SEETELLIGENCE MALTA LIMITED AND ANOR V COMPUDIGM INTERNATIONAL LIMITED HC WN CIV-2007-485-002773 [2009] NZHC 1273 (16 September 2009)

IN THE HIGH COURT OF NEW ZEALAND
WELLINGTON REGISTRY
                                                               CIV-2007-485-002773



               BETWEEN                     seeTELLIGENCE MALTA LIMITED
                                           First Plaintiff

               AND                         seeTELLIGENCE INTERNATIONAL BV
                                           Second Plaintiff

               AND                         COMPUDIGM INTERNATIONAL
                                           LIMITED
         
                                 Defendant


Hearing:       16 September 2009

Counsel:       O J Meech and D D Watterson for plaintiffs
               No appearance for defendant

Judgment:      16 September 2009



                RESERVED JUDGMENT OF SIMON FRANCE
J



[1]    The plaintiffs and the defendant were in a contractual relationship concerning
the distribution of a software product
owned by the defendant. The agreement gave
the plaintiffs exclusive distribution rights in Europe.


[2]    On 21 August 2007, legal
counsel for the defendant wrote giving notice of
alleged breaches of clauses 8.1, 8.2 and 8.3 of the agreement. The letter also referred
to a clause in the contract that required a named person to be CEO or, failing that,
agreement from the defendant as to his replacement.
If that did not happen within
six months the Distribution Agreement became no longer exclusive.


[3]    The plaintiffs responded.
     They denied breaches, but also relied on the
contractual period of 30 days to remedy any breach. The primary breach was the

SEETELLIGENCE MALTA LIMITED AND ANOR V COMPUDIGM INTERNATIONAL LIMITED HC WN
CIV-2007-485-002773 16 September 2009

alleged failure
to provide monthly reports. These were supplied within 30 days.
Concerning the issue about the Chief Executive, it is sufficient
to note that the
named person had left his position as CEO of the first plaintiff to become CEO of
the defendant.     He had also
been the person responsible for reporting to the
defendant.


[4]    On 21 September 2007, the defendant wrote saying it did not
consider the
steps taken by the plaintiffs were satisfactory to remedy the breaches and the
contract was terminated.


[5]    The
subplot as alleged by the plaintiffs is that the defendant was seeking to
sell worldwide distribution rights to the software in relation
to its use in the gaming
industry. It had assured the plaintiffs any such deal would either exclude Europe or
they would negotiate
an out with the plaintiffs.


[6]    Subsequent to the purported termination, the worldwide rights were sold.
Five months later the
defendant went into receivership, and three months further on
liquidators were appointed.


These proceedings


[7]    The plaintiffs
had commenced litigation prior to receivership and liquidators
being appointed. The liquidators have agreed to the litigation proceeding
on certain
conditions. The effect is that this proceeding is by way of formal proof by affidavit.
It is unopposed.     The plaintiffs
seek only a declaration that the contract was
unlawfully terminated. No damages are sought, nor costs.


[8]    The evidence filed
includes an affidavit from the former CEO of the
defendant.   He was involved in the implementation of the contract until his
resignation
in April 2007. There is also an affidavit from the former Chief Operating
Officer and Financial Officer of the defendant.

[9] 
   From the plaintiffs' side, affidavits are filed by a former commercial and
strategic adviser to the plaintiffs and by the former
Chief Operating Officer who
then, in June 2007, became the Chief Executive of the first plaintiff.


[10]    That unopposed evidence
establishes that there was no breach of the contract
terms as alleged by the defendant. One could argue whether the form of reporting
met the terms of the wording of the contract, but the evidence establishes the
information contemplated by the relevant contractual
term was provided.                 Any
breach would be "technical" but I prefer the view, based on what is before the Court,
that there was no
breach.


Conclusion


[11]    I declare that the defendant's termination of the Distribution Agreement was
not valid.




     
                                                 _____________________________
                                                 
                      Simon France J




Solicitors:
Minter Ellison Rudd Watts, PO Box 2793, Wellington ([e-mail])