AUTOTERMINAL NEW ZEALAND LIMITED v IBC JAPAN LIMITED [2018] NZHC 2986

AUTOTERMINAL NEW ZEALAND LIMITED v IBC JAPAN LIMITED [2018] NZHC 2986 [19 November2018]IN THE HIGH COURT OF NEW ZEALANDHAMILTON REGISTRYI TE KŌTI MATUA O AOTEAROAKIRIKIRIROA ROHECIV-2018-419-000294[2018] NZHC 2986BETWEEN AUTOTERMINAL NEW ZEALANDLIMITEDApplicantAND IBC JAPAN LIMITEDRespondentHearing: 1 November 2018Appearances: M D Branch for the ApplicantJ A MacGillivray and M K Brady for the RespondentJudgment: 19 November 2018JUDGMENT OF WOOLFORD JThis judgment was delivered by me on Monday, 19 November 2018 at 12:30 pmpursuant to r 11.5 of the High Court Rules.Registrar/Deputy RegistrarSolicitors: Harkness Henry, HamiltonTompkins Wake, HamiltonIntroduction[1] The plaintiff, Autoterminal New Zealand Limited (ATNZ), is a companyincorporated in New Zealand. It imports and distributes used cars from Japan. Thedefendant, IBC Japan Ltd (IBC), is a company incorporated in Japan. It exports usedcars to New Zealand. IBC supplies cars to ATNZ. This is done pursuant to a "VehicleSupply Agreement" (VSA), dated 1 July 2014.[2] The two companies are part of a wider partnership between Mr Robert Stoneand Mr Hohua Hemi. They own or ultimately control both companies and all aspectsof the business partnership. The relationship between them has broken down.Irretrievably so. They are engaged in litigation in several jurisdictions. At present,Mr Stone controls ATNZ and Mr Hemi controls IBC.[3] IBC has just negotiated and signed an agreement to supply cars to ATNZ'scompetitor in New Zealand – 2 Cheap Cars. ATNZ says in doing so, IBC has breachedthe VSA and two supplemental agreements. It now seeks an interim injunction againstIBC to preserve what it says is its position as a preferred recipient of cars from IBC.Background[4] All the shares in ATNZ are owned by its sole director, Mr Michael Tyler.Mr Tyler holds these shares as a bare trustee for a Cayman Islands company, Autonet.Autonet is indirectly owned or controlled by Mr Stone and Mr Hemi, or their interests,on a 50/50 basis. Mr Tyler has firmly allied himself with Mr Stone in the disputebetween Mr Stone and Mr Hemi.[5] Autonet, the beneficial owner of ATNZ, is deadlocked to the extent itsindependent director has resigned because he cannot make any decisions in theabsence of agreement between shareholders.[6] NPLH Limited (a Hemi family trust company), as 50 per cent owner ofAutonet, has instructed solicitors in the Cayman Islands to apply for the appointmentof a liquidator over Autonet on just and equitable grounds.[7] IBC is directly owned by Mr Stone and Mr Hemi. Each owns 50 per cent. IBCcan continue to operate because under Japanese law a single representative directorhas wide ranging powers to make decisions and to enter contracts for the company.[8] Until 31 May 2018, Mr Stone was the representative director and effectivelycontrolled IBC. Mr Hemi became the representative director with effect from 31 May2018. He and his wife now comprise a majority of IBC's board of directors.[9] Mr Stone has given notice that he intends to apply for the liquidation of IBC.His counsel submits that the liquidation of IBC seems a likely outcome given thatMr Stone holds 50 per cent of the shares and is a guarantor of the bank debt.[10] Mr Hemi has been a director of IBC since its incorporation in 1991. He acceptsIBC is a party to the VSA dated 1 July 2014. He does, however, take issue with theprovenance and validity of the two supplemental agreements. He says he had not seenthe supplemental agreements at any stage prior to the filing of the proceedings. Theyhad also not been referred to in any of the correspondence leading up to theproceedings.[11] Mr Tyler says each of the supplemental agreements were put together byhimself and Mr Stone when he was the representative director of IBC following ayear-end review session. He says the first supplemental agreement was signed byMr Stone and himself when they were in Cebu, Philippines, sometime between15 August 2016 and 27 August 2016. That is why there is no email trail for theexchange of the document. There was no need for correspondence as they were in thesame place. He says he and Mr Stone worked through and edited the agreementtogether. He further says he saved a copy of the agreement on his laptop, which waslater stolen.[12] Mr Tyler says he signed the second supplemental agreement when he was inCebu between 1 July 2017 and 4 August 2017. He then left it for Mr Stone tocomplete. Mr Stone was not in Cebu because he was late returning from an overseastrip. Mr Tyler says they subsequently worked on the document together throughGoogle Docs. The final copy was stored on his laptop, which was stolen together withhis backup hard drive when he and his wife were on a European trip in November2017. Mr Tyler says that he has carried out a full electronic search for copies of theagreement, but has not found anything.[13] Mr Stone says he too has carried out electronic searches for the twosupplemental agreements, but has found nothing. He says, however, that he foundcopies of both agreements in his hardcopy files.[14] Mr Hemi remains suspicious. He points out Google Docs is a web-based wordprocessor and forms part of the cloud-hosted office suite software offered by Googlewithin its Google Drive service. As it is cloud-hosted, users are able to access theirGoogle Drive account from different devices. Documents created on Google Docsare not exclusively stored on any specific device or server owned by the documentcreator. Rather, with the login details, these documents can be accessed from anycomputer, and many other devices, with an internet connection.[15] Mr Hemi says there should, therefore, be an electronic record of Mr Tyler andMr Stone making the second supplemental agreement dated 1 July 2017 in GoogleDrive. Mr Hemi has instructed IBC to search for the supplemental agreements, butthey have not been able to be located. Furthermore, no correspondence regarding theircreation, negotiation or execution has been able to be located.Vehicle Supply Agreement[16] ATNZ relies on two clauses in the VSA dated 1 July 2014:5. DeliveryIBC shall use its best endeavour to deliver the vehicles ordered as soon aspossible on the next available vessel. All deliveries shall be made Cost,Insurance and Freight (CIF) to Lytteton, [sic] Auckland or Wellington in NewZealand unless another port or destination is agreed upon by the parties subjectto adjustment of freight costs, if any.14. Relationship of PartiesThe parties agree that they will work closely together to develop the marketin New Zealand for both companies benefit. IBC grants ATNZ the exclusiveright to represent IBC, act on IBC's behalf and use the IBC name in NewZealand for the purposes of marketing, promotion, customer's service andsales.[17] ATNZ says cl 5 of the VSA requires IBC not to enter into agreements withparties other than ATNZ where the effect of such sales would prevent cars ordered byATNZ being delivered "as soon as possible on the next available vessel."[18] As to cl 14 of the VSA, ATNZ says that it creates an obligation such that IBCcannot operate in a way which:(a) materially departs from the way parties have historically conductedthemselves; and/or(b) competes with, rather than being complementary to ATNZ's business,including without limitation, attempting to sell directly to ATNZ'sexisting customers and changing the priority rules.[19] ATNZ also claims the wording of cl 14, the VSA as a whole, and thebackground set out by Mr Tyler, gives rise to a general obligation of good faith. Therequirement of cooperation is said to be a strong factor in that regard.Supplemental agreements[20] ATNZ also relies on two supplemental agreements, which are said to have beeneffective from 1 July 2016 and 1 July 2017. As mentioned, the provenance and validityof the two supplemental agreements are challenged by IBC.[21] ATNZ relies on three clauses in the first supplemental agreement dated 1 July2016:1. TermThe parties agree to extend the term of the VSA outlined in clause 2for a further period of three years. The VSA will automatically renewat the expiry of each three year period for further rolling three yearsperiods. The VSA can only be cancelled by mutual agreement of bothparties or by one party giving the other party twelve (12) monthswritten notice of termination before the end of the term or thesubsequent renewal term. The termination of the agreement to takeplace at the end of the term or the subsequent renewal term.2. PurchasingClause 3.2 of the VSA outlines the price IBC shall sell vehicles toATNZ. The parties wish to update the pricing. IBC shall sell thevehicles to ATNZ at the lower of the following prices:c) ATNZ and IBC shall mutually agree and set the terms for allcustomers in New Zealand so there is consistency in themarketplace. ATNZ shall have the right to set pricing termsand conditions for any customer to allow it to stay competitivein the market. No customer terms outside of establishedlevels and below those offered to existing customers arepermissible without the approval of ATNZ.3. Credit TermsAll customers being offered credit terms in the NZ marketplace musthave those credit terms approved by ATNZ, with ATNZ acting as theconsignee, to enable ATNZ to responsibly fulfil its role as the managerof the credit facility. ATNZ will manage all such terms customers toensure IBCs interests are protected including entering into contractswith those customers, collecting of deposits, lodging vehiclesecurities and managing the release of the MR2As.[22] ATNZ says cl 2(c) of the first supplemental agreement means unless ATNZagrees to the terms proposed, IBC cannot enter into agreements to sell cars to any othercustomer in New Zealand.[23] It also says that cl 3 means that ATNZ has to agree to credit terms before theycan be offered by IBC to any other customer in New Zealand.[24] ATNZ relies on four clauses in the second supplemental agreement dated 1 July2017:BackgroundIBC and ATNZ have entered into a Vehicle Supply Agreement ("VSA") datedJuly 1, 2014 which was amended via a supplementary agreement in July 2016.The parties agree to amend the existing VSA as follows:1. Shipping PriorityATNZ will receive priority for shipments if and when there are spaceor other restrictions, but will cooperate with IBC on sharing spacewhen needed if the shortage of space or restrictions are a long-termproblem. In the event that alterative [sic] shipping services, includingcontainer shipments, are required, IBC will pay the extra costs.3. Purchasing PriorityATNZ will work with IBC on developing a priority policy for allvehicles purchased by IBC for the New Zealand market, any changesto this policy to be mutually agreed by both parties. The policy willbe based on the following order of priority:a) Customer attending the auction in person, as long as the customerselects, submits (via the website or auction staff) and bids on thevehicle.b) Highest bid placed directly by the customer via the website,including bids made on behalf of customers by sales staff.c) Highest bid placed by the customer via auction recommend orpricing with staff.d) Auction or ISS staff attending the auction, as long as they select,submit and bid on the vehicle, with discretion that the staff do notmonopolize too many of the vehicles bid on by other staff.e) Highest bids submitted via website, if the highest bid is the samethen the first bid placed with take priority.4. Competitive Pricing and TermsIBC will do everything in its power to keep ATNZ competitive in theNZ market, cooperating closely to recruit new customers and cultivaterelationships to grow IBC's market share. In pursuit of new business,and to retain the existing business, pricing and terms for some newand existing customers may be updated to levels lower than thosealready established. The new pricing and terms, once mutually agreedupon by IBC and ATNZ, will also be made available to ATNZ on atleast equal terms to keep it competitive in the market. Once new termsare adjusted and confirmed, ATNZ's pricing and terms will be updatedimmediately to reflect the changes. The pricing changes will affectall purchases, including those from IBC inventory, on-line auctionsystem (iDirect), and buy trips. IBC will inform ATNZ prior tochanging any customer pricing and terms below or outside of alreadyapproved parameters for approval, but also to confirm whether or notATNZ wishes to avail itself of the updated pricing and terms.5. Buy TripsATNZ will encourage all New Zealand customers to visit Japan topurchase vehicles on buy trips at auction. All buy trips must benotified to IBC in advance so that the schedule can be co-ordinatedand bookings made. All buy trip costs including flights,accommodation, transport and meals will be covered by IBC for thecustomer and any ATNZ staff who accompany customers on the buytrip on the following basis:a) Flights will be economy or premium economy only, orNZD$2,000 toward a ticket the customer purchases themselves.Flights must be booked and arranged through ATNZ, for all buytrips including those customers that purchase direct from Japan,to keep the costs down and avoid peak dates and last-minutearrangements when tickets are much more expensive.b) Hotel accommodations will be comfortable 3.5-4 star level asclose and convenient to the auctions as possible.c) Entertainment expense during buy trips should be limited to one-night out per trip, preferably before the smaller auctions, to allowIBC staff the rest they need and keep costs down.d) IBC staff will only entertain customers until 10pm, after that theyare to return home or to the hotel unless they choose to stay ontheir own. Driving to and from the auctions requires at least8 hours after drinking alcohol to avoid violations of Japan'sdrinking and driving laws.e) Shinkansen (bullet train) seats will be assigned normal class, andnot the green car.f) IBC and ATNZ will endeavour to make the buy trips a pleasantexperience for customers while being mindful of the costs andkeeping expenses at a minimum.g) Priority for choice of vehicles at auction is for customers on buytrips. If there are multiple customers at auction at the same timethe customer who booked first shall have priority with the auctionstaff and account manager to make sure there is cooperationbetween them so conflicts are avoided.[25] ATNZ says that cl 1 confirms that its shipping needs are to have priority, whilecl 3 sets the priority that ATNZ's customers must receive. ATNZ further says that cl 4confirms the close working relationship of ATNZ and IBC and provides that ATNZhas to agree to pricing by IBC and, if agreed, those same terms have to be offered toATNZ. Finally, ATNZ argues cl 5 provides ATNZ can book buying trips (and isrequired to encourage such trips) as long as the rules are complied with.Orders sought[26] In its amended application for an interim injunction, ATNZ seeks thefollowing:(a) An order preventing the respondent from:(i) selling vehicles to 2 Cheap Cars: and/or(ii) marketing to customers of the applicant; and/or(iii) offering preferential terms and/or priority to new customersin relation to vehicles purchased from IBC; and/or(iv) offering credit terms to motor vehicle traders; and/or(v) consigning any vehicle to a ship leaving Japan unless thatvehicle was purchased prior to a vehicle purchased by theapplicant; and/or(vi) amending the priority rules from what are set out at pages 162and 163 of the affidavit of Melinda Amy Findon sworn3 October 2018 and, in particular, applying the rule that superpriority goes to parties on buying trips and not to parties thathave buyers permanently based in Japan; and/or(vii) preventing or interfering with buying trips for ATNZcustomers provided the terms set out in clause 5 of the SecondSupplementary Agreement is adhered to;without the prior written approval of the applicant or by further orderof the Court.(b) An order that:(i) IBC must continue to supply vehicles ordered by ATNZ butwith this order having a return date of 16 November 2018, atwhich time ATNZ will have reconciled, or at least will haveattempted to reconcile, the amount owed and due (if any) byATNZ to IBC; and/or(ii) IBC must produce to ATNZ an unredacted copy of the VSAbetween it and 2 Cheap Cars.The law[27] The law relating to applications for interim injunctions is well settled. TheCourt of Appeal outlined the approach in NZ Tax Refunds Ltd v Brooks Homes Ltd:1The applicant must first establish that there is a serious question to be tried or,put another way, that the claim is not vexatious or frivolous. Next, the balanceof convenience must be considered. This requires consideration of the impacton the parties of the granting of, and the refusal to grant, an order. Finally, anassessment of the overall justice of the position is required as a check.1 NZ Tax Refunds Ltd v Brooks Homes Ltd [2013] NZCA 90, (2013) 13 TCLR 531 at [12]–[13].The grant of an interim injunction involves, of course, the exercise of adiscretion. Such a decision is amenable to appeal, on the basis that the judgehas erred in law, taken account of an irrelevant matter, failed to take accountof a relevant matter or is plainly wrong. This is subject to the qualification,however, that whether there is a serious question to be tried is an issue whichcalls for judicial evaluation rather than the exercise of a discretion. Where anappellate court disagrees with a judge's finding that there is no serious issueto be tried, the appellate court will have to carry out its own assessment of thebalance of convenience and the overall justice of the case, although it maywell derive assistance from the judge's analysis of those aspects.[28] First, the applicant must establish there is a serious question to be tried. Thestandard is easily satisfied. This part of the assessment is intended to dispose of casesthat are "vexatious or frivolous", or cases where the applicant has "no real prospect ofsuccess".2 As Lord Diplock said in American Cyanamid Co v Ethicon Ltd:3It is no part of the court's function at this stage of the litigation to try to resolveconflicts of evidence on affidavit as to facts on which the claims of either partymay ultimately depend nor to decide difficult questions of law which call fordetailed argument and mature considerations. These are matters to be dealtwith at the trial.[29] Second, once the applicant has established a serious question to be tried, theCourt considers whether the balance of convenience lies in favour of granting orrefusing interim relief. This part entails consideration of whether, if the plaintiff wereto succeed at trial, an award of damages would be adequate. As Lord Diplock said:4If damages in the measure recoverable at common law would be adequateremedy and the defendant would be in a financial position to pay them, nointerlocutory injunction should normally be granted, however strong theplaintiff's claim appeared to be at that stage. If, on the other hand, damageswould not provide an adequate remedy for the plaintiff in the event of hissucceeding at the trial, the court should then consider whether, on the contraryhypothesis that the defendant were to succeed at the trial in establishing hisright to do that which was sought to be enjoined, he would be adequatelycompensated under the plaintiff's undertaking as to damages for the loss hewould have sustained by being prevented from doing so between the time ofthe application and the time of the trial. If damages in the measure recoverableunder such an undertaking would be an adequate remedy and the plaintiffwould be in a financial position to pay them, there would be no reason uponthis ground to refuse an interlocutory injunction.2 American Cyanamid Co v Ethicon Ltd [1975] AC 396 (HL) at 407–408.3 At 407.4 At 408.[30] Last, the Court will make a determination as to where overall justice lies. Thispart of the assessment serves as a check. The matters discussed and conclusionsreached under the first two broad questions will assist.5Serious question to be tried[31] ATNZ submits there is a serious question to be tried because IBC has breachedand intends to continue to breach the VSA and the two supplemental agreements by:(a) Entering sale agreements which will substantially increase the numberof cars it is required to export from Japan.(b) Offering, or intending to offer, preferential bidding rights and otherterms to 2 Cheap Cars and other motor vehicle traders withoutobtaining the prior approval of ATNZ.(c) Offering, or intending to offer, credit terms to motor vehicle traders.(d) Actively marketing to ATNZ's customers.(e) Directly competing with ATNZ with full knowledge that thiscompetition will put ATNZ's business at risk of failure.[32] I am satisfied ATNZ has established a serious question to be tried. At least inrespect of some of the clauses. I address each of its arguments in turn. In doing so, Iput the concerns regarding the provenance of the supplemental agreements to one side.There is clearly a serious question to be tried in that regard.[33] ATNZ submits by entering into sale agreements which will substantiallyincrease the number of cars it is required to export from Japan, IBC is in breach of itsbest endeavour obligation as set out in cl 5 of the VSA. I am not convinced there is aserious question to be tried here. First, cl 5 is just a best endeavour clause: "IBC shalluse its best endeavour to deliver the vehicles ordered as soon as possible on the next5 Klissers Farmhouse Bakeries Ltd v Harvest Bakeries Ltd [1985] 2 NZLR 129 (CA) at 142.available vessel." That clause does not prohibit IBC from entering into agreementssuch as that with 2 Cheap Cars. Second, I have not seen anything to indicate cl 5 hasbeen breached. Although it appears there has been an increase in the average timebetween purchase and shipment from 10 – 15 days to 25 – 30 days, the Ministry ofPrimary Industries has imposed an additional requirement that all cars shipped to NewZealand now have to undergo a new heat treatment regime to meet the threat of stinkbug infestations. This is a substantial contributor to the delays.[34] As to the question of offering preferential pricing and terms to 2 Cheap Carsand others without obtaining the prior approval of ATNZ, it is not disputed that IBChas entered an agreement with 2 Cheap Cars without ATNZ's approval. 2 Cheap Carshas also negotiated pricing that is in some respects superior to the pricing given toATNZ. This is a prima facie breach of cl 2 of the first supplemental agreement andcl 4 of the second supplemental agreement. There is a serious question to be tried.But, as will be clear below, I am of the view the determinative issue is whetherdamages would be an adequate remedy.[35] ATNZ further submits IBC has also offered credit terms to 2 Cheap Carswithout ATNZ's approval, which is another prima facie breach of cl 3 of the firstsupplemental agreement: "All customers being offered credit terms in the NZmarketplace must have those credit terms approved by ATNZ". In reply, IBC say that2 Cheap Cars has not been given credit terms in the NZ marketplace because it mustpay for cars on delivery to New Zealand. ATNZ has then pointed to another agreementwith Mr Motors, which does not include any fixed payment date such that it could beup to six months before some cars are paid for. Again, a serious question to be triedhas been established. But I am of the view that the determinative issue is not so muchwhether there is a breach of cl 3, but whether ATNZ has suffered any damage.[36] As to the question of marketing to ATNZ's customers, ATNZ says this is abreach of cl 14 of the VSA, which requires the parties to work closely together todevelop the market in New Zealand for both companies benefit and grants ATNZ theright to represent IBC, act on IBC's behalf and use the IBC name in New Zealand.This is not a serious question to be tried. First, the clause is a general one requiringthe parties to work closely together for both companies benefit. Second, IBC hasalways made significant sales to other customers in New Zealand. From 21 March to21 September 2018, cars supplied to ATNZ have accounted for less than half of IBC'stotal sales revenue from New Zealand. There is no specific clause in the VSA or thesupplemental agreements prohibiting IBC from selling cars direct to other customersin New Zealand.[37] Finally, ATNZ further submits IBC is directly competing with ATNZ with fullknowledge that this competition will put ATNZ's business at risk of failure. I assumethat ATNZ here again relies upon cl 14 of the VSA. This is not a serious question tobe tried. First, the clause is a general one requiring the parties to work closely togetherfor both companies benefit. It does not go as far as argued by ATNZ. Second, ATNZhas not provided an evidential basis for its claims that IBC is trying to put ATNZ outof business or that without the Court's intervention ATNZ's business will fail.[38] ATNZ is not obliged to pay for cars supplied by IBC until they are sold tocustomers in New Zealand. The total contingent debt owing from ATNZ to IBC inrespect of vehicles supplied by IBC to ATNZ is at least $40 million. There is a disputeas to how much of the total debt is currently due and owing (that is, about how muchATNZ has collected from its customers as against the amount that it has paid to IBC).IBC is taking steps to resolve the dispute with ATNZ about the exact level of debt, buthas not suspended ATNZ's right to purchase cars or given notice cancelling the VSA.[39] Although not specified as a serious question to be tried in the amendedapplication for an interim injunction, ATNZ also complains about what it says arechanges to the priority rules for buying at car auctions in Japan. In reply, IBC saysthat 2 Cheap Cars has not been given enhanced priority. If more than one customerattends an auction, the highest bid always wins. IBC says that ATNZ is attempting tointroduce a gloss on what it means to have a customer present at the auction. This isnot a serious question to be tried as ATNZ relies on cl 3 of the second supplementalagreement, which requires nothing more than ATNZ to "work with IBC on developinga priority policy for all vehicles purchased by IBC for the New Zealand market."Although cl 3 goes on to state that the policy will be based on a specified order ofpriority, the full and final policy is not contained in the agreement. Clause 3 merelysets out guidelines for the policy to be developed.[40] Further, Mr Hemi says reasonable notice should be given per cl 5 of the secondsupplemental agreement:All buy trips must be notified to IBC in advance so that the schedule can beco-ordinated and bookings made. All buy trip costs including flights,accommodation, transport and meals will be covered by IBC for the customerand any ATNZ staff who accompany customers on the buy trip on thefollowing basis ...[41] In any event, even if breached, damages should be an adequate remedy.Balance of convenience[42] In my view, damages would be an adequate remedy for ATNZ if IBC is foundto be at fault at trial.[43] At its highest, ATNZ has established prima facie breaches of cl 2 and cl 3 ofthe first supplemental agreement and cl 4 of the second supplemental agreementbecause IBC has entered sales agreements containing pricing and other terms with2 Cheap Cars and Mr Motors without the prior approval of ATNZ. IBC has alsoappeared to offer credit terms without ATNZ's approval. And I also include here therisk IBC might breach cl 5 of the second supplemental agreement in the future.[44] The measure of damages would be the difference between the pricing and otherterms offered to other customers and that offered to ATNZ. ATNZ would be able toidentify where it has lost in auctions to 2 Cheap Cars. Clause 4 of the secondsupplemental agreement specifically provides that, in pursuit of new business, pricingand terms for some new and existing customers may be lowered. Once the lower rateshad been agreed upon by IBC and ATNZ, the same pricing and terms would then bemade available to ATNZ on at least equal terms to keep it competitive in the market.If it is established at trial that IBC is in breach of cl 4, then ATNZ can clearly quantifythe extent to which ATNZ has suffered loss. The same reasoning applies in respect ofcl 5.[45] As far as offering credit is concerned, cl 3 of the first supplemental agreementgives ATNZ the right to approve credit terms offered to all customers by IBC, but itdoes not specifically provide that credit terms offered to ATNZ are to match creditterms offered to other customers. It appears that ATNZ has, however, better creditterms than any other IBC customer because it only pays for cars supplied to it by IBCwhen they are sold. This is a real competitive advantage which ATNZ apparentlyretains. Even though ATNZ may have the rights to approve credit terms offered toother customers in the New Zealand marketplace, it is difficult to see what damagehas been caused to ATNZ by a breach of cl 3. Nonetheless, if there is any damage, itshould be able to be quantified in some way.[46] There is also no difficulty in IBC meeting any damages which may be assessedat trial. Such damages can be offset against the more than $40 million owed by ATNZto IBC.Overall justice[47] Standing back and looking at the situation overall as a matter of justice, I amconvinced that the injunction ought not to be granted.[48] First, ATNZ is seeking orders preventing IBC selling cars to competitors ofATNZ and/or offering preferential terms and/or priority to new customers in relationto vehicles purchased from IBC. In seeking such orders, ATNZ wants the Court toenforce the VSA and the two supplemental agreements.[49] However, I have my doubts that the two supplemental agreements in particularare lawful. During the course of argument, I voiced my concern that the supplementalagreements may breach s 27 of the Commerce Act 1986 in that they appear to havethe effect of substantially lessening competition. They effectively require ATNZ andIBC to collude and set IBC's prices for all customers. Counsel for IBC agreed withmy concern, but I did not hear any substantial argument on the issue. I would only beprepared to consider granting an injunction if I was satisfied that the supplementalagreements are lawful. At this stage, I am not so satisfied.[50] Second, one of the orders sought is that IBC must continue to supply carsordered by ATNZ. In effect, ATNZ seeks an enforcing mandatory injunction requiringIBC to do something it has already agreed to do by contract. Enforcing mandatoryinjunctions are essentially particular orders for specific performance and are grantedon the same principles that govern an order for specific performance.6[51] The general rule is, however, that contracts for the sale of goods will not bespecifically enforced by the Courts.7 This is because damages calculated on themarket price of the goods are as complete a remedy to the purchaser as the delivery ofthe goods contracted for. In terms of its agreement with IBC, ATNZ is not obliged topay for the cars it has ordered from IBC until it has sold them to customers in NewZealand. When ATNZ filed its application for an injunction it provided a balance sheetfrom its financial accounts for the year ended 31 July 2018, which showed that it hadnegative equity of NZ$12,008.177. In these circumstances, IBC also has concerns thatif an enforcing mandatory injunction was granted in terms that required it to continueto supply cars ordered by ATNZ, it would not be paid for them.[52] And as mentioned above, I am not convinced that there is a risk ATNZ'sbusiness would fail if interim relief were declined. Rather, there is evidence that IBCis continuing to sell cars to ATNZ. Mr Hemi said that since 1 September 2018, ATNZhas purchased 1533 cars from IBC. The significant debt owed to IBC by ATNZ is alsorelevant.[53] Third, this Court is reluctant to make orders that would fall to be performedand (if necessary) enforced in Japan in circumstances where IBC and therepresentative director of IBC is subject to Japanese law. One of the major issues inthe proceeding is the priority given to particular buyers by IBC at car auctions in Japan.The priority rules apply to all of IBC's customers and not just ATNZ. Any change inthese would impact not on ATNZ, but also on all customers to whom IBC suppliedcars.6 Peter Blanchard (ed) Civil Remedies on New Zealand (2nd ed, Thomson Reuters, Wellington,2011) at [5.2.1(2)].7 At [8.7.1].Result[54] The application for an interim injunction is dismissed. Costs are payable byATNZ to IBC on a 2B basis._________________________Woolford J