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High Court of New Zealand Decisions |
Last Updated: 9 June 2015
IN THE HIGH COURT OF NEW ZEALAND NELSON REGISTRY
CIV-2014-442-000079 [2015] NZHC 1215
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BETWEEN
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NELSON HONEY & MARKETING (NZ)
LIMITED Plaintiff
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AND
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WILLIAM JACKS AND COMPANY (SINGAPORE) PRIVATE LIMITED Defendant
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Hearing:
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14 May 2015
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Appearances:
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P J Bellamy for Plaintiff
O D Peers for Defendant
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Judgment:
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3 June 2015
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JUDGMENT OF ASSOCIATE JUDGE MATTHEWS
Introduction
[1] Nelson Honey & Marketing (NZ) Limited (Nelson Honey) is a
company registered in New Zealand, which carries on business
in Nelson as a
supplier of honey. William Jacks and Company (Singapore) Private Limited
(William Jacks) is a company incorporated
in Singapore which, since November
2010, has purchased honey from Nelson Honey.
[2] In this proceeding Nelson Honey says that after receiving a purchase order from William Jacks, it despatched two consignments of honey to a warehouse in Auckland, for which William Jacks has not paid. Both consignments were exported from New Zealand by William Jacks to Shanghai, and both arrived in Shanghai. William Jacks says that there are faults with the honey, some of which is said to have froth on the surface and some discolouration, and it also says that labelling required
by the terms of the contract was missing from jars contained
in the second
NELSON HONEY & MARKETING (NZ) LTD v WILLIAM JACKS & COMPANY (SINGAPORE) PRIVATE LTD [2015] NZHC 1215 [3 June 2015]
consignment. On 30 October 2013 William Jacks rejected the goods. Nelson
Honey does not accept that rejection and sues for the cost
of the
consignments.
[3] This proceeding was served on William Jacks in Singapore in
November
2014 without leave of the Court. In January 2015, William Jacks filed an
appearance under protest to jurisdiction under r 5.49 of
the High Court Rules.
It then filed an application for dismissal of the proceeding or, in the
alternative, a stay of the proceeding,
under r 5.49(3). Nelson Honey opposes
this application.
Relevant High Court Rules
[4] This application invokes rr 6.27-6.29 of the High Court
Rules.1 Rule 6.27 sets out the circumstances in which originating
documents may be served out of New Zealand, without leave of the Court.
The
circumstances of relevance to the present proceeding are set out in subparagraph
(b):
(2) An originating document may be served out of New Zealand without leave in
the following cases:
...
(b) when a contract sought to be enforced or rescinded, dissolved,
annulled, cancelled, otherwise affected or interpreted in any
proceeding, or for
the breach of which damages or other relief is demanded in the proceeding
–
(i) was made or entered into in New Zealand; or
(ii) was made by or through an agent trading or residing within New
Zealand; or
(iii) was to be wholly or in part performed in New Zealand;
or
...
(iv) was by its terms or by implication to be governed by
New Zealand law;
[5] Rule 6.28 provides a mechanism by which parties may seek leave to serve an originating document outside New Zealand, where not expressly permitted by r 6.27.
Rule 6.28(5) provides that:
1 The combined effect of these rules was considered by the Court of Appeal in Wing Hung Printing Co Ltd v Satio Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 [Wing Hung] at [20]-[49].
(5) The court may grant an application for leave if the applicant
establishes that -
(a) The claim has a real and substantial connection with New
Zealand; and
(b) there is a serious issue to be tried on the merits; and
(c) New Zealand is the appropriate forum for the trial; and
(d) any other relevant circumstances support an assumption of
jurisdiction.
[6] Rule 6.29(1) provides the Court with a discretion whether
to assume jurisdiction, where service has been effected
out of New Zealand
without leave, and the Court’s jurisdiction is protested under r 5.49.
Where this arises, as here, the
Court must dismiss the proceeding unless the
party effecting service establishes:
(a) that there is –
(i) a good arguable case that the claim falls wholly within 1 or more of the
paragraphs of rule 6.27; and
(ii) the court should assume jurisdiction by reason of the matters
set out in rule 6.28(5)(b) to (d); or
(b) that, had the party applied for leave under rule 6.28, –
(i) leave would have been granted; and
(ii) it is in the interests of justice that the failure to apply for leave
should be excused.
[7] Rule 6.29(2) applies where service has been effected under r 6.28,
that is with leave, and the Court’s jurisdiction
is protested under r 5.49
on the basis that leave was wrongly granted under r 6.28. In this circumstance
the Court must dismiss
the proceeding unless the party effecting service
establishes that in the light of the evidence now before the Court, leave was
correctly
granted.
[8] This proceeding was served without leave, under r 6.27. Therefore, r 6.29(1) applies, not r 6.29(2). Accordingly, the Court must dismiss this proceeding unless Nelson Honey establishes one of two positions. I set these positions out to avoid repetitive references to the interlocking subparagraphs of rr 6.27, 6.28 and 6.29.
[9] Position 1 (r 6.29(1)(a)) –
(a) that there is a good arguable case that the claim falls wholly within one
or more of the paragraphs of r 6.27;2 and
(b) the Court should assume jurisdiction by reason of the following
matters:3
• there is a serious issue to be tried on the merits;4
and
• New Zealand is the appropriate forum for the trial;5
and
Or
[10] Position 2 (r 6.29(1)(b)) –
(a) had Nelson Honey applied for leave under r 6.28, leave would have been
granted, which requires Nelson Honey to establish that:7
• the claim has a real and substantial connection with
New
Zealand;8 and
• there is a serious issue to be tried on the merits;9
and
• New Zealand is the appropriate forum for the trial;10
and
2 High Court Rules, r 6.29(1)(a)(i).
3 Rule 6.29(1)(a)(ii).
4 Rule 6.28(5)(b).
5 Rule 6.28(5)(c).
6 Rule 6.28(5)(d).
7 Rule 6.29(1)(b)(i).
8 Rule 6.28(5)(a).
9 Rule 6.28(5)(b).
10 Rule 6.28(5)(c).
11 Rule 6.28(5)(d).
(b) It is in the interests of justice that the failure to apply for leave
should be excused.12
[11] It will be observed that two of the factors which must be
established by Nelson Honey under the first of these positions
are a good
arguable case, and a serious issue to be tried. In Wing Hung the Court
of Appeal commented:13
• To find a serious issue to be tried on the merits the Court must
be satisfied there is a serious legal issue to be tried
and that there is a
sufficiently strong factual basis to support the legal right asserted.
• In approaching these questions the Court will not
determine credibility issues where there are conflicting affidavits
other than
in exceptional cases where one version can be demonstrated by objective evidence
to be untenable.
• The serious issue standard is less stringent than the good
arguable case criterion.
• In practice it may be difficult to draw a distinction between the
two standards.
• The good arguable case test does not require a plaintiff to
establish a prima facie case, recognising that disputed questions
of fact cannot
be readily resolved on affidavit evidence.
• On the other hand there must be a sufficiently plausible foundation established that the claim falls within one or more of the headings
in r 6.7(2). The Court should not engage in
speculation.
12 Rule 6.29(1)(b)(ii).
13 Wing Hung, above n 1, at [37]-[42] (citations omitted). In its judgment, the Court of Appeal discusses these concepts in greater detail, with references to the relevant authorities provided and discussed.
Has Nelson Honey established Position 1?
First issue: Is there a good arguable case that the claim falls wholly
within one or more of the paragraphs of r 6.27?
[12] Nelson Honey relies on r 6.27(2)(b)(i) and (iii). It is convenient
to deal first with paragraph (iii): was the contract
to be wholly or in part
performed in New Zealand?
[13] The contract was for the supply of honey. The evidence establishes
the following propositions:
(a) The honey sold by Nelson Honey was grown, processed, placed in jars,
labelled and packed for delivery in New Zealand.
(b) The contract required delivery of the packed goods by Nelson Honey, at
its own expense, to the warehouse of a shipping agent
in New Zealand. The honey
passed into the possession of William Jacks on delivery to that warehouse.
Therefore, all delivery required
by the contract took place in New
Zealand.
(c) Risk in the honey passed to William Jacks on delivery to the
warehouse in New Zealand.
(d) Payment for the honey was to be made to the bank account of
Nelson
Honey in New Zealand.
(e) The events which are said to give rise to William Jacks’
cancellation of the contract, that is the delivery of
faulty product
and incorrect labelling, occurred, if they occurred at all, in New
Zealand.
[14] Mr Peers accepts that the honey was produced in New Zealand and shipped from this country, but says that in all other material respects the contract was performed in Singapore. He says that the honey bore William Jacks’ labels, business meetings were held in Singapore, and payment was made from Singapore. He says Nelson Honey was well aware that the honey was for sale in the Chinese and Asian markets and not in New Zealand.
[15] I do not accept that apart from the honey being produced in New
Zealand and shipped from this country, all material aspects
of the contract were
performed in Singapore. Certainly, the honey bore labels specifically designed
for William Jacks, but labelling
occurred in New Zealand. There were some
business meetings in Singapore, though they occurred some years ago. Payment
was to
be made from Singapore, but it was received in New Zealand. Further,
William Jacks did not send the honey from Auckland to Singapore;
it sent it to
Shanghai.
[16] I am satisfied that this proceeding was properly served out of New
Zealand without leave pursuant to r 6.27(2)(b)(iii), as
it was certainly in part
performed in this country, if not wholly so.
[17] It is not, therefore, necessary to determine, for the
purpose of deciding whether leave to serve the proceeding
out of New Zealand
was required under r 6.27, whether the contract was made or entered into
in New Zealand pursuant to
r 6.27(2)(b)(i).
Second issue: should the Court assume jurisdiction?
[18] As I have set out above at [9](b), before the Court will assume
jurisdiction
Nelson Honey must establish:
(a) there is a serious issue to be tried on the merits, and
(b) New Zealand is the appropriate forum for the trial, and
(c) any other relevant circumstances which support an assumption of
jurisdiction.
[19] The first point requiring consideration is whether there is a serious issue to be tried on the merits. This issue poses no difficulty; indeed William Jacks did not submit otherwise. Nelson Honey supplied honey pursuant to a contract,14 it was delivered in accordance with Nelson Honey’s contractual obligations, and it has not
been paid for. Allegations which will evidently be raised by
way of defence,
concerning the quality of the honey
and the labelling of honey jars, also appear to raise serious questions for
trial.15
[20] The next point to be considered is whether New Zealand is the appropriate forum for the trial. In Wing Hung, the Court of Appeal said that in considering this issue it will be guided by existing authority, including the matters canvassed by the House of Lords in Spiliada Maritime Corporation v Cansulex Ltd (“The Spiliada”).16
The Court of Appeal went on to say:17
[45] In considering whether another forum is more appropriate, the Court
looks for the forum with which the proceeding has the
most real and substantial
connection. Relevant factors include issues of convenience or expense,
availability of witnesses, the
law governing the relevant transaction and the
places where the parties resided or carried on business.
[46] We accept that other relevant considerations also bear on the issue of
appropriate forum. These include the cautious approach
already discussed to the
subjection of foreigners to the jurisdiction of a New Zealand court; whether
other related proceedings
are pending elsewhere; whether the New Zealand court
would provide the most effective relief or whether a foreign court is in a
better
position to do so; whether the overseas defendants will suffer an unfair
disadvantage if a New Zealand court assumes jurisdiction;
and any choice of
jurisdiction previously agreed by the parties.
[21] I will discuss the criteria I find relevant in this case
thus:
• whether there was an agreed choice of jurisdiction;
• convenience, expense and availability of witness; and
• where the contract was entered into.
Agreed choice of jurisdiction
[22] I deal first with an issue which assumed considerable prominence in argument, that is the submission by William Jacks that the honey was supplied under an exclusive distribution agreement entered by the two companies in late 2010 or
early 2011. It is common ground that a proposed exclusive distribution
agreement
15 These issues are presently raised in a claim by William Jacks against Nelson Honey in the High
Court in Singapore.
16 Wing Hung, above n 1, at [43], citing Spiliada Maritime Corporation v Cansulex Ltd [The
Spiliada] [1987] AC 460 (HL).
17 At [45] and [46] (citations omitted).
passed through several drafts at around that time, and that the following
clause appears in the last two of these drafts:
5.2 This agreement shall be governed by and construed in accordance with
the Laws of the [sic] Singapore and Recipient consents
to the exclusive
jurisdiction of Singapore courts for any dispute arising out of the
agreement.
[23] These draft agreements also contain the following provisions of
relevance:
(a) An operative clause in these terms:
Upon signing of this Agreement, the Supplier appoints WILLIAM JACKS & CO
(SINGAPORE) PTE. LTD as its exclusive distributor for
the territory of
Singapore, Malaysia & Brunei for all Nelson Honey range of products
(hereinafter referred to
as the “PRODUCTS’).
(b) Two further relevant provisions, providing:
1.1 - This agreement shall come into force and remain binding from the date of first order, December 1st 2010 until December 1st
2012 and shall be subject to annual review thereafter. Upon mutual acceptance, this agreement shall be renewed unless
terminated as provided for hereunder.
...
5.3 – This agreement may be modified only by a further writing that is
duly executed by both parties.
(c) One other draft also stipulated that “Providing sales
targets and payments are met, this agreement is valid
to September
2012”.
[24] Evidence in support of this application was initially given, for
William Jacks, by Low Kean Jin, the regional director of
William Jacks. Mr Low
deposes that he has direct knowledge of the matters relevant to his
company’s application for dismissal
or stay. He affirmed his initial
affidavit on 12 March 2015. On 30 April Mr Low affirmed a second affidavit. By
that point Mr
Low had made contact with Ms Guan Yoke Ching who no longer works
for William Jacks, but did work for the company in 2010. Ms Ching
dealt with
Mr Bone, then the general manager of Nelson Honey.
[25] Mr Low annexed a number of documents including the three draft versions of a distribution agreement to which I have referred, none of which are signed, minutes of a meeting in Singapore between representatives of William Jacks and Mr Bone,
and an exchange of emails. The emails were sent by a firm by the name of
Natures
Farm Pte Limited, which is a wholly owned subsidiary of William
Jacks.
[26] Mr Low expresses the belief that although a distribution agreement
was not in fact ever signed, the parties did agree to
the essential terms of the
contract set out in the drafts, through a series of negotiations. He notes that
the first order of honey
took place within the timeframe of the
negotiations.
[27] Mr Low also notes that William Jacks has ordered products
by way of purchase order as provided for in clause
4.1 of the second and third
versions of the draft agreement, has paid the purchase prices by way of direct
wire transfers of funds
in New Zealand dollars, as provided for in clause 4.4 of
those drafts, and that purchase orders submitted have provided for a 60
day
payment term which is also consistent with clause 4.4. Mr Low states further
his belief that the agreement was not signed due
to the fact that Ms Ching had
left the company before it was signed and there was no-one following up on the
documentation. He
says it is usually William Jacks’ practice to have
supply and distribution agreements in place with all of its suppliers, and
for
those agreements to include a term that the agreement, and any dispute arising
under it, is governed by Singapore law.
[28] Because this evidence came in in an affidavit in reply, two further
affidavits were filed for Nelson Honey. The first is
a second affidavit of Mr
Bone. On the question of whether an exclusive marketing agreement was entered
into, Mr Bone says that Ms
Ching made it clear that the agreement had to be
approved by “HQ” as she described it. He refers to an email from
Ms
Ching dated 24 January 2011 in which she says “Would appreciate if you
could forward me the agreement in your letterhead for
me to present to my HQ for
approval.” Earlier, on 6 December 2010, Ms Ching had stated by email
“Noted on your comments
to the agreement. If can, appreciate that you put
it on your letter head, so that I can forward to my head office for
review.”
[29] This follows from the same advice in the earliest email produced by Mr Low, which is from Ms Ching to Mr Bone on 7 September 2010, and which includes the following sentence:
I am afraid the agreement could not be signed off before you go as we need to
send to our HQ for vetting before signing. I will first
review and will get
back to you should there be anything that is left out.
[30] Mr Bone says that once he had a final draft of the exclusive
distribution agreement document, he would have taken it to Mr
Cropp, the
managing director of Nelson Honey, to run it past him before it was signed. He
says he does not know whether Mr Cropp
would have sought advice before giving
him permission to sign, but if he did it would have been from Mr Paul Le Gros,
the company
solicitor and board chairman.
[31] Mr Le Gros says in his affidavit that in the latter part of 2013 he
went to Singapore to meet Mr Low with a view to trying
to achieve a commercial
settlement of the issues that had arisen between their companies. No mention
was made of there being any
exclusive distribution agreement. Indeed, the
existence of such an agreement was not raised until Mr Low’s second
affidavit
was filed in May 2015. Eighteen months of correspondence and
discussion about the unpaid invoices had taken place without any mention
of
there being an exclusive distribution agreement.
[32] Mr Le Gros expresses the view that Mr Low knew nothing about such an
agreement until the drafts were recently uncovered.
He also says that had
the document been seen by him he would not have allowed its execution because it
concedes jurisdiction
of disputes to the courts in Singapore. Finally, Mr Le
Gros says that any exclusive distribution right in a proposed distribution
agreement must be approved by the board before being sent in final
format to the customer concerned.
[33] On the evidence as presented Mr Peers submits, first, that although
various amendments were made as the draft agreement
evolved, the second
revision included, for the first time, clause 5.2. For clarity, clause 5.2
provides:
This Agreement shall be governed by and construed in accordance with the Laws
of Singapore and Recipient consents to the exclusive
jurisdiction of Singapore
courts for any dispute arising out of the Agreement.
[34] Mr Peers submits that Mr Bone did not suggest that this clause be removed and it remained in the third revised version. He notes that the minutes of a meeting
with Mr Bone and representatives of Natures Farm in Singapore on 6th
September
2010 set out a number of issues discussed and includes a note –
“Any dispute to be in accordance to Singapore law”.
[35] Mr Peers says that the parties had reached agreement in principle
over the terms of a distribution agreement by January 2011
when the third draft
was considered, and amendments suggested by Mr Bone did not relate to clause
5.2. Mr Peers describes as a formality
Ms Ching obtaining approval from head
office.
[36] Mr Peers then submits that William Jacks waived any right it might have to argue that there was no distribution agreement because they commenced a trading relationship as envisaged by the draft agreement. I have referred to Mr Low’s evidence on this point. Mr Peers says that acceptance can occur through conduct.18
He also says that Mr Bone was the general manager of Nelson Honey, travelled
to
Singapore to meet William Jacks’ representatives on several occasions,
including the initial meeting to discuss a proposed distribution
agreement in
September 2010, and at all material times was held out by Nelson Honey, and held
himself out, as having full authority
to bind the company.
[37] The last draft of the proposed exclusive distribution agreement has
not at any point been signed by either company. I am
not satisfied that it was
accepted by conduct. All three elements of conduct referred to by Mr Low are
relatively standard steps
in agreements to purchase goods. If goods are to be
purchased there must be a purchase order for the goods required. Any funds
transferred from one country to another are ordinarily transferred
electronically (indeed, the reference to direct wire transfer
in the last two
drafts has now been superseded by later technology). The application of a 60
day payment period, and that period
being recorded in purchase orders, is
scarcely sufficient to show that an exclusive distribution agreement for Nelson
Honey’s
goods, covering three countries, was put into effect even though
not signed.
[38] There are five other difficulties standing in the way of
William Jacks’
contention, also. First, it was expressly recorded by its negotiating
representative,
18 Canterbury FM Broadcasting Ltd v Daniels [1988] NZHC 427; (1988) 2 NZBLC 103,535 (HC).
Ms Ching, that the document must be approved by her headquarters. There is
no evidence that the approval of the headquarters was
ever given or, for that
matter, that it was ever sought. There is no foundation for Mr Peers’
submission that obtaining approval
of William Jacks’ head office was a
formality.
[39] Secondly, the document was never executed by Nelson Honey, nor, on
the evidence, was approval given for it to be executed.
The evidence is, in
fact, that approval would not have been given.
[40] Thirdly, the document would only have applied to sales for goods
destined to Singapore, Malaysia and Brunei. The goods in
issue in this case
were destined for China.
[41] Fourthly, the term specified in the last draft expired in December
2012, and clause 5.3 provides that the document may only
be modified by “a
further writing that is duly executed by both parties”. There is no
evidence this ever occurred.
[42] Fifthly, although the parties have traded some 22 times since the
beginning of
2011, Mr Low, the regional director of William Jacks, seems to have known
nothing about the alleged distribution agreement until he
received a copy of Mr
Cropp’s affidavit, which was not sworn until 16 April 2015. It then seems
he undertook a search of William
Jacks’ records. It does not seem an
unreasonable inference that the regional manager would have known that his
company had
the benefit of an exclusive distribution agreement for three
countries, if indeed that were so.
[43] For these reasons I reject the contention that there is an exclusive distribution agreement in force between Nelson Honey and William Jacks, in the terms of the final draft produced to the Court. It follows that there is no agreement between the parties that the law of Singapore applies to their subsequent contracts for sale and purchase of honey, or that the courts of Singapore have exclusive jurisdiction over any disputes arising between them.
Convenience, expense and availability of witnesses
[44] Whether the case is tried in New Zealand or Singapore,
representatives of one party or the other will have to travel. For
William
Jacks, it is said that it will call expert evidence on the condition of the
honey, requirements as to the quality and appearance
of honey for the purposes
of sale in China, and the requirements for labelling of product to be sold in
China. No doubt this will
also include evidence on William Jacks
representatives’ observations when they inspected the honey on delivery
in Shanghai.
Conversely, Nelson Honey says that it will call expert
evidence from persons in New Zealand in relation to the honey and
evidence on Mr
Bone’s observations of the honey in Shanghai.
[45] While the honey was in storage in Shanghai, and after Mr Bone had
inspected it, it was evidently removed from the premises
where it was stored and
has not been returned. William Jacks maintains this was unlawful. It seems
that William Jacks knows who
removed the honey because it has produced in
evidence a translation of a claim which either has been, or is intended to be,
filed
in court in China against the perpetrator. An English translation of
this document describes the defendant as Wang Ming.
[46] Wang Ming “and his entourage” are said to have gone to
the plaintiff’s warehouse and forcibly taken
away not only manuka honey,
but also other products, without consent. This occurred, perhaps surprisingly,
with the police from
a named public security bureau on site. This is said to
have severely violated the ownership and other property rights of Natures
Farm
which is named as the plaintiff.
[47] On the scant information presently available in relation to this incident, little can be made of it, beyond observing that the legality of the actions complained of must be at least moot, given the presence of the police while it was going on. Its present relevance, however, is that William Jacks does not have the honey and therefore cannot make it available to any experts in Singapore or Shanghai, or for that matter elsewhere, to test, or assess it in terms of marketability in accordance with any health and product standards that may apply to sale of such goods in China.
[48] However, Nelson Honey retains in Nelson a quantity of honey from
every batch it produces and it therefore has some honey
from the batch from
which the product sold to William Jacks was drawn. Therefore, it is possible
for this batch to be tested and
assessed in Nelson. It appears from this that,
at least as matters stand at present, any experts William Jacks intends to call
in
relation to the condition of the honey will need to come to New Zealand to
assess it.
[49] Nelson Honey also says that testing equipment of the quality
available in New Zealand is not available overseas, and that
a significant
percentage of its staff would need to be absent in Singapore for a trial in that
country which, given that it only
has some 20 people working, would be
unsustainable.
[50] On the information available to me, I think this issue is finely
balanced, but the balance lies slightly in favour of Nelson
Honey.
Where was the contract entered?
[51] Nelson Honey maintains that the contract was made in New
Zealand. William Jacks maintains it was made in Singapore.
The contract is
subject to the provisions of the United Nations Convention on Contracts for the
International Sale of Goods (the
Convention).19 This has the force
of law in New Zealand by virtue of s 4 of the Sale of Goods (United Nations
Convention) Act 1994. The Convention
is reproduced as a schedule to that
Act.
[52] The effect of arts 18(2), 21 and 24 of the Convention is that acceptance of a contract to which the Convention applies is only effective on communication to the offeror. A decision on whether the contract was made in Singapore or in New Zealand rests, therefore, on where acceptance of the contract was received. That in turn depends on which party made the offer which was accepted, thereby forming a contract. On this point, counsel present different interpretations of the facts
disclosed in the affidavits.
[53] The evidence is principally within the first
affidavit of Mr Bone. He says that some time early in 2013 he received a
telephone
call from Mr Yeo of Natures Farm asking if Nelson Honey could fill a
large order. They discussed the particulars of the order and
established a
price. Mr Bone thinks he sent an email confirming these details. He then
received a purchase order for honey to
the value of $206,300.
[54] At some point he had received from Mr Yeo the timeframes he required
for shipment of the honey. He talked this over with
the production staff at the
firm and learned that they could not meet the timeframe Mr Yeo wanted by
dispatching the honey in one
shipment. After discussing this with Mr Cropp, the
managing director of Nelson Honey, it was decided to suggest that the
order be split. This was suggested to Mr Yeo and he agreed. There were
discussions about the composition of each shipment
and each date of
dispatch.
[55] An amended purchase order was then sent from Natures Farm to Nelson
Honey. It provided for the order to be split into two
consignments, the first
to be ready for air freighting to its destination by 22 March and the second to
be ready to be shipped to
its destination by sea freight, by 19 April. This
revised purchase order is contained in an email from Natures Farm to Nelson
Honey
on 27 February.
[56] On 5 March Mr Yeo emailed Mr Bone about the revised purchase order,
asking him to confirm whether the order for air shipment
in particular could be
fulfilled by 22 March. The next day Mr Bone confirmed that the order would be
met, and Mr Yeo acknowledged
his advice.
[57] Nelson Honey argues that the acceptance which formed the purchase contract occurred in one of two ways. Either it occurred by way of a telephone call between Natures Farm and Nelson Honey prior to receipt of the revised purchase order, in which Nelson Honey’s proposal to split the order into two parts was accepted orally, or it occurred when the revised purchase order was received in Nelson. Nelson Honey says whichever of those is established on the evidence, acceptance took place in New Zealand, when the communication of acceptance by William Jacks was received by Mr Bone.
[58] Conversely, William Jacks argues that neither of those events was
the final step by way of acceptance that created the contract.
This is because
on 5 March Mr Yeo emailed Mr Bone seeking confirmation that the first air
shipment could be fulfilled by 22 March,
and Mr Bone responded positively. That
email was received in Singapore. Mr Peers argues that these emails would not
have been necessary
had acceptance of the delivery terms already been agreed,
and a contract thus concluded.
[59] Article 19 of the Convention provides:
(1) A reply to an offer which purports to be an acceptance but contains
additions, limitations or other modifications is a rejection
of the offer and
constitutes a counter-offer.
(2) However, a reply to an offer which purports to be an acceptance but
contains additional or different terms which do not materially
alter the terms
of the offer constitutes an acceptance, unless the offeror, without undue
delay, objects orally to the discrepancy
or dispatches a notice to that effect.
If he does not so object, the terms of the contract are the terms of the offer
with the modifications
contained in the acceptance.
(3) Additional or different terms relating, among other things, to the
price, payment, quality and quantity of the goods, place and
time of delivery,
extent of one party’s liability to the other or the settlement of disputes
are considered to alter the terms
of the offer materially.
[60] Applying Article 19(1), the response to the initial purchase order
contained modifications and was thus a rejection of the
offer, and a
counter-offer. By virtue of Article 19(3), the modifications proposed by Nelson
Honey related to the time of delivery
and were therefore material. As a
result, the position established under Article 19(1) is not altered by Article
19(2).
[61] The next communication from Nelson Honey was to the effect that the
initial purchase order could be accepted if the delivery
dates were
changed, and new delivery dates were established which were acceptable to both
sides. The subsequent purchase order
reflected those dates, and was received in
New Zealand.
[62] This establishes, at least to the level of a good arguable case,20 that acceptance occurred on receipt of the revised purchase order in New Zealand. The
subsequent email exchange in relation to meeting the date did not alter
the terms
20 As required by r 6.29.
which were contained in the revised purchase order. It is not clear why Mr
Yeo made a further inquiry about Nelson Honey meeting
the date for the first
shipment because on the evidence this had been established in the conversation
which led to the revised purchase
order being sent.
[63] If the evidence in relation to all the steps that were
taken by the representatives of both companies were the
subject of evidence at
trial, a definite position would be established, but on this application it is
necessary only for Nelson Honey
to demonstrate that it has a good arguable case
and, in my opinion, it has done so on the evidence as it stands. There is,
therefore,
a good arguable case that the contract was made in New
Zealand.
[64] For the foregoing reasons I conclude that New Zealand is the country
with which the transaction has the closest and most
real connection, and the New
Zealand High Court is therefore the appropriate forum for the trial of this
proceeding.
Other relevant factors?
[65] The third point to be considered in relation to whether Nelson Honey
has established position 1, as set out in paragraph
[9] (and derived from r
6.29(1) and r 6.28(5)(b) to (d)) is whether there are any other relevant
circumstances which support an assumption
of jurisdiction. On the information
before the Court on this application I find that there are no other factors
which support an
assumption of jurisdiction by the Court.
Conclusion in relation to position 1
[66] For the reasons given, I find that there is a good arguable case
that the claim by Nelson Honey falls wholly within one or
more of the paragraphs
of r 6.27. I have also found that there is a serious issue to be tried on the
merits and that New Zealand
is the appropriate forum for the trial.
[67] The Court is conscious that it has an overall discretion on whether or not to assume jurisdiction over a proceeding where the defendant is outside New Zealand. The Court does not lightly exercise its discretion to assume jurisdiction over foreign
parties.21 The ultimate issue is whether there are sufficient grounds for the Court properly to assume jurisdiction.22 The factors which the Court must consider, and which I have discussed in this judgment do to an extent overlap, but in this case, in my view, they lead to a clear conclusion that this Court should assume jurisdiction
over this proceeding.
[68] I have not overlooked two further issues raised in argument. First,
it appears to be accepted by counsel that the law
to be applied to this
dispute would be materially similar whichever jurisdiction was to decide it,
and each court could provide
effective relief to Nelson Honey should it be
successful in its claim.
[69] Secondly, related proceedings are pending in the High Court in
Singapore, a factor relied on by Mr Peers in his argument.
However, as Mr
Bellamy pointed out, that proceeding was issued after this proceeding was filed
and served on William Jacks. William
Jacks has chosen the court in Singapore as
the forum within which to sue Nelson Honey for damages it maintains it has
suffered as
a consequence of the alleged breach of contract by Nelson Honey
which would form the basis of its defence to the claim in New
Zealand.
[70] I am not persuaded that the filing by William Jacks of that proceeding in its own country, is a decisive factor in favour of declining jurisdiction. It was equally open to William Jacks to file a defence and a counterclaim in the New Zealand High Court. It elected to sue in Singapore. The counterclaim would raise the same issues as are foreshadowed as William Jacks’ defence to Nelson Honey’s claim for the unpaid contract price. A decision on the assumption of jurisdiction by this Court should, in my view, be governed by the factors I have identified, and not by the election of William Jacks to select a different forum for its own claim, particularly when, for the reasons discussed, the connection of this contract with Singapore is that Singapore is the principal place of business of William Jacks, but otherwise is
tenuous at best.
21 Wing Hung Printing Company Ltd & Ors v Saito Offshore Pty Ltd at [23] and [27] and
Poynter v Commerce Commission [2010] NZSC 38 at [43].
22 Wing Hung, above n 1, at [30].
[71] In the analysis of the High Court Rules contained in paragraphs [4]
to [11] of this judgment, I have established two alternative
positions which
Nelson Honey must establish. Having found that Nelson Honey has established
Position 1, it is unnecessary to discuss
whether it has established Position 2.
It will be observed, however, that in order to establish the second position,
Nelson Honey
would also be required to establish that the claim has a real and
substantial connection with New Zealand. I would have had no hesitation
in
finding that factor to be established, were it necessary to do so, principally
for the reasons set out in paragraphs [12] to [17].
Outcome
[72] The application to dismiss this proceeding or, in the alternative,
to stay it, is dismissed.
[73] Mr Peers sought costs on a 2B basis if William Jacks were
successful. I take from that an acceptance that an award of costs
on that basis
would be appropriate in the inverse position. Mr Bellamy did not make a
submission on costs. My provisional view
is that costs should be awarded to
Nelson Honey on a 2B basis, with disbursements fixed, if necessary, by the
Registrar.
[74] If Mr Bellamy disagrees and seeks costs on a different basis, he may file and serve a memorandum within five working days. In that event Mr Peers may file and serve a memorandum in response within a further three working days, both memoranda being confined to a maximum of three pages. Unless Mr Bellamy
follows this course costs are awarded as
indicated.
J G Matthews
Associate Judge
Solicitors:
P L Law Limited, Nelson. Buddle Findlay, Christchurch.
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