ADAMA NEW ZEALAND LIMITED v RAAM CHEM PTE LIMITED [2021] NZHC 315

ADAMA NEW ZEALAND LIMITED v RAAM CHEM PTE LIMITED [2021] NZHC 315 [26 February 2021]IN THE HIGH COURT OF NEW ZEALANDWELLINGTON REGISTRYI TE KŌTI MATUA O AOTEAROATE WHANGANUI-A-TARA ROHECIV-2018-485-961[2021] NZHC 315BETWEEN ADAMA NEW ZEALAND LIMITEDPlaintiffAND RAAM CHEM PTE LIMITEDDefendantAND FALCON INTERNATIONALBIOSCIENCES PRIVATE LIMITEDFirst third partyARISTO BIO-TECH AND LIFESCIENCEPRIVATE LIMITEDSecond third partyJAY LAXMI INDUSTRIESThird partyORCHID AGRO SYSTEMSFourth third partyUPL LIMITEDFifth third partyHearing: 3 December 2020Appearances: No appearance for plaintiffW Holden and N Cannon for defendantNo appearance for first to fourth third partiesA Johnson for fifth third partyJudgment: 26 February 2021JUDGMENT OF ASSOCIATE JUDGE JOHNSTON[1] In this proceeding the plaintiff, Adama New Zealand Ltd, a New Zealandcompany, sued the defendant, Raam Chem Pte Ltd, a Singaporean company. Asdescribed in my judgment of 29 May 2020, Raam has commenced third partyproceedings against five Indian concerns including the fifth third party, UPL Ltd.1[2] In that judgment I outlined the background in these terms:Background[3] The plaintiff, Adama New Zealand Ltd ("Adama"), is a New Zealandcompany. Raam is a Singaporean company. In late 2016 Adama and Raamentered into a contract pursuant to which Adama ordered 50,000 kg ofMancozeb, a fungicide used by horticulturalists to protect against a range ofdiseases in crops, and commonly used by apple growers.[4] In early 2017 the Mancozeb was delivered to Adama in New Zealandin four consignments.[5] During the course of 2017 Adama sold a substantial quantity of theMancozeb to Horticentre Ltd (Horticentre), another New Zealand company.Horticentre sold the product to various apple growers, who applied it in theirorchards.[6] In its claim, Adama alleges that the Mancozeb was contaminated witha chemical known as Azoxytrobin with the result that it damaged the trees.[7] The apple growers claimed compensation from Horticentre.Horicentre in turn looked to Adama.[8] Adama took responsibility for settling the claims and paid outcompensation totalling more than $13 m.[9] In late 2018 Adama commenced this proceeding against Raamalleging breach of contract and related causes of action. Raam is defendingthe claim.[10] It turns out, that, quite possibly unbeknown to Adama, behind Raamthere was a prodigiously long manufacturing and supply chain.[11] Raam, which, it will be recalled, is a Singaporean company, orderedthe Mancozeb from an Indian company known as Falcon InternationalBiosciences Pte Ltd ("Falcon"). Falcon in turn ordered it from another Indiancompany known as Aristo Bio-Tec and Lifescience Pte Ltd ("Aristo"). Aristoengaged another Indian concern, Jay Laxmi Industries ("Laxmi") tomanufacture the Mancozeb by blending the necessary ingredients. Aristosupplied the primary chemical component, Mancozeb TC 85%, to Laxmi fromits own stock and from additional stock acquired from two other Indianconcerns, Orchid Agro Systems ("Orchid") and UPL. As if this were not1 Adama New Zealand Ltd v Raam Chem Pte Ltd [2020] NZHC 1163.complicated enough, it would seem that all or a proportion of the MancozebTC 85% that Aristo acquired from Orchid had originally been acquired byOrchid from UPL.[12] One of the deponents who has sworn an affidavit in opposition toRaam's application is Mr Amitesh Mishra who is a principal of UPL'sNew Delhi solicitors. Mr Mishra exhibits to his affidavit an opinion fromJustice V N Khare who is a former Chief Justice of India (one of two formerChief Justices whose opinions on aspects of this matter are in evidence, or,rather, are exhibited to affidavits sworn by others). Justice Khare's opinionincludes a diagram of the manufacturing and supply chain involved which isreproduced below:Jay LaxmiAdamaRaam ChemFalconAristoUPLSupplied UPL Marcozeb TC 85%for formulationSupplied Formulated Adama MancozebSale of Mancozeb TC 85%Sale of Mancozeb TC 85%Onsold Mancozeb TC 85% from UPLSold Adama MancozebSold Adama MancozebSold Adama MancozebOrchid(Affiliate ofAristo)[13] In early 2019 Raam commenced third party proceedings citingFalcon, Aristo, Laxmi, Orchid and UPL as first to fifth third parties.[14] Understandably, given the relatively straight forward nature of itsclaim against Raam, and that the resolution of this claim wouldunquestionably be delayed by Raam's third party claims, Adama applied foran order striking out or severing those claims.[15] I heard that application on 14 October 2019. Having explored variousoptions with counsel, in the end, I was able to make an order by consentsevering Adama's claim against Raam from Raam's third party claims. Thisapproach had advantages for both parties. From Adama's perspective it couldproceed with its claim against Raam unimpeded by Raam's third partyproceedings (Adama's claim has since been allocated a fixture and is to beheard over two weeks commencing on 3 August 2020). From Raam'sperspective, the approach avoided the necessity of commencing newproceedings.[16] In his submissions on Raam's behalf Mr Holden described thatcompany as a "fixer". By this I understood him to mean that Raam merelyfacilitated Adama's acquisition of the Mancozeb. It is common ground thatRaam did not handle the product at all. As already said, Aristo was responsiblefor its preparation, which it engaged Laxmi to undertake. It was alsoresponsible for its packaging and labelling. Falcon arranged shipment.[17] In its third party claims, Raam says that in those circumstances itcould not have been responsible for any contamination, which must thereforehave occurred further down the manufacturing and supply chain. At this stage,it does not claim to be able to pinpoint exactly where. Accordingly, it sues allof the entities involved.[18] Having filed its third party notices and statements of claim, Raamproceeded on the basis that it was entitled to serve these outside thejurisdiction without leave pursuant to r 6.27 of the High Court Rules 2016.[19] Raam first communicated with the third parties asking whether theywere prepared to accept and acknowledge service of the originatingdocumentation in the third party claims against them. These enquiries appearto have been ignored by Falcon, Aristo, Laxmi and Orchid. But UPL acceptedservice. Raam therefore arranged for service on the other third parties throughdiplomatic channels. My understanding is that as at the date of the hearingbefore me the originating documentation had been served on Laxmi andOrchid (though those entities had not taken any steps in the proceeding), butwas still to be served on Falcon and Aristo.[20] For its part, having accepted service, UPL filed and served theappearance under protest to jurisdiction pursuant to r 5.49 of the High CourtRules that Raam now applies to have set aside.[21] The Court has the benefit of a considerable amount of affidavitevidence before it. For a start, there is the evidence filed and served by Adamaand Raam in connection with the former's application to set aside or sever thethird party proceedings to which I have already referred. In relation to thisapplication, Raam relies also on affidavit evidence sworn by Mr SaurabhGupta, the company's General Manager, Ms Caitlin Barclay, a solicitoremployed by the firm representing the company in this proceeding andMr Gautam Khazanchi, a New Delhi advocate. For its part, UPL relies also onaffidavits sworn by Mr Suman Dutta, the company's Vice President, Mr RohitKumar, its Global General Counsel, and Mr Amitesh Mishra whose evidencehas already been mentioned.[22] The sole purpose of the affidavits sworn by Messrs Khazanchi forRaam and Mishra for UPL was to exhibit the opinions obtained for thoseparties by, respectively, Justices Dipak Misra and V N Khare, the two formerChief Justices.[3] For the reasons given in my 29 May 2020 judgment, I made the order soughtby Raam setting aside UPL's protest.[4] Since 29 May 2020, Adama and Raam have settled the primary claim — at theeleventh hour by the sound of it. In these circumstances, counsel for Raam and UPLjointly sought a recall of my earlier judgment and a re-hearing of the former'sapplication to set aside UPL's protest to jurisdiction. I made such an order by minutedated 7 October 2020.[5] Raam's position is that the settlement of the primary claim does not affect thereasoning in my earlier judgment. UPL's position is that the settlement underminesthe basis for my earlier determination, and so it contends for the opposite outcome.[6] A preliminary issue is the scope of the re-hearing.[7] On Raam's behalf, Mr Holden acknowledges that there is little or no authorityas to the scope of a rehearing granted in circumstances where matters have changedmaterially following the delivery of judgment. As he says, the recall of the judgmentfalls within the narrow category of having been necessary as a result of "some veryspecial reason".2 He goes on to submit that a rehearing in such circumstances is notan opportunity to relitigate the entire matter, as this would involve recall being asubstitute for an appeal. Rather, he submits that the rehearing should be confined towhether the change of circumstances calls for a different outcome.3 Mr Johnson forUPL did not adopt a materially different position.2 Horowhenua County Council v Nash (No. 2) [1968] NZLR 632 (HC) at 633.3 See generally the commentary on the recall and rehearing contained in McGechan on Procedure(loose-leaf ed, Thompson Reuters) at [HR 11.9.01] and the cases there referred to.[8] I am inclined to accept that that is the appropriate approach to take here. Itmay be that once a judgment has been recalled it is generally open to the Court toreconsider the matter and that such reconsideration may extend beyond the particularchange in circumstances that gave rise to the recall in the first place. However, it isunnecessary to say more in this case because it seems to me that it is only necessaryto consider the change in circumstances here in order to deal with the underlyinginterlocutory issue that is (again) before the Court.[9] The questions of when the New Zealand courts will assume jurisdiction to dealwith a claim against a foreign party engages issues of both procedural and substantive(private international) law. The most convenient entry point for the discussion is theHigh Court Rules 2016, and in particular rr 6.29, 6.28 and 6.27.[10] Rule 6.29 provides as follows:6.29 Court's discretion whether to assume jurisdiction(1) If service of process has been effected out of New Zealand withoutleave, and the court's jurisdiction is protested under rule 5.49, thecourt must dismiss the proceeding unless the party effecting serviceestablishes—(a) that there is—(i) a good arguable case that the claim falls whollywithin 1 or more of the paragraphs of rule 6.27; and(ii) the court should assume jurisdiction by reason of thematters 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 applyfor leave should be excused.(2) If service of process has been effected out of New Zealand under rule6.28, and the court's jurisdiction is protested under rule 5.49, and it isclaimed that leave was wrongly granted under rule 6.28, the courtmust dismiss the proceeding unless the party effecting serviceestablishes that in the light of the evidence now before the court leavewas correctly granted.(3) When service of process has been validly effected withinNew Zealand, but New Zealand is not the appropriate forum for trialof the action, the defendant may apply for a stay, or for a dismissal ofthe proceeding under rule 15.1.(4) This rule is subject to section 27(1) of the Trans-Tasman ProceedingsAct 2010 (see rule 5.49(7A)).[11] Rule 6.29(1) applies here. Raam served its third party proceedings on UPL outof New Zealand without seeking leave, and UPL has filed and served a protest tojurisdiction under r 5.49. The Court must dismiss Raam's claim against UPL unlessRaam can establish that it is entitled to proceed against UPL in this country becauseone or more of the circumstances in (a) or (b) of r 6.29(1) applies.[12] In my 29 May 2020 judgment I concluded that the appropriate route by whichto approach the case was pursuant to r 6.29(1)(b), and therefore that whether or notRaam's application for an order dismissing UPL's protest to jurisdiction should begranted turned on whether r 6.28 applied.[13] Rule 6.28(5) materially provides as follows:6.28 When allowed with leave(5) The court may grant an application for leave if the applicantestablishes that—(a) the claim has a real and substantial connection withNew 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 ofjurisdiction.[14] I analysed Raam's claim against UPL under the first three of thosesub-paragraphs and concluded that Raam's claim against UPL had a real andsubstantial connection with this country, that there was a serious issue to be tried onthe merits, and that New Zealand was the appropriate forum for the trial of that claim(the substantive private international law issue).[15] I did not understand Mr Johnson for UPL to contend that Raam's claim againstUPL did not have a real and substantial connection with New Zealand or that therewas not a serious issue to be tried. Accordingly, the key issue determined in my earlierjudgment — and the issue that now needs to be revisited in light of changedcircumstances — is whether New Zealand is the appropriate forum for the trial of thatclaim.[16] After analysing the forum conveniens considerations (essentially thosesummarised in The Laws of New Zealand upon which Mr Johnson relied4) and havingreferred to the Court of Appeal's judgment in Longbeach Holdings v Bhanabhai andCo Ltd, 5 I reached the view that " the considerations that arise in relation to [that]issue [were] finely balanced".6[17] My conclusion was as follows:7[78] In the end, I have reached the view that New Zealand is theappropriate forum for the trial of Raam's claim against UPL. Theconsiderations that have influenced me in reaching that conclusion are these:(a) The damage in respect of which both Adama and Raam seekrecovery occurred in New Zealand.(b) Adama's claim against Raam is to be litigated inNew Zealand, and Raam's claim against UPL is a third partyclaim.(c) Core factual aspects of Adama's claim pertain to the damageor loss which is the subject matter of that claim as well asRaam's claim will have to be determined. Ideally, these wouldbe determined by one court in one trial. This is not to happenhere because Adama's claim has been severed from Raam's.Nevertheless, consistency remains important, and in my viewconsistency is more likely to be achieved if the two aspects ofthe claim are litigated in the same jurisdiction.(d) Adama's claim against Raam will be determined inaccordance with New Zealand procedural law, andconsistency suggests that Raam's claim against UPL shouldbe determined on the same basis.(e) If this Court were to order that Raam's claim against UPLshould be determined in India, then the practical difficulty for4 See The Laws of New Zealand Conflict of Laws (online ed, LexisNexis) at 30.5 Longbeach Holdings v Bhanabhai and Co Ltd [1994] 2 NZLR 28 (CA) at 36 and 37.6 Adama New Zealand Ltd v Raam Chem Pte Ltd, above n 1, at [77].7 Adama New Zealand Ltd v Raam Chem Pte Ltd, above n 1.Raam will be that it will have to re-establish the core factualconsiderations already referred to in India. This willnecessitate it in calling evidence from New Zealand-basedwitnesses over whom it has little influence and may in the endmean from a practical perspective that it is deprived of theopportunity to prove its case.(f) In terms of overall efficiency and expediting the resolution ofthe entire dispute (by which I mean to refer both to Adama'sclaim against Raam and Raam's claim against UPL), I havebeen influenced by the opinion of Justice Misra which,without going into great detail, tends to suggest that the matterwill be dealt with more expeditiously in New Zealand than inIndia.[18] The question then is whether the settlement between Adama and Raam hasundermined my conclusion as to whether the New Zealand Courts should assumejurisdiction.[19] Mr Johnson commenced his submissions as to this by saying that:5. Following the Settlement, if the Court were to assume jurisdiction, theclaim which would remain before the Court for determination wouldbe a claim by a Singaporean Company against an Indian company inrespect of something which happened in India, in the course of a non-contractual relationship which was not governed by New Zealand law,and in respect of which the claimant has suffered loss in Singapore. Itis submitted that, absent the parties' agreement, the Court should notexercise jurisdiction over such a claim.[20] As Mr Holden said in reply, that was the case both before and after thesettlement.[21] In relation to the question of the damage that is the subject of the claim, itappears to me that nothing has changed.[22] Mr Johnson submitted that the damage that is the subject matter of Raam'sclaim against UPL arose in Singapore.[23] Here is how he put the point:15. For conflict of law purposes, the situs of a debt is the country in whichthe debtor resides. Raam Chem is a Singapore-registered company,and it appears to have its place of business there. The place of thedamage is therefore Singapore, not New Zealand. Even if it couldhave been said previously that Adama was suffering damage inNew Zealand (which is not conceded), the Settlement means thatRaam Chem's damage occurred in Singapore.(footnotes omitted)[24] I do not accept that.[25] The argument appears to me to confuse the notion of the physical "damage"— the damage to the fruit trees in New Zealand — that has given rise both to Adama'sclaim against Raam and is a core component of any claim that Raam may have againstany of the third parties, with the "damages" that Raam may be able to claim from anyof those third parties, who are not registered and do not carry on business in thiscountry. The fact that the quantum of Raam's liability to Adama was only determinedwhen the primary claim was settled does not alter the fact that the damage that gaverise to Adama's claim occurred in New Zealand.[26] In any event, the principle on which Mr Johnson relies seems to relate to claimsin debt, which this is not. And the argument that Mr Johnston advances in relation tothis damage issue is one that would have been open to him irrespective of thesettlement as between Adama and Raam.[27] In short, the settlement does not alter the fact that the same physical damagethat led to Adama's claim against Raam is also behind Raam's third party claims.[28] In contrast, it appears to me that the settlement as between Adama and Raammaterially alters the dynamics of the situation as I described theses in the remainingpoints (points (b)–(f)).[29] Adama's claim against Raam will now not be litigated in New Zealand. Thecore factual aspects of Adama's claim pertaining to the physical damage that was thesubject matter of that claim will not be determined in litigation here, so there is noprospect of inconsistent findings as between a New Zealand court and any overseasjurisdiction such as India. Moreover, Adama's claim against Raam will not bedetermined in accordance with New Zealand procedural law. If this Court were toorder that Raam's claim against UPL should be determined in India, that would notrequire Raam to re-establish any core facts determined in New Zealand litigation.[30] Those four factors, which were heavily influential in my earlier determination,therefore fall away.[31] Of course, from Raam's point of view, there remains the position that there willbe complications pursuing its claim in India.[32] In order to pursue its claim against UPL (or any of the other third parties),Raam will need to establish both the legitimacy of Adama's claim against it and thatthe settlement it has agreed to is a proper reflection of its liability. Given that theexclusive focus of Adama's claim against Raam was events that occurred in NewZealand, Raam will unquestionably face difficulties in establishing that aspect of itsclaim against UPL in India. However, in part at least those difficulties will beameliorated by the term in the settlement arrangements between Adama and Raamobliging the former to cooperate with Raam in terms of providing evidence. In anyevent, mere inconvenience and difficulty for a plaintiff is never in and of itself a properbasis for founding extraterritorial jurisdiction.[33] There is another ameliorating factor from Raam's point of view. AsMr Johnson submitted, a claim by a Singaporean concern against an Indian concernof a non-contractual nature regarding the actions of the latter that took place in Indiawill in all probability fall largely to be determined at Indian law. Therefore, if it wereto be litigated in New Zealand, Indian law would have to be established as a matter offact, whereas if it were to be litigated in India that would not be necessary.[34] The final consideration on which I relied concerned the evidence as to therelative efficiency of disposing of litigation in this country and India. I had, and ofcourse still have, the benefit of evidence from a number of Indian-based witnesses,including two former Chief Justices of that country. On that basis of that evidence, Iconcluded that the preponderance of that evidence suggested to me that the litigationcould be disposed of more efficiently in New Zealand than in India. That may still bethe case, but in and of itself that is not a proper foundation for this Court claimingjurisdiction over a party in litigation that is not otherwise properly available.[35] For those reasons, I have reached the conclusion that the settlement of theprimary claim as between Adama and Raam so fundamentally alters the situation thatUPL's protest to jurisdiction must stand.[36] I therefore dismiss Raam's application for an order setting aside UPL'sappearance under protest to jurisdiction and dismiss the third party claim.[37] Once again, I reserve costs having not heard from counsel in relation to these.My preliminary view is that UPL is entitled to its costs of both the original hearingand this rehearing, although there may well be an argument as to whether full costs forboth hearings should be allowed. I expect that counsel will be able to settle costs onan appropriate basis. But if that proves impossible then counsel may file memorandain the usual way.Associate Judge JohnstonSolicitors:Wootton + Kearney, Wellington for defendantMartelli McKegg, Auckland for fifth third party