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Intellihub Limited v Genesis Energy Limited [2020] NZCA 344 (13 August 2020)

Last Updated: 18 August 2020

IN THE COURT OF APPEAL OF NEW ZEALAND

I TE KŌTI PĪRA O AOTEAROA
CA285/2020
[2020] NZCA 344



BETWEEN

INTELLIHUB LIMITED
Appellant


AND

GENESIS ENERGY LIMITED
First Respondent

ADVANCED METERING SERVICES LIMITED TRADING AS VECTOR AMS
Second Respondent

Hearing:

27 July 2020

Court:

Collins, Peters and Whata JJ

Counsel:

J D McBride and A W McDonald for Appellant
S J P Ladd with B A Keown and D M Scholes for First Respondent
S M Hunter QC with I Rosic and S T Coupe for Second Respondent

Judgment:

13 August 2020 at 9.00 am


JUDGMENT OF THE COURT

  1. The applications for leave to adduce further evidence are granted.
  2. The appeal is dismissed.
  1. The appellant must pay the first and second respondents costs for a standard appeal on a band A basis and usual disbursements. We certify for two counsel.

____________________________________________________________________

REASONS OF THE COURT

(Given by Collins J)

Introduction

(a) intentionally causing harm to Intellihub by unlawful means (unlawful means cause of action); and

(b) in breach of an implied term of its contract with Intellihub whereby, according to Intellihub, Genesis is required to give three to five years’ notice to displace Intellihub’s meters (breach of contract cause of action).

No cause of action is pleaded against Vector.

(a) there was no serious question to be tried in relation to the unlawful means cause of action;

(b) there was a serious question to be tried in relation to the breach of contract cause of action;

(c) the balance of convenience weighed against issuing an interim injunction; and

(d) the overall justice of the case also weighed against issuing an interim injunction.

(a) Did the High Court apply the correct legal test when determining there was no serious question to be tried in relation to the unlawful means cause of action?

(b) Did the High Court err when concluding there was no serious question to be tried in relation to the unlawful means cause of action?

(c) Did the High Court err when concluding the balance of convenience weighed against granting an interim injunction?

(d) Did the High Court err when concluding the overall justice also weighed against the granting of an interim injunction?

Background

(a) ensuring competition in the electricity industry;

(b) maintaining a reliable supply of electricity to consumers; and

(c) ensuring the efficient operation of the electricity industry in New Zealand.

(a) its share of the metering market and therefore its revenue; and

(b) its mesh information system and therefore the efficacy of its other meters.

Applications to adduce further evidence

The threshold for an interim injunction

(a) that all that was required of Intellihub was to demonstrate that its claim was “not frivolous or vexatious”; and

(b) that the Judge erred when she said “it is a matter of common sense that if there is no tenable resolution of the issues of fact and law on which the plaintiff may be able to succeed at trial (the Klissers test) there cannot be a serious question to be tried”.[4]

“Not frivolous or vexatious”

The court no doubt must be satisfied that the claim is not frivolous or vexatious; in other words, that there is a serious question to be tried.

The threshold question in each case must be whether the plaintiff has established that there is a serious question to be tried. In order to determine that question the Court must consider – first, what each of the parties claims the facts to be; second, what are the issues between the parties on these facts; third, what is the law applicable to those issues, and, fourth, is there a tenable resolution of the issues of fact and law on which the plaintiff may be able to succeed at the trial: see Shotover Gorge Jet Boats Ltd v Marine Enterprises Ltd [1984] 2 NZLR 154, 157. In American Cyanamid Lord Diplock said at pp 406-407:

“... where the legal rights of the parties depend upon facts that are in dispute between them, the evidence available to the court at the hearing of the application for an interlocutory injunction is incomplete. ...

“It is no part of the court’s function at this stage of the litigation to try to resolve conflicts of evidence on affidavit as to facts on which the claims of either party may ultimately depend nor to decide difficult questions of law which call for detailed argument and mature considerations.”

(a) whether there was a serious question to be tried;

(b) the balance of convenience; and

(c) where the overall justice lies.

A tenable resolution of the issues

Was there a serious question to be tried in relation to the first cause of action?

The common law has traditionally been reluctant to become involved in devising rules of fair competition ... It has largely left such rules to be laid down by Parliament. In my opinion, the courts should be similarly cautious in extending a tort which was designed only to enforce basic standards of civilised behaviour in economic competition, between traders or between employers and labour. ...

(a) “wrongful interference with the actions of a third party in which the claimant has an economic interest”; and

(b) “an intention thereby to cause loss to the claimant”.

(a) Genesis intentionally committed acts which interfered with the freedom of Vector to deal with Intellihub.[19]

(b) Those acts were unlawful as against Vector and provide a cause of action by Vector against Genesis, save for the qualification that it is not necessary for Vector to have actually suffered loss.[20]

(c) Intellihub must have an “economic interest” in Vector.[21]

(d) Genesis must have intended to cause loss to Intellihub.[22]

(e) Intellihub must have suffered loss.

(a) Genesis has unlawfully instructed Vector to decommission Intellihub’s meters. The unlawfulness is said to arise from Genesis’ failure to act in accordance with an arrangement under the Code.

(b) Genesis is intentionally harming Intellihub via Vector.

(c) If Intellihub meters are decommissioned it will lose any possibility of entering into an arrangement with Vector to enable Vector to use Intellihub meters.

(a) Genesis had attempted to interfere with Vector and that Genesis’ alleged unlawful acts restrict the ability of Vector to deal with Intellihub if it wished to do so.

(b) Intellihub has an “economic interest” in Vector.

(a) The law in relation to unlawful means is still evolving. It was therefore wrong for the Judge to attempt to define the untested perimeters of the tort in the context of an application for an interim injunction.

(b) Properly construed, the pleadings and evidence relied upon by Intellihub demonstrate the existence of a serious question to be tried in relation to the unlawful means cause of action.

Did the High Court err in its approach to the unlawful means cause of action?

(a) whether what constitutes an unlawful act has been cast too narrowly in Lord Hoffmann’s formulation;[25]

(b) whether it is necessary to show the defendant was “targeting” the applicants;

(c) what an “economic interest in the third party” actually means; and

(d) whether it is necessary to confine the tort to cases in which the defendant has interfered with the freedom of the third party to deal with the plaintiff.[26]

Do the facts support Intellihub’s unlawful means cause of action?

(a) Genesis and Intellihub can be classified as competitors; and

(b) Genesis’ alleged unlawful conduct has the effect of preventing Vector from dealing with Intellihub.

(a) Genesis has attempted to interfere with Vector so as to restrict the ability of Vector to deal with Intellihub; and

(b) Intellihub has some form of economic interest in Vector.

(a) there is nothing to suggest that Genesis and Intellihub compete in the same market; and

(b) it is difficult to understand why Genesis would wish to harm Intellihub when it is in Genesis’ interests to have competition between Intellihub and Vector in relation to the supply of meters.

Balance of convenience

(a) not giving precedence to preserving the status quo;

(b) misunderstanding the basis upon which Intellihub was arguing that damages would fail to provide an adequate remedy;

(c) overestimating the impact of an interim injunction upon Genesis and Vector;

(d) failing to give proper consideration to the intangible and reputational harm that Intellihub would suffer if its meters are decommissioned; and

(e) effectively endorsing Genesis’ breach of contract.

Status quo

Assessment of damages as an adequate remedy

Intellihub does not allege that Genesis cannot displace the MTRX metering installations. Rather, it says it is entitled to more time before that occurs, or compensation in the absence of reasonable notice.

Impact of an injunction on Genesis and Vector

Potential impact on Intellihub’s business

Endorsing a breach of contract

Overall justice

Result


Solicitors:
Lee Salmon Long, Auckland for Appellant
Bell Gully, Auckland for First Respondent
Gilbert Walker, Auckland for Second Respondent


[1] Intellihub Ltd v Genesis Energy Ltd [2020] NZHC 807 [High Court judgment].

[2] Electricity Industry Act 2010, s 32.

[3] Then named Mighty River Power Ltd.

[4] High Court judgment, above n 1, at [15].

[5] American Cyanamid Co v Ethicon Ltd [1975] UKHL 1; [1975] AC 396 (HL).

[6] At 407.

[7] Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] NZCA 70; [1985] 2 NZLR 129 (HC) [Klissers HC judgment] at 133.

[8] Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] NZCA 70; [1985] 2 NZLR 129 (CA) at 142.

[9] Klissers HC judgment, above n 7, at 133; and Henry Roach (Petroleum) Pty Ltd v Credit House (Vic) Pty Ltd [1976] VicRp 26; [1976] VR 309.

[10] Sutton v The House of Running Ltd [1979] 2 NZLR 750 (SC).

[11] Shotover Gorge Jet Boats Ltd v Marine Enterprises Ltd [1984] 2 NZLR 154 (HC).

[12] Mogul Steamship Co Ltd v McGregor, Gow & Co [1891] UKLawRpAC 50; [1892] AC 25 (HL).

[13] Allen v Flood [1897] UKLawRpAC 56; [1898] AC 1 (HL).

[14] OBG Ltd v Allan [2007] UKHL 21, [2008] AC 1.

[15] Diver v Loktronic Industries Ltd [2012] NZCA 131, [2012] 2 NZLR 388 at [100]–[103]; and Greenbaum v Southern Cross Hospitals Ltd [2019] NZCA 438 at [21].

[16] OBG Ltd v Allan, above n 14, at [56].

[17] At [47].

[18] At [306].

[19] At [51].

[20] At [49] and [51].

[21] At [47].

[22] At [62].

[23] High Court judgment, above n 1, at [50].

[24] Citing Hazel Carty “The Economic Torts in the 21st Century” (2008) 124 LQR 641 at 641.

[25] Referring to Lord Nicholls in OBG Ltd v Allan, above n 14, at [150].

[26] Citing AI Enterprises Ltd v Bram Enterprises Ltd 2014 SCC 12, [2014] 1 SCR 177 at [87].

[27] At [29]–[35].

[28] At [87].

[29] NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90 at [13].

[30] At [12].

[31] High Court judgment, above n 1, at [88].

[32] High Court judgment, above n 1, at [76] and [88].


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