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High Court of New Zealand Decisions |
Last Updated: 9 February 2011
ORDER SUPPRESSING THE INFORMATION CONTAINED AT [9](III) OF THIS JUDGMENT
ORDER THAT PARTS OF THE DOCUMENTS FILED
ARE NOT TO BE INSPECTED BY NON-PARTIES ElWITHOUT THE PERMISSION OF A JUDGE REMAINS IN PLACE.
IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY
CIV-2009-409-002921
BETWEEN BLUE STAR TAXIS (CHRISTCHURCH) SOCIETY LIMITED
First Plaintiff
AND PATRICK BRENNAN
Second Plaintiff suing in a representative capacity
AND GOLD BAND TAXIS (CHRISTCHURCH) SOCIETY LIMITED First Defendant
AND BRIAN HARRIS
Second Defendant being sued in a representative capacity
Hearing: 17 August 2010
Appearances: G Riach for Defendants
A Foote for Plaintiffs
Judgment: 19 November 2010
RESERVED JUDGMENT OF HON. JUSTICE FRENCH
BLUE STAR TAXIS (CHRISTCHURCH) SOCIETY LIMITED AND ANOR V GOLD BAND TAXIS (CHRISTCHURCH) SOCIETY LIMITED AND ANOR HC CHCH CIV-2009-409-002921 19 November 2010
Introduction
[1] Two parties agree to prepare and submit a joint tender for a licence. The joint tender is duly submitted. However, one of the parties, without telling the other, also submits a separate tender on their own account and is successful.
[2] Those are the basic facts at the heart of this dispute between two taxi companies and their drivers, and the issue is what legal ramifications (if any) arise from such conduct.
[3] The defendants contend there are no legal ramifications and have applied under r 15.1(a) to strike out the plaintiffs’ claims on the grounds they do not disclose a reasonably arguable cause of action.
[4] The specific issues raised by the application are:
a) Is a fiduciary obligation capable of arising from the circumstances as pleaded?
b) Is a joint tender price capable of qualifying as confidential information?
c) Is there any basis on which the first defendant Gold Band could be found to have misused that information?
d) Is Gold Band’s failure to advise Blue Star that it was submitting its own tender capable of amounting to misleading and deceptive conduct for the purposes of s 9 of the Fair Trading Act 1986?
e) On what basis can a member of an incorporated society be liable to account for profits made as a result of the society’s breach of a fiduciary duty?
Factual background
[5] Christchurch Airport has a number of preferential taxi parks. The airport authority grants selected taxi companies the right to occupy the preferential parks under a licence arrangement, the taxi company paying the airport an annual licence fee.
[6] Between mid-2006 and 2009 the preferential stand was occupied by Blue Star, Gold Band and a third company, Corporate Cabs Limited. This was pursuant to a joint tender proposal which had been submitted on behalf of all three taxi companies and accepted by the airport authority.
[7] In December 2008 the airport authority announced its intention to relocate the preferential stand and to let a tender for the licence to occupy it. The new stand was to consist of six parks.
[8] On 7 January 2009, following a meeting between representatives of Blue Star, Gold Band and Corporate Cabs, the three taxi companies agreed to prepare and submit a joint tender to occupy the new preferential stand.
[9] According to the statement of claim, the express terms of the agreement were:
i) The tender submission for the stand was to be a joint tender on behalf of Gold Band, Corporate Cabs and Blue Star.
ii) It was to be prepared by Gold Band on behalf of Corporate
Cabs and Blue Star.
iii) [information suppressed]
iv) The spaces available at the stand would be split between Blue Star (two and a half spaces), Gold Band (two and a half spaces) and Corporate Cabs (one space), and each company would pay their respective share of the price.
[10] On 14 January 2009 Gold Band duly submitted the joint tender to the airport authority.
[11] However, without the knowledge or consent of Blue Star, Gold Band also submitted its own separate tenders. The separate tenders were for three or four spaces with alternative pricing options – one option being a fixed licence fee, the other involving a combination of a fixed price and a variable component depending on passenger movement numbers.
[12] Subsequently, in late-January 2009, the airport authority advised Blue Star that the joint tender had been unsuccessful. The airport authority however accepted one of the Gold Band tenders, giving Gold Band the right to occupy four spaces. The licence period is for two years from 1 February 2009 to 31 January 2011. The remaining spaces were allocated to Corporate Cabs (who, like Gold Band, must also have submitted a separate tender) and another taxi company.
[13] Blue Star then decided to issue these proceedings. For reasons which remain unknown at this stage, it has chosen not to sue Corporate Cabs.
[14] As will be apparent from the intituling, the claim is not only between the two taxi companies, but also includes two drivers, one from each camp. The presence of these two drivers is the result of representative orders made under r 4.24 on the application of Blue Star’s lawyers prior to commencement of the proceedings.
[15] The reason for that application was due to perceived legal problems in obtaining a remedy if the claim were to be solely between the two companies.
[16] Although Blue Star and Gold Band loosely describe themselves as “taxi companies”, technically they are non-profit-making societies registered under the Industrial and Provident Societies Act 1908. Each is governed by a set of rules. I was provided with a copy of Gold Band’s rules, and understand Blue Star’s rules are similar.
[17] Under Gold Band’s rules, the stated purpose of the society is “to provide an organisation for the co-operative control of taxi services by members of the Society”, the members being the individual taxi operators. In other words, the entities Gold Band and Blue Star do not themselves operate taxis. It is their self-employed members who do that, either by employing someone else to drive or by physically driving themselves. Both societies operate on a subscription basis, the members paying a fixed subscription and in return receiving the benefits of membership which include branding, a call centre and advertising.
[18] Because the subscription is fixed, the societies do not directly obtain any benefit from the profitability of their individual members. The concern for Blue Star’s lawyers was that because of the structure, any losses sustained as a result of the tender process will be suffered by Blue Star members rather than Blue Star itself, and that conversely any profits obtained will be obtained by Gold Band’s drivers rather than Gold Band itself. Although the licence is issued to Gold Band, it is for the benefit of its members.
[19] An added complication was that because of the large number of members involved – Blue Star has 225 individual members and Gold Band has approximately
155 members (including associate members) – it was not practical to join every individual.
[20] Although the application for representative orders was made without notice, counsel for Gold Band was given an opportunity to be heard. Gold Band neither opposed nor consented to the application.
[21] The application was duly granted by an Associate Judge, and orders made to the effect that Mr Brennan may sue on behalf of all persons who at any time between
1 February 2009 and 31 January 2011 were or are members of Blue Star, while Mr Harris may be sued on behalf of all persons who are members of Gold Band during the same period. The period is of course the period of the licence.
[22] The statement of claim pleads three causes of action against Gold Band:
ii) Breach of confidentiality.
iii) Breach of s 9 of the Fair Trading Act.
Strike out principles
[23] The Court’s approach to strike out applications on the basis of no reasonable cause of action is well settled (see Couch v Attorney-General [2008] 3 NZLR 725 (SC) and Attorney-General v Prince and Gardner [1998] 1 NZLR 262 (CA)):
a) The Court will assume the facts pleaded are true.
b) Before it may strike out a proceeding, the Court must be certain the cause of action is so clearly untenable it cannot succeed.
c) The jurisdiction is to be exercised sparingly. Striking out is a draconian step.
d) Particular care is required in areas where the law is confused or developing.
e) The jurisdiction is not ousted by the need to decide difficult questions of law requiring extensive argument.
f) Where a defect in a pleading, challenged as disclosing no reasonably arguable cause of action, can be cured by amendment which the plaintiff is willing to make, the Court will almost always permit amendment rather than strike the pleading out.
[24] As Mr Riach, for the defendants, responsibly acknowledged, it is a high threshold.
[25] Mindful of these principles, I now turn to consider each of the causes of action against Gold Band before turning to consider the position of the second defendant Mr Harris.
Claim for breach of fiduciary duty
[26] The statement of claim pleads the existence of an agreement to submit a joint tender and says the agreement was for the mutual benefit of the parties and their respective members. It then goes on to allege that “pursuant to the arrangements”, Gold Band owed fiduciary obligations to Blue Star and Mr Brennan, including:
17.1 To act loyally to the plaintiffs and in their interests;
17.2 To act in good faith;
17.3 Not to act against the interest of the other parties to the arrangement;
17.4 Not to deal separately with [the airport authority];
17.5 Not to use information provided by the first plaintiff (including information in relation to the tender price) for its own use and benefit;
17.6 Not to breach the confidence of the first and second plaintiffs by using information provided by the first plaintiff to it in good faith and in confidence;
17.7 Not to profit from the trust placed in it by the first and second plaintiffs.
[27] The statement of claim continues:
18. The information contained in the joint tender, including information in relation to the tender price, was information which was confidential to the parties to the joint tender and as such could not be used other than in furtherance of the joint interests of those parties and their members.
19. In breach of the obligations set out in paragraph 17 and 18 above the first defendant has:
19.1 Prepared and submitted the Goldband [sic] tender to [the airport authority];
19.2 Used the confidential information provided by the first plaintiff, and by the first plaintiff, the first defendant and Corporate Cabs jointly, for its own benefit, and for the benefit of its members (including the second defendant).
This information includes, but is not limited to, the tender price submitted with the joint tender;
19.3 Used information submitted by it as part of the joint tender for the purposes of its separate tender with [the airport authority].
20. As a result of the breaches set out in paragraph 19 above, the first and second plaintiffs have suffered loss, and the first and second defendants have made profits which, but for the breaches, would not have been made.
[28] The relief sought is that an account be taken of the profits made by Gold Band and Mr Harris as a result of Gold Band’s breach, or an award of equitable damages in such sum as this Court thinks fit.
Gold Band’s arguments
[29] While Gold Band admits the terms of the agreement as pleaded, it denies there is any authority or legal basis for the imposition of any fiduciary obligation.
[30] In support of that contention, Mr Riach made the following points:
• The parties were fundamentally competitors. Their agreement was simply to submit a joint tender for separate spaces in a preferential taxi rank from which their members would earn separate profits by virtue of accepting fares from travellers. There was to be no collective profit earned.
• There is no pleading the agreement was a joint venture and nor could there be, because the taxi companies were not intending to profit- share. Chirnside v Fay [2007] 1 NZLR 433 (SC), an authority heavily relied upon by the plaintiffs, does not therefore apply.
• The statement of claim does not contend there was any agreement or undertaking not to submit a separate tender, and accordingly in the absence of any such agreement or representation any of the parties were free to submit separate tenders.
• There is no pleading the parties agreed the information was confidential.
• If Blue Star did not want Gold Band to submit a rival tender, it could and should have sought that as a term of the contract. Similarly, if it had wanted the relationship to be confidential, this should have been agreed as a term of the contract. There is no allegation Gold Band is in breach of any term of the contract, express or implied. It discharged all of its contractual obligations. The pleading of a fiduciary obligation is simply an attempt to overcome the fact that Gold Band is not in breach of contract.
• Gold Band has not done anything wrong. All it did was cover its position in the event the joint tender was unsuccessful. Its task in submitting the joint tender was purely administrative, while its separate tenders did not replicate the joint tender. There were significant differences.
• Blue Star may have made assumptions, but that was not the result of anything done or said by Gold Band.
Discussion
[31] It was common ground there is no New Zealand authority directly on point.
[32] Novelty, of itself, is not of course a ground for striking out. Otherwise the law would never develop, and as is often stated the categories of fiduciaries are never closed.
[33] Given the lack of authority, it is necessary to go back to first principles.
[34] A helpful starting point is the following statement in Paper Reclaim Limited v Aotearoa International Limited [2007] 3 NZLR 169 (SC):
[31] ... When parties have formed a contract the correct approach is first to decide exactly what they have agreed upon. Only then should the court consider whether any particular aspect of their agreement gives rise to a relationship which can properly be characterised as fiduciary, imposing an obligation of loyalty on one or both parties, which supplements the express or implied contractual terms.
[35] The inquiry is thus a fact-specific one. It follows, in my view, that whether the relationship in this case can or cannot be labelled a “joint venture” is not determinative. The inquiry is whether there are any particular aspects of the arrangement that justify the imposition of a fiduciary duty.
[36] It is clear from the case law that the inquiry should include consideration of the following[1]:
• the terms of the agreement[2];
• the actual course of dealings between the parties[3];
• the entitlement[4] or legitimate expectation[5] or reasonable expectation[6] of one party to place trust and confidence in the other;
• the existence of an agreement, express or implied, to act on behalf of another and thus put the interests of the other before one’s own[7];
• vulnerability, which has been said to be an important, indeed cardinal, feature of a fiduciary relationship[8];
• the Frame v Smith (1987) 42 DLR (4th) 81 test, which sets out three general characteristics of relationships which cumulatively may attract fiduciary obligations, namely:
iii. and the beneficiary is peculiarly vulnerable to or at the mercy of the fiduciary holding the discretion or power.
[37] It has also been said that for a fiduciary duty to exist in a situation such as the one at issue here, the plaintiff must establish a stabbing when his or her guard was down by someone whom, by reason of a special relationship, there was reason to trust: see Saunders v Houghton [2010] 3 NZLR 331 (CA) at [100].
[38] Applying those considerations to the assumed facts of the present case, I am not persuaded the cause of action pleaded is so certainly or clearly bad it should be precluded from going forward. A key factor must be the parties’ prior dealing, i.e. the previous submission of a joint tender and the sharing of the licence. Or to put it another way, when the parties reached their agreement in January 2009, they did so in the context of a pre-existing arrangement. It is arguable that this prior dealing shaped their relationship, created reasonable expectations and informed Blue Star’s decision not to seek legal protection and not to put in a separate bid of its own. Blue Star was vulnerable because it was relying on participation in the joint tender as its way into the airport rank. It also placed trust in Gold Band in revealing and being prepared to discuss pricing information. The lack of contractual protection in the context of a competitive commercial relationship may be seen as illustrating the trust that Blue Star and its members were placing in Gold Band.
[39] In those circumstances it is reasonably arguable that Gold Band did owe a fiduciary duty and breached that duty by submitting a separate tender without the knowledge or consent of Blue Star before the tender process closed.
[40] As regards the other alleged breaches, Ms Foote drew my attention to evidence the tender form Gold Band used for its separate tenders was sparse, giving rise to an inference that it was, as she put it, piggy-backing off the joint tender. Ms Foote further submitted that an analysis of the tender figures shows that on a per- space basis the Gold Band figure for its fixed price tender was so close to the joint tender figure that it could not be a coincidence. In her submission, there must have been misuse of the joint pricing information. Another argument raised was that because Gold Band and Blue Star taxis are major players in the Christchurch market, it was likely that had there not been a separate tender, the airport may well have had to accept the joint tender.
[41] All of these matters are issues which obviously must await trial.
[42] However, for present purposes I am satisfied the cause of action for breach of a fiduciary duty owed to both Blue Star and its members is reasonably arguable, and it would be wrong to strike it out.
[43] In coming to this conclusion I have not overlooked an English decision cited to me by Mr Riach where a claim for breach of fiduciary duty was dismissed in reasonably similar circumstances. However the decision in question, Thames Cruises Ltd v George Wheeler Launches Ltd [2003] EWHC 3093 (Ch), is in my view of limited value for two reasons. First, because the Judge considered that fiduciary relationships should be limited to the traditional categories, which is not the law in this country. Secondly, because on the facts the party who had submitted the separate tender terminated the joint arrangements prior to the tender process closing. Unlike Blue Star, the claimant thus had an opportunity to itself submit a separate tender.
Claim for breach of confidentiality
[44] The statement of claim pleads:
21. The information contained in the joint tender, including the information in relation to price, was confidential to the parties to the joint tender.
22. The information was put together and provided in circumstances which imported an obligation of confidence on each party to the joint tender;
23. The first defendant has breached that obligation of confidence in that it has:
23.1 Prepared and submitted the Goldband tender to [the airport authority];
23.2 Used the confidential information provided by the plaintiff, and by the first plaintiff, the first defendant and Corporate Cabs jointly, for its own benefit, and for the benefit of its members (including the second defendant). This information includes, but is not limited to, the price submitted with the joint tender;
23.3 Has used information submitted by it as part of the joint tender for the purposes of its separate tender with [the airport authority].
24. As a result of the breaches set out in paragraph 23 above, the first and second plaintiffs have suffered loss and the first and second defendants have made profits which, but for the breaches, would not have been made.
[45] The relief sought is the same as that sought in the claim for breach of fiduciary duty, i.e. an account of profits and equitable damages.
[46] As Mr Riach pointed out, the pleading is deficient because it fails to particularise what information is alleged to be confidential other than information in relation to price.
[47] Ms Foote accepted this. She also accepted that the only information which was legally capable of qualifying as confidential for the purposes of the claim was the joint tender price arrived at by the three companies. All the other corporate information which Blue Star supplied to Gold Band to enable it to prepare the joint tender was in the public domain and did not have the necessary character of confidence required by such decisions as Coco v A N Clark (Engineers) Ltd [1969] RPC 41. Ms Foote agreed to amend the claim accordingly.
[48] However, Mr Riach submitted that even if the claim were to be amended, it would still not disclose a tenable cause of action. He contended the joint tender price cannot be confidential information because the circumstances did not import any
obligation of confidence and because the information was to be seen by the airport authority. Nor, in Mr Riach’s submission, could the information be confidential to Blue Star, because two of its competitors, namely Gold Band and Corporate Cabs, knew of it. Mr Riach further argued that Gold Band did not disclose the information. Nor did it misuse it, the separate tenders being different in nature and kind from the joint tender. All that can be said is that Gold Band had knowledge of the joint tender price and knowledge in itself cannot constitute misuse.
[49] Mr Riach derived some support from Thames Cruises for his contention that the joint tender price is not capable of qualifying as confidential information. The judgment records that during cross-examination, it emerged no confidential information had been used in the defendants’ separate bids, and accordingly a claim based on breach of confidentiality had been withdrawn. Mr Riach argues this demonstrates that knowledge of the joint bid in itself is not enough.
[50] I accept it is a reasonable inference from the judgment that the Judge considered the abandonment of the confidentiality claim was an appropriate concession. However, without the issue being the subject of a considered ruling and without knowing all the circumstances, it would in my view be wrong to rely on this as an authority justifying strike out.
[51] As regards Mr Riach’s other submissions, the fact the tender price was known to all three companies and was to be disclosed to the airport authority does not in my view as a matter of law deprive the information of its necessary character of confidence. The disclosure to the airport authority was authorised disclosure. As Ms Foote submitted, the thrust of the plaintiffs’ case is not about disclosure. The thrust is that the tender price was confidential to the three parties and was not to be misused.
[52] In my view, the issues raised by Mr Riach are essentially trial issues and not grounds for striking out.
Claim under the Fair Trading Act 1986
[53] Under this head, the statement of claim pleads the same facts relied upon to support the other two claims at [19] to [23] quoted above. The relief sought is for an order pursuant to s 43(2) of the Fair Trading Act directing the first defendant and/or second defendant pay the plaintiffs the amount of any loss and/or damages which the plaintiffs have suffered by reason of the conduct of the defendants.
[54] As Ms Foote herself acknowledged, the weight of authority supports the view that a claim under s 9 must be based on an actionable misrepresentation yet none is pleaded.
[55] Ms Foote stated it was proposed to amend the claim by pleading the following representations:
• that only a joint tender would be put in by the parties;
• the failure to disclose the intention to submit a separate tender.
[56] An actionable misrepresentation is a statement of existing or present fact that is false. In so far as this proposed re-pleading involves reliance on statements of future intent, it remains problematic unless the allegation is that at the time the alleged promises or statements were made, Gold Band had no intention of honouring them.
[57] As for the allegation of failing to disclose its intention to submit a separate bid, Mr Riach accepted that silence may, as a matter of law, amount to a misrepresentation for the purposes of the Fair Trading Act. However, he submitted there was no reasonable expectation of disclosure and therefore no duty to correct a
misapprehension. Gold Band could not be under an obligation to speak up for the benefit of its competitors. Assumptions were made for which Gold Band was not responsible.
[58] I agree the test is whether there was a reasonable expectation of disclosure. However in my view that is a trial issue and not one amenable to strike out.
[59] My conclusion on the Fair Trading Act cause of action is that the plaintiffs should be given the opportunity to re-plead the claim, bearing in mind the difficulties I have identified.
Claim against Mr Harris
[60] As already mentioned, Mr Harris is a member of Gold Band. He is sued in a representative capacity because the plaintiffs seek to make all Gold Band drivers liable to disgorge profits earned by reason of their use of the preferential rank during the period of the licence. Ms Foote acknowledged that if the plaintiffs were to limit their claim to damages for loss, the need to join Mr Harris would no longer exist. She explained that she had included a claim for account of profits because in Chirnside the Supreme Court had stated it was the primary remedy for breach of fiduciary duty.
[61] As Mr Riach pointed out, there is no separate cause of action pleaded against Mr Harris, and in particular no allegation that he himself owed a fiduciary duty to the plaintiffs. Rather, the plaintiffs seek to make Mr Harris liable on the grounds that he has made profits which, but for the alleged breaches of Gold Band, would not have been made.
[62] However, in Mr Riach’s submission it is not enough that Mr Harris may have benefited from the breach, or even that Gold Band holds the licence on trust for the benefit of him and the other members. Mr Riach contended (at least in written submissions) that Mr Harris could only be liable to account for profits if he either knowingly assisted or participated in Gold Band’s breach or received the benefits of the licence knowing it had been wrongfully obtained. Mr Riach further pointed out
that if the claim was based on knowing assistance, the representative class would need to be re-defined so as to be limited to drivers who were members at the time of the alleged breach.
[63] I agree, following the reasoning in Estate Realties Ltd v Wignall [1992] 2
NZLR 615 that so far as the claim against Mr Harris for an account of profits is concerned, the plaintiffs will be required to prove knowledge and that in the absence of any pleading alleging knowledge (actual or constructive as defined in Westpac Banking Corporation v Savin [1985] 2 NZLR 41 (CA)), the statement of claim is defective.
[64] Mr Riach argued that this was more than a salvageable pleading point because of affidavit evidence from Gold Band’s general manager. The manager deposes that Gold Band members were completely unaware of the discussions with Blue Star about submitting a joint tender and were also unaware that separate tenders had been submitted.
[65] As noted in Attorney-General v McVeagh [1995] 1 NZLR 558 (CA) at 566, the Court is entitled to receive evidence on a striking out application. However, that is generally limited to evidence which is undisputed or irrefutable, whereas in this case the evidence at issue is contested. Mr Riach submitted the evidence should nevertheless be admitted because although disputed, it is not inconsistent with the statement of claim, that being a second category of permissible evidence identified in McVeagh in addition to undisputed evidence.
[66] I do not accept that submission, and am not prepared to take the evidence into account for the purposes of the strike out application. What the Court of Appeal actually said in McVeagh was that normally the Court will not consider evidence that is inconsistent with the pleading. There was no suggestion the converse automatically applied. That is to say, the Court of Appeal did not hold that contested evidence will automatically be admitted so long as it does not contradict the pleading. Apart from anything else, such an approach would make a nonsense of the well established principle that the Court will allow the statement of claim to be amended in preference to striking it out.
[67] There is the further point that, unlike the innocent partner in Estate Realties, the members of the represented class in this case are continuing to receive profits, so that even if they had no knowledge of Gold Band’s breach at the time it occurred, they would arguably be fixed with knowledge now.
[68] That consideration may have prompted Mr Riach to contend in oral reply submissions that even if the Gold Band members did have the requisite knowledge, it would be wrong for their profits to be impressed with a constructive trust, or to require them to account because those profits have been earned by their own effort. In his submission, the remedy of accounting for profits is properly reserved for the very different situation where an errant fiduciary has taken a trust asset and transferred it to the third party. In this case, he argued the connection between the breach and the third party’s profit was too remote.
[69] In my view, correctly analysed, these are essentially trial issues. What is being alleged is that although the wrongfully obtained licence was issued to Gold Band, Gold Band is holding it for the benefit of its members. It is the licence that is said to enable the members to make the profit. Quantifying how much of the profit is attributable to the licence and what allowance should be made for the drivers’ own efforts may be a difficult exercise, but of itself that should not preclude the case from proceeding.
[70] Mr Riach also took issue with some aspects of the representative order and the practicalities of the claim for profits, identifying a number of difficulties:
c) New members cannot be liable on the authority of Estate Realties.
d) It is unfair that those who resign their membership partway through the licence period should be caught up in this proceeding.
e) The calculation of the profits will be highly problematic because of the different business structures used by different members. Some members may also never use the preferential rank. Further, not only must there be an allowance for the drivers’ own efforts, but also for the fact that under the joint tender the Gold Band drivers would have been entitled to two and a half spaces in the preferential stand anyway.
f) How will the Court be able to determine which members of Blue Star are entitled to claim a share of the disgorged profits, and on what basis?
[71] I accept the claim for profits is far from straightforward and that Mr Riach has undoubtedly highlighted some real difficulties. I also accept it is likely the description of the represented class will require further refinement as the proceeding progresses and more becomes known. For example, discovery may reveal how Gold Band regulates the use of the preferential stand as between its members.
[72] However, at this very early stage I do to consider that any of the problems are necessarily insuperable or render the claim so unworkable as to justify the draconian step of strike out. Issues about the allowance to be made for the drivers’ own efforts and the fact Gold Band would have received two and a half spaces anyway are trial issues.
[73] Also, contrary to Mr Riach’s submissions, I consider that the position of new members is different from the position of the hypothetical new partner discussed in Estate Realties. That is because in this case profits are continuing to be received.
[74] As for the second plaintiff, it would be open to the Court to award one lump sum, with the distribution of that sum amongst the represented class to be
determined by agreement. Such an agreement could if required be submitted to the
Court for approval.
[75] Finally for completeness I should also record it was common ground the plaintiffs will be required to provide further particulars of the losses claimed. Ms Foote stated that these will be supplied prior to trial and after completion of discovery.
Outcome
[76] Subject to the plaintiffs amending the statement of claim in accordance with [47], [54] to [56] and [63] of this judgment, the application for strike out is dismissed.
[77] The amended statement of claim is to be filed within ten working days.
[78] There will be a further case management conference on 3 December 2010 at
9 a.m.
[79] As regards the costs of this application, the general rule is that they should be fixed now and on the basis that costs follow the event. My provisional view, however, is that because of the deficiencies in the statement of claim, the more appropriate and just course is for the costs to lie where they fall.
[80] That view is a provisional view only, because the parties have not had an opportunity to make submissions on costs.
[81] The issue of costs is to be discussed at the case management conference.
Solicitors:
Duncan Cotterill, Christchurch
Harmans Lawyers, Christchurch
[1] See the helpful
summary in NZLS Intensive The Law of Obligations – Contract in Context
(July 2007) at
65
[2]
Paper Reclaim Limited v Aotearoa International Limited [2007] 3 NZLR
169 (SC)
[3]
New Zealand Netherlands Society “Oranje” Inc v Kuys and The
Windmill Post Ltd [1973] 2 NZLR 163 (PC) at 166 per Lord
Wilberforce
[4]
Chirnside v Fay [2007] 1 NZLR 433 (SC), Paper Reclaim Limited v
Aotearoa International Limited [2007] 3 NZLR 169 (SC)
[5] Arklow
Investments v Maclean [2000] 2 NZLR 1
(PC)
[6]
LAC Minerals Ltd v International Corona Resources Ltd (1989) 61 DLR
(4th) 14
(SCC)
[7]
Paper Reclaim Limited v Aotearoa International Limited [2007] 3 NZLR
169 (SC)
[8] Watson v Dolmark Industries Ltd [1992] 3 NZLR 311 (CA)
[9] Liggett v Kensington [1993] 1 NZLR 257 (CA) at 281 per Gault J
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