Danone Asia Pacific Holdings Pte Ltd v Nutricia Ltd
| Jurisdiction | New Zealand |
| Judge | White J |
| Judgment Date | 07 November 2014 |
| Neutral Citation | [2014] NZCA 536 |
| Docket Number | CA438/2014 |
| Court | Court of Appeal |
| Date | 07 November 2014 |
[2014] NZCA 536
White, French and Cooper JJ
CA438/2014
IN THE COURT OF APPEAL OF NEW ZEALAND
Appeal against a High Court (HC) judgment temporarily staying a claim by the appellant pending resolution of arbitration in Singapore — the appellant's claims against the respondent and its subsidiaries were based on alleged breaches of the Fair Trading Act, negligent misstatement and breach of a supply agreement between the appellant and one of the respondent's subsidiaries — the appellant had issued a notice of arbitration to the subsidiaries simultaneously with issuing proceedings against the respondent — it was agreed that the arbitration would determine most if not all of the issues between the parties and the HC proceeding might well not need to go ahead — since the HC stay, there had been considerable progress in the arbitration and it would now be resolved before the HC proceeding — appellant requested that the terms of the temporary stay be amended to require the respondent to file its statement of defence, provide “targeted discovery” and address at a case management conference any further interlocutory issues arising from those steps — whether there would be a risk of injustice to the respondent if the stay was amended to require it to take these steps.
D J Goddard QC and J H Stevens for Appellants
A R Galbraith QC and D R Kalderimis for Respondent
A The appeal is dismissed.
B The appellants are to pay the respondent's costs for a standard appeal on a band A basis with usual disbursements. We certify for second counsel.
REASONS OF THE COURT
(Given by White J)
The appellants, collectively called Danone, have claims against the respondent (FCGL) and two of its wholly owned subsidiaries, Fonterra Ltd (Fonterra) and Fonterra Australia Pty Ltd, for damages for the manufacture and supply of nearly 2,000 metric tons of an alleged defective milk powder product (WPC80), an ingredient in Danome's baby formula.
Danone issued this proceeding against FCGL in the High Court at Auckland on 9 January 2014. Danone seeks damages projected to exceed EUR 630,000,000 on the basis of four causes of action: breach of s 9 of the Fair Trading Act 1986 ( FTA); breach of s 13 of the FTA; negligent misstatement; and “product liability”, in relation to the defective WPC80 which Danone claims was produced and supplied outside the scope of a Supply Agreement between the first appellant (Danone AP) and Fonterra (the Supply Agreement). Mr Goddard QC for Danone notes that the “product liability” cause of action is a novel one based on Body Corporate No 207624 v North Shore City Council [Spencer on Byron]. 1
Simultaneously with issuing this proceeding, Danone issued a notice of arbitration to the subsidiaries, under the Supply Agreement. Danone seeks similar damages under the Supply Agreement for breach of the Agreement in the manufacture and supply of the defective WPC80. In addition Danone alleges in its notice that the subsidiaries' “conduct was tortious and violated applicable statutory
law”As required by the terms of the Supply Agreement, the arbitration is to take place in Singapore and in accordance with English law. The parties accept that the claims in the High Court proceeding, including the claims under the FTA and for negligent misstatement, can properly be raised and determined in the arbitration. Fonterra concedes that the actions of the relevant FCGL employees are legally attributable to Fonterra. One of the issues in the arbitration will be whether Fonterra's liability is limited to AUD 30,000,000 under the terms of the Supply Agreement. 2
On the application of FCGL, the High Court has temporarily stayed Danone's proceeding pending resolution of the Singapore arbitration. 3 The order staying the proceeding provides that it is made until further order of the Court and leave is expressly reserved for Danone to seek to lift the stay in the event Fonterra delays the arbitration process. The stay is therefore conditional on Fonterra pursuing the arbitration expeditiously.
In granting the temporary stay the High Court Judge, Venning J, accepted that in the absence of an arbitration agreement between Danone and FCGL, the provisions of sch 1, art 8(1) of the Arbitration Act 1996, which would have enabled FCGL to have required the dispute to be determined by arbitration, did not apply. 4 The Judge decided, however, that the Court had a discretionary power to stay the High Court proceeding. He was satisfied that this was one of those rare and compelling cases where the circumstances required a stay because to require FCGL to respond to the allegations raised by Danone would, in the circumstances where the claims arose out of the performance of the Supply Agreement by Fonterra, be oppressive to FCGL, unnecessarily duplicative and contrary to the interests of justice. 5
Danone accepts that the Judge had power to grant the temporary stay, but appeals against his decision on the ground that he should not have exercised his discretion to do so in the circumstances of this case. In essence Danone submits that in granting the stay, Venning J erred in failing to:
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(a) apply correctly the test for the exercise of the Court's power under r 15.1(3) of the High Court Rules or its inherent jurisdiction to grant a stay of this nature; and
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(b) address Danone's argument that there was no risk of injustice to FCGL in permitting the High Court proceeding to continue at least through all the normal pre-trial steps pending the resolution of the arbitration.
Since the temporary stay was granted on 17 July 2014, there has been significant progress with the Singapore arbitration. The arbitral tribunal has been appointed. Comprehensive timetable directions have been made leading to a three week substantive hearing scheduled to commence on 8 February 2016. All documents and evidence relevant to the issues in the arbitration are to be disclosed before the hearing.
While maintaining Danone's primary position that Venning J erred in granting the temporary stay, Mr Goddard, in the course of oral argument before us, acknowledged that:
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(a) the Singapore arbitration will inevitably be resolved before the High Court proceeding;
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(b) most, if not all, of the issues...
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Danone Asia Pacific Holdings Pte Limited v Nutricia Limited CA438/2014
...COURT OF APPEAL OF NEW ZEALAND CA438/2014 [2014] NZCA 536 BETWEEN DANONE ASIA PACIFIC HOLDINGS PTE LIMITED First Appellant NUTRICIA LIMITED Second Appellant DUMEX BABY FOODS CO LIMITED Third Appellant DANONE DUMEX (MALAYSIA) SDN BHD Fourth Appellant DUMEX LIMITED Fifth Appellant DANONE VIET......