4.4 Default in payment: In the event of default by any party in payment of any amount of money due to the other (including any refund or other amount due under this agreement) the party in default must pay to the party to whom payment is due, interest on the amount unpaid at the Default Interest Rate computed on a daily basis from a date on which such amount should have been paid until the date of actual payment but without prejudice to any other rights or remedies of the non-defaulting party in respect of such default.

[24] Clause 4 applies, mutatis mutandis, to the Option II payment under cl 20.1. Moreover the Option II purchase price is dealt with specifically in cl 18.7 as follows:

Option II Settlement Date: If either the call or put options in this clause are exercised, the Purchaser will pay the purchase price described in clause 18.6 to the Vendor and the Vendor will deliver the Option II Shares to the Purchaser on the Option II Settlement Date.

[25] The warranty claim set-off provision is in cl 30:

30. Warranty Claim Setoff

30.1 Request to setoff: Subject to the provisions of this clause, if a Warranty claim (“Warranty Claim”) is made by the Purchaser prior to the Option II Settlement Date, the Purchaser may make a request in writing to the Vendor that 50% of the amount of the Warranty Claim be deducted from the unpaid Option I Share price or the unpaid Option II Share price (“Request to Setoff”) and paid into a stakeholder’s trust account until such time as the claim is finally settled or determined.

30.2 Vendor’s response: Within 10 working days of receipt of a Request to Setoff, the Vendor will:

30.2.1 advise the Purchaser in writing that it does not accept the Request to Setoff, in which case clause 30.3 shall apply; or

30.2.2 advise the Purchaser in writing that it accepts the Request to Setoff, in which case clause 30.4 shall apply.

30.3 Action if dispute: If the Vendor advises the Purchaser in writing that it does not accept the Request to Setoff (or the Vendor does not respond to such request within the stated time period) then:

30.3.1 the Vendor and the Purchaser shall negotiate in good faith for five (5) working days to try and agree the Request to Setoff, and if it is agreed, clause 30.4 shall then apply; or

30.3.2 if the Warranty Claim is not agreed by negotiation within that time, then an expert shall be appointed to determine whether the Warranty Claim is bona fide and has a reasonable chance of success. The expert shall be a qualified barrister or solicitor experienced in commercial/corporate private practice in Auckland of not less than 7 years. If the parties are unable to agree on the appointment of an expert or one party fails to act, then the expert shall be appointed on the request of either party by the President of the New Zealand Law Society. The expert shall determine all matters of process and procedure, shall determine the costs to be paid by each party in relation to this proceeding and his or her decision shall be final. When the expert has made his or her determination, clause 30.4 shall then apply.

30.4 Action on agreement or determination by expert: If the Purchaser has agreed to the Request to Setoff or the expert appointed pursuant to clause 30.3.2 has ruled that the Warranty Claim is bona fide and has a reasonable chance of success, then 50% of the disputed amount of the Warranty Claim may be deducted by the Purchaser from the unpaid Option I Share price or the unpaid Option II Share price on condition that it is paid directly and immediately on the relevant Settlement Date into the stakeholder’s trust account until such time as the claim is finally settled or determined. In all other circumstances unless expressly provided by this agreement, the Purchaser shall not be permitted to make any deduction or claim any right of setoff from the unpaid Option I Share price or the unpaid Option II Share price.

30.5 Stakeholder: The stakeholder must be a reputable firm of solicitors practising in Auckland. If the parties are unable to agree on the appointment of a stakeholder or one party fails to act, then the stakeholder shall be appointed on the request of either party by the President of the New Zealand Law Society. The stakeholder shall hold the amount paid to it on account of the Warranty Claim in an interest bearing trust account with a registered bank, in the name of the stakeholder.

[26] In the General provisions of the agreement there are governing law and submission clauses as follows:

41. Governing Law

41.1 This agreement will be governed by and construed according to the laws of New Zealand.

41.2 Subject only to the dispute resolution clauses set out above, the parties submit to the non-exclusive jurisdiction of the High Court of New Zealand.

Strike-out principles

[27] Before turning to the substance of the issues before us, we set out briefly the guiding principles applicable to a strike-out application, in relation to which there is no dispute.
[28] The Court will strike out a claim only where it is so clearly untenable that it cannot possibly succeed.[18] A strike-out application proceeds on the assumption the facts as pleaded are true. To the extent that there are disputed questions of fact, a Court dealing with a strike-out will not decide evidential issues. It may strike out a proceeding where there is essentially a factual allegation where it is demonstrably contrary to indisputable fact.[19] Even where the case turns largely on the interpretation of contractual provisions, some evidence may be necessary to inform the context and elaborate on the factual matrix.
[29] Although there was affidavit evidence in the High Court, it is accepted that the affidavit evidence was limited and did not discuss the background to the February 2009 acquisition agreement. Nor was there any elaboration on what comprises the context to the relevant contractual provisions, particularly those regarding payment of the purchase price (cl 4) and warranty claim set-off (cl 30).

The first cause of action

[30] The issue for our determination is whether it is reasonably arguable Tigerturf is owed default interest. That requires an assessment of when Ten Cate became contractually obliged to pay the purchase price for Option II to Tigerturf. Was it on the prescribed settlement date, or at some other point, being a “reasonable” period after the expert determination? As demonstrated in the two decisions below, that is a question of contractual interpretation.

Tigerturf’s position

[31] For Tigerturf, Mr Salmon submits that the basic premise of the first cause of action is that Ten Cate was under a primary obligation under cl 18.7 to pay the full Option II purchase price of $7,715,000 on the Option II settlement date, being 14 April 2011. Ten Cate was required to pay; Tigerturf had a corresponding obligation to deliver the remaining shares.
[32] The provisions of cls 4.3 and 30.4 gave Ten Cate the opportunity to obtain a qualified and temporary right to withhold part of the purchase price by way of the expert determination process. Unless and until a determination was delivered allowing such deduction, Ten Cate’s obligation to pay in full subsisted. Moreover, default interest accrued (under cl 4.4) on any sums not paid in accordance with the primary payment obligation.
[33] The effect of the expert determination process was that from the date the determination was delivered on 25 January 2013, the sum of $511,704 of the Option II purchase price was able to be paid by Ten Cate to an independent stakeholder. It would be held in an interest bearing trust account by the stakeholder pending a resolution of Ten Cate’s substantive warranty claims through the Courts, at which point it would be either retained by Ten Cate (were the claims successful) or returned Ten Cate (were they not), with the balance of the claims being resolved as required.[20]
[34] Tigerturf submits that until the time of payment Ten Cate was in default of its primary obligation to pay the full purchase price to Tigerturf. Logically, it follows that Ten Cate is liable to pay default interest from 14 April 2011 on all sums not paid in accordance with the agreement for the period during which those sums were wrongfully retained. During this period, Ten Cate had the use of money, which should have been available to Tigerturf for its use, and for which Tigerturf contends it must be compensated by interest.[21]
[35] Tigerturf contends that Keane J’s decision on the first cause of action is wrong. It says Keane J’s approach to the issue amounted to him identifying a “gap” in the contractual terms. The parties had not turned their mind to the contingency involved in the present dispute that the expert determination might be delayed beyond settlement. Tigerturf contends no such gap exists: the contractual terms as they stand govern the question. In any event, after examining the leading authorities governing the implication of terms in a contract, it argues there was no basis on which a term could be implied to the effect it was. The interpretation accepted by Keane J was contrary to the express words and overall tenor of the agreement and goes against the contractual framework agreed to by the parties. It contends, therefore, that its own position as to the correct interpretation is not unarguable and the decision to contrary should be overturned.

Ten Cate’s position

[36] Ten Cate submits Tigerturf’s position on the first cause of action is not reasonably arguable. For Ten Cate, Mr Lange submits the interpretation of the agreement which underlies the obligation for immediate payment of 14 April 2011 is so clearly untenable that the issue should not go to trial. Moreover, Mr Lange submits the issue is so clear on the face of the agreement that no evidence of the factual matrix is required.
[37] Ten Cate’s interpretation of the agreement is that the commencement of the expert determination process, initiated by the warranty claims, deferred the Option II settlement date until “a reasonable time” after the delivery of the expert determination. Ten Cate says that until that time, the sum payable for the Option II settlement was unknown and no liability for payment arose. Ten Cate therefore supports the reasoning and decision of the High Court Judge.
[38] Mr Lange elaborates that Tigerturf’s interpretation of the agreement is “untenable” because it would oblige Ten Cate to pay the full Option II price to Tigerturf before the expert determination process had concluded and before the amount of any set-off to be deducted from the unpaid Option II purchase price could be known. It says the validity of its position is demonstrated by the situation that would arise on Tigerturf’s interpretation, namely that if Ten Cate’s warranty claims were found to exceed the purchase price, it would still owe default interest on the purchase price, until the date of expert determination (despite ultimately having no obligation to pay any of the purchase price amount). Therefore, it would require Ten Cate to pay default interest on the full Option II purchase price from 14 April 2011, regardless of the outcome of the ongoing expert determination process.
[39] Mr Lange submits the High Court interpretation represents the actual meaning of the agreement as it would be understood by a reasonable person and accords with business common sense. Ten Cate’s position is that Keane J was not engaged in gap-filling, but rather was construing the agreement in accordance with its natural and ordinary meaning. The necessary construction Ten Cate contends for is, as the Judge said, “to read cl 30.4 subject to cl 30.3.2 so that Ten Cate’s liability to pay the share price, less any setoff, only crystallises within a reasonable time after the expert’s decision”.[22]
[40] Mr Lange submits that, although that interpretation is the outcome of the internal construction of the agreement, the same interpretation could be achieved by implication of an additional term or terms. Mr Lange submits that further contextual evidence is not required to determine the proper interpretation of the agreement if the Court is driven to imply a term or terms into the agreement.
[41] Finally, Mr Lange submits that there was a proper basis on which to conclude that payment of the purchase price for Option II was to be made within a reasonable time after the decision of the expert.

Evaluation

[42] We consider that the appeal on this first cause of action must succeed. We are satisfied the interpretation of the agreement advanced by Tigerturf is arguable. Our conclusion draws on the plain wording of the key provisions of the agreement set out earlier and the internal context from within the four corners of the agreement itself.
[43] The essence of the first cause of action is that the payment obligations under cl 18.7 (for the Option II purchase price specifically) and cl 4.3 (more generally) crystallised on settlement date, namely 14 April 2011. Ten Cate’s submission requires a construction of these provisions leading to non-crystallisation of such payment obligation, on the basis that any determination arising from the expert determination process will automatically delay payment until completion of that process, however long that may take and no matter how unreasonable the warranty claims. Further, pursuant to that delay of the primary payment obligation, the requirement for a determination will also defer any claim for default interest under cl 4.4.
[44] In our view, Ten Cate’s submissions as to the correct interpretation of the agreement are not sufficiently or so obviously persuasive to render Tigerturf’s interpretation unarguable, based as it is solely on the plain wording and internal context.
[45] The submission for Ten Cate means that the plain wording creating the primary obligation for the payment of the purchase price in cl 4.3 must be drastically read down. However, to do that inevitably creates a gap in the contractual regime, as Mr Lange in argument realistically accepted and necessitates additional terms to make the contract operable.
[46] Assuming for present purposes there is such a gap, Mr Lange submits that it is an omission of type where those drafting a complicated instrument have overlooked making express provision for some event because the contingencies which might arise have not been fully thought through.[23] Mr Lange submits a term implied in those circumstances would not be contrary to the express words and general tenor of the agreement. He submits that the implication Ten Cate contends for would be simply to spell out what the agreement reasonably could be understood to mean or what the parties could be taken to have reasonably intended.
[47] We consider that the High Court Judge erred by concluding as he did, that it was necessary effectively to imply a term into the agreement (reading cl 30.4 as being subject to cl 30.3.2) so that Ten Cate’s liability to pay the purchase price (less any set-off) would only crystallise within a reasonable time after the expert determinations, without considering any relevant evidence, and further finding Tigerturf’s argument was untenable.[24]
[48] Given the structure of the agreement and the background (set out in the contract, albeit in a relatively limited form) set out in the preamble, we consider that if Ten Cate seeks to imply a term of this type, any resulting implication could well be informed by evidence of how the payment process was to operate and the nature and scope of any applicable set-off. Clause 4.3.3 refers to the purchaser paying all amounts payable “without any deduction or withholding on account of any other amount, whether by way of setoff, counter claim or otherwise”. It is true that cl 4.3 is itself said to be “subject only to clause 30 or any other express right of setoff conferred by this agreement ...”. However those words suggest it may well be a real issue at trial what the primary meaning of the obligations of the respective parties are, whether the implication is necessary to make the contract operable, and, if so, whether and how that might occur. The true scope of cl 30 will be a critical issue including whether it is in truth a “qualified and temporary right” as Tigerturf contends.
[49] Mr Lange supports the position of Keane J that there is no need for further evidence, citing the judgment of this Court in Yandina Investments Limited v ANZ National Bank Limited.[25] This case was an example of the Court’s ability to address matters of contractual interpretation on the strike-out application without a full trial addressing the factual matrix. We are satisfied the circumstances in Yandina are quite different from the present case. There, extensive affidavit evidence was available in the High Court and the factual background was not seriously disputed. Here, if the Court is to be asked to imply terms to make the contract operable, there will need to be evidence. It is likely to be contested.
[50] Finally, Mr Lange refers to the provisions of cl 19 relating to the determination of EBITDA (earnings before income, tax, depreciation and amortisation). He submits cl 9.7 is an example of the deferral of an option period pending expert determination, where EBITDA has not been determined by acceptance or negotiation. The wording of these provisions supports an intention to defer the payment date under cl 4 where the expert determination has not been completed under cl 30.4. We doubt the validity of this line of reasoning. However for present purposes all we need to say is that any analogy between the provisions of cls 19.7 and 30.4 does not alter our view that the Tigerturf interpretation of the agreement is at least arguable.
[51] Many of the above matters cannot be resolved on a strike-out application. We can only determine whether the interpretation contended for by Tigerturf is arguable or tenable. We are satisfied it is. In any event, even if there is a gap or lacuna in the drafting of the agreement, any implication of terms could, in the present circumstances, only occur after hearing any available evidence at trial. There is insufficient material before us to determine the matter.
[52] For the above reasons, the appellants succeed in respect of the first cause of action.

The third cause of action

[53] The third cause of action is straightforward. As pleaded in the amended statement of claim, Tigerturf seeks a declaration that it is not liable under the warranty claim brought against it by Ten Cate. There is also a claim for damages in the sum of $511,704, being half of the warranty claim determined by Mr Fisher, currently held in the stakeholder account.
[54] As noted earlier, the third cause of action was struck out by the Associate Judge on two grounds:[26]
[55] On review, Keane J did not discuss the first ground. Rather, the Judge addressed the issue as a forum non conveniens.
[56] An immediate difficulty with the finding that the cause of action was an abuse of process was that prior to the review, there had been no plea by Ten Cate of forum non conveniens as a ground for striking out the third cause of action. No evidence relevant to the issue was adduced in the High Court. No party made submissions on the issue. The judgment itself contained no discussion of the relevant principles nor any clear discussion of the reasons for the Judge’s conclusion.
[57] Tigerturf was later granted leave to appeal the High Court judgment.In this Court, Ten Cate does not seek to uphold the High Court judgment on the basis of forum non conveniens. Mr Lange accepts there was no plea of forum non conveniens before the High Court. He also accepts that, if and when such a plea is made, it would need to be considered afresh and in the light of any relevant evidence adduced in relation to it.
[58] In view of this proper stance by Mr Lange we set aside the finding of forum non conveniens. It should not have been made and the finding in the High Court cannot stand.
[59] Ten Cate also did not rely on the Associate Judge’s decision that there were insufficient facts pleaded to support the third cause of action. Ten Cate accepts that the decision was based on a misunderstanding of the cause of action which has subsequently been clarified. What the third cause of action seeks to achieve is a final determination of Ten Cate’s warranty claims, the consequence of which would be that Tigerturf thereby seeks the release to it of the sum of $511,704 held in the stakeholder’s account.
[60] In this Court, Ten Cate submits the third cause of action is an abuse of process. Mr Lange contends Tigerturf’s amendment to include the third cause of action was an “opportunistic attempt to take advantage of what proved to be only a temporary state of affairs for the Texas proceeding”. Mr Lange submits that the fact that the Texas proceeding now remains on foot renders the third cause of action (purporting to raise the warranty claims in New Zealand) an abuse of process. Mr Lange submits that Tigerturf’s response that duplication of proceedings in separate jurisdictions is not an abuse is no answer.
[61] It is therefore necessary for us to determine whether the third cause of action is an abuse of process or redundant, pending the resolution of any future plea regarding forum non conveniens.

Evaluation

[62] We are not persuaded that it is an abuse of process to leave the third cause of action on foot at this stage. There appears to be considerable water to flow under the bridge with the Texas proceeding. The current application before the District Court is reserved and remains to be finally resolved. Thereafter, we were informed by counsel that there are two further jurisdictional arguments to be dealt with.
[63] We agree with Tigerturf that the mere existence of the Texas proceeding does not render the third cause of action an abuse. While a duplication of proceedings within a jurisdiction is prima facie an abuse of process, the same does not apply to any duplication of proceedings in separate jurisdictions.[27] As Lord Goff said in Airbus Industrie GIE v Patel:[28]

I must stress again that, as between common law jurisdictions, there is no system as such, comparable to that enshrined in the Brussels Convention. The basic principle is that each jurisdiction is independent. There is therefore, as I have said, no embargo on concurrent proceedings in the same matter in more than one jurisdiction. There are simply these two weapons, a stay (or dismissal) of proceedings and an anti-suit injunction.

[64] Further, we accept the submission for Tigerturf that the timing of commencement of proceedings in different jurisdictions, the stage of the respective proceedings in the two jurisdictions and factors relating to the conduct of the prospective proceedings (such as evidence, witnesses, exhibits and documentation) are all relevant for the purposes of any forum non conveniens analysis. However such factors are not necessarily determinative.[29] Of course, once the position in Texas is clarified, it may be open to Ten Cate to apply to stay the proceedings, if the appropriate grounds can be made out.
[65] We consider it would be premature to strike out the third cause of action ahead of any detailed forum non conveniens assessment. If such a plea is raised in the High Court then it may well be able to be resolved, depending on the state of play in the respective jurisdictions by a stay in one or other of the proceedings. If not, the point will need to be resolved by the High Court. In any event, it is not something we can determine or comment upon on the material before us.
[66] For the above reasons the third cause of action ought to remain on foot and should not be struck out.

Result

[67] The appeal is allowed.
[68] The order of the High Court striking out the first cause of action is quashed.
[69] The order of the High Court declining the appellants’ review of the decision of Associate Judge Sargisson striking out the third cause of action is quashed.
[70] The first and third causes of action are both reinstated.
[71] The proceeding is remitted to the High Court for hearing.
[72] Costs in the High Court are to be determined in that Court in the light of this judgment.
[73] There is no dispute as to costs. The respondents must pay the appellants one set of costs on a standard appeal on a band A basis and usual disbursements. We certify for second counsel.







Solicitors:
LeeSalmonLong, Auckland for Appellants
Simpson Grierson, Auckland for Respondents

[1] TTAH Limited v Koninklijke Ten Cate NV [2013] NZHC 3029 [Associate Judge’s decision].

[2] TTAH Limited v Koninklijke [Ten Cate] NV [2014] NZHC 2032 [High Court review decision].

[3] The second cause of action in the ultimate proceeding is in relation to certain consultancy fees owing from the respondents. This is not relevant to the present appeal and remains on foot.

[4] The underlying business of Tigerturf is an artificial turf manufacturing and distribution business.

[5] According to the definition of Option II Shares and Option II Settlement Date in cl 1.1 and cl 18 of the agreement.

[6] See cl 30.1 of the agreement, set out below at [25].

[7] As was permitted under cl 30.2.

[8] On 14 March 2013, Mr Fisher awarded Tigerturf costs of $162,841.84 in respect of the expert determination. Ten Cate paid that amount on 14 June 2013.

[9] The strike-out claims arise out of an amended statement of claim.

[10] Tigerturf has since particularised this, confirming it seeks default interest on the entire purchase price from 14 April 2011 to 25 January 2013 (the date of the expert determination decision) and then default interest on the purchase price, less half the quantum of the warranty claim determined by Mr Fisher, for the period of 25 January 2013 until payment on 1 March 2013.

[11] The issue estoppel argument related to a previous judgment of Associate Judge Bell, on 18 June 2012 in respect of the agreement. This ground is no longer pursued.

[12] Associate Judge’s decision, above n 1, at [44].

[13] At [51]–[52].

[14] High Court review decision, above n 2, at [33].

[15] At [39]–[43].

[16] High Court review decision, above n 2, at [47].

[17] TTAH Ltd v Koninklijke [Ten Cate] NV [2014] NZHC 2461.

[18] Attorney-General v Prince [1998] 1 NZLR 262 (CA) at 267; and Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33] per Elias CJ and Anderson J.

[19] Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566; and Pharmacy Care Systems Limited v Attorney-General [2001] NZCA 351; (2001) 15 PRNZ 465 (CA) at 472.

[20] The retention of the warranty claim amount in the stakeholder’s account until substantive resolution of the claim is provided for in cls 30.6 and 30.7.

[21] Relying here on Worldwide NZ LLC v New Zealand Venue and Event Management Ltd [2014] NZSC 108, [2015] 1 NZLR 1 at [23], acknowledging that this case deals with pre-judgment interest, but contending the principle is instructive.

[22] High Court review decision, above n 2, at [42].

[23] Echoing the words of Lord Hoffman in Attorney-General of Belize v Belize Telecom Limited [2009] UKPC 10, [2009] 1 WLR 1988 at [25].

[24] We accept that Keane J did not expressly imply a term into the contract. We do, however, accept Tigerturf’s position that it is the inevitable consequence of Keane J’s reasoning that extra wording is implied in the contract.

[25] Yandina Investments Limited v ANZ National Bank Limited [2013] NZCA 569; High Court review decision, above n 2, at [18]–[19].

[26] Associate Judge’s decision, above n 1, at [51]; see above at [15]–[16].

[27] Yeoman v Public Trust Limited [2011] NZHC 1869; [2011] NZFLR 753 at [73]–[78].

[28] Airbus Industrie GIE v Patel [1998] UKHL 12; [1999] 1 AC 119 at 133.

[29] Laws of New Zealand Conflict of Laws: Jurisdiction and foreign judgments (online ed) at [30] and McConnell Dowell Constructors Ltd v Lloyd’s Syndicate 396 [1987] NZCA 144; [1988] 2 NZLR 257 (CA) at 273–276, where the Court of Appeal set aside a stay of a New Zealand proceeding on the basis that New Zealand was the appropriate forum. The competing proceeding in England had been commenced 10 days earlier.

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