H O WILES LTD v BAR’S PRODUCTS INTERNATIONAL LTD [2022] NZHC 2045

H O WILES LTD v BAR'S PRODUCTS INTERNATIONAL LTD [2022] NZHC 2045 [18 August 2022]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2021-404-991[2022] NZHC 2045UNDER the Contractual Remedies Act 1979the Fair Trading Act 1986the Trade Marks Act 2002IN THE MATTER of breach of agreement, repudiation,estoppel, breach of trust and passing offBETWEEN H O WILES LIMITEDFirst plaintiffBARS LEAKS NZ LIMITEDSecond plaintiffBAR'S LEAKS (AUSTRALIA) PTY LTDThird plaintiffBAR'S LEAKS AUSTRALIA LPFourth plaintiffAND BAR'S PRODUCTS INTERNATIONALLIMITEDDefendantHearing: 15 August 2022Appearances: C L Elliott QC for plaintiffsJ M Glover for defendantDate of judgment: 18 August 2022JUDGMENT OF JAGOSE JThis judgment was delivered by me on 18 August 2022 at 11.00am. Pursuant to Rule 11.5 of the High Court Rules.Registrar/Deputy RegistrarCounsel/Solicitors:C L Elliott QC, AucklandJ M Glover, Barrister, AucklandMcVeagh Fleming, AucklandWoodroffe Lawyers, Auckland[1] The plaintiffs (the Wiles Group) licence an Australian- and New Zealand-registered trade mark from the defendant (BPI), a company registered in California.They contend for an agreement by which the trade mark would be transferred to them.It was not.[2] By claim of 4 June 2021, Wiles Group asserted BPI was liable to them inbreach or repudiation of contract and estoppel, at least inferentially to be determinedin accordance with the laws of New Zealand. BPI defended the claim and raiseda counterclaim on 17 August 2021, to which Wiles Group replied on 21 September2021.[3] Wiles Group's amended claim dated 5 November 2021 added claims for breachof trust or institutional constructive trust, revocation or invalidity of the trade markunder the Trade Marks Act 2002, breach of the Fair Trading Act 1986 and passing off.Except for the statutory causes of action, Wiles Group included reference to Australianlaw under each other cause of action. No leave was sought to serve the amended claim.[4] BPI objected to this Court's jurisdiction to hear and determine the proceeding"to the extent that the governing law is now said to be the law of Australia". Its presentapplication seeks to stay or dismiss the causes of action to the extent of their referenceto Australian law, and additionally to stay or dismiss the last two causes of action intheir entirety as lacking substance.[5] At the hearing of BPI's application, Wiles Group withdrew the amendedclaim's references to Australian law.1 Accordingly, for my decision only is if the causesof action under the Fair Trading Act and in passing off may be maintained.Applicable law[6] Rule 5.49 of the High Court Rules 2016 relevantly provides:Appearance and objection to jurisdiction(1) A defendant who objects to the jurisdiction of the court to hear anddetermine the proceeding may, within the time allowed for filing a1 For the record, Wiles Group withdrew paragraphs 66, 70, 89, 90, 97, 106 and 152 of its amendedclaim dated 5 November 2021.statement of defence and instead of so doing, file and serve an appearancestating the defendant's objection and the grounds for it.(2) The filing and serving of an appearance does not operate as a submissionto the jurisdiction of the court.(3) A defendant who has filed an appearance may apply to the court to dismissthe proceeding on the ground that the court has no jurisdiction to hear anddetermine it.(6) The court hearing an application under subclause (3) must,—(a) if it is satisfied that it has no jurisdiction to hear and determine theproceeding, dismiss the proceeding; and(b) if it does not dismiss the proceeding under paragraph (a), set aside theappearance.(7) To the extent that an application under this rule relates to service ofprocess effected outside New Zealand under rule 6.27 or 6.28, it must bedetermined under rule 6.29.(7A) But both this rule and rule 6.29 are subject to section 27(1) of the Trans-Tasman Proceedings Act 2010, which provides that a New Zealand courtcannot stay a civil proceeding before it on forum grounds connected withAustralia otherwise than in accordance with subpart 2 of Part 2 of that Act.(8) The court, in exercising its powers under this rule, may do so on any termsand conditions the court thinks just and, in particular, on setting aside theappearance it may extend the time within which the defendant may fileand serve a statement of defence and may give any directions that appearnecessary regarding any further steps in the proceeding.[7] In term of r 5.49(7), rr 6.27–6.29 provide:6.27 When allowed without leave(1) This rule applies to a document that initiates a civil proceeding, or is anotice issued under subpart 4 of Part 4 (third, fourth and subsequentparties), which under these rules is required to be served but cannot beserved in New Zealand under these rules (an originating document).(2) An originating document may be served out of New Zealand without leavein the following cases:(a) when a claim is made in tort and—(i) any act or omission in respect of which damage was sustained wasdone or occurred in New Zealand; or(ii) the damage was sustained in New Zealand:(b) when a contract sought to be enforced or rescinded, dissolved,annulled, cancelled, otherwise affected or interpreted in anyproceeding, or for the breach of which damages or other relief isdemanded in the proceeding—(i) was made or entered into in New Zealand; or(ii) was made by or through an agent trading or residing within NewZealand; or(iii) was to be wholly or in part performed in New Zealand; or(iv) was by its terms or by implication to be governed by New Zealandlaw:(c) when there has been a breach in New Zealand of any contract,wherever made:(d) when the claim is for—(i) a permanent injunction to compel or restrain the performance ofany act in New Zealand; or(ii) interim relief in support of judicial or arbitral proceedingscommenced or to be commenced outside New Zealand:(e) when the subject matter of the proceeding is land or other propertysituated in New Zealand, or any act, deed, will, instrument, or thingaffecting such land or property:(f) when the proceeding relates to the carrying out or discharge of thetrusts of any written instrument of which the person to be served is atrustee and which ought to be carried out or discharged according tothe law of New Zealand:(g) when any relief is sought against any person domiciled or ordinarilyresident in New Zealand:(h) when any person out of the jurisdiction is—(i) a necessary or proper party to proceedings properly broughtagainst another defendant served or to be served (whether withinNew Zealand or outside New Zealand under any other provisionof these rules), and there is a real issue between the plaintiff andthat defendant that the court ought to try; or(ii) a defendant to a claim for contribution or indemnity in respect ofa liability enforceable by proceedings in the court:(i) when the proceeding is for the administration of the estate of anydeceased person who at the time of his or her death was domiciled inNew Zealand:(j) when the claim arises under an enactment and either—(i) any act or omission to which the claim relates was done oroccurred in New Zealand; or(ii) any loss or damage to which the claim relates was sustained inNew Zealand; or(iii) the enactment applies expressly or by implication to an act oromission that was done or occurred outside New Zealand in thecircumstances alleged; or(iv) the enactment expressly confers jurisdiction on the court overpersons outside New Zealand (in which case any requirements ofthe enactment relating to service must be complied with):(k) when the person to be served has submitted to the jurisdiction of thecourt:(l) when a claim is made for restitution or for the remedy of constructivetrust and the defendant's alleged liability arises out of acts committedwithin the jurisdiction:(m) when it is sought to enforce any judgment or arbitral award.6.28 When allowed with leave(1) In any proceeding when service is not allowed under rule 6.27, anoriginating document may be served out of New Zealand with the leaveof the court.(2) An application for leave under this rule must be made on notice to everyparty other than the party intended to be served.(3) A sealed copy of every order made under this rule must be served with thedocument to which it relates.(4) An application for leave under this rule must be supported by an affidavitstating any facts or matters related to the desirability of the court assumingjurisdiction under rule 6.29, including the place or country in which theperson to be served is or possibly may be found, and whether or not theperson to be served is a New Zealand citizen.(5) The court may grant an application for leave if the applicant establishesthat—(a) the claim has a real and substantial connection with New Zealand; and(b) there is a serious issue to be tried on the merits; and(c) New Zealand is the appropriate forum for the trial; and(d) any other relevant circumstances support an assumption ofjurisdiction.6.29 Court's discretion whether to assume jurisdiction(1) If service of process has been effected out of New Zealand without leave,and the court's jurisdiction is protested under rule 5.49, the court mustdismiss the proceeding unless the party effecting service establishes—(a) that there is—(i) a good arguable case that the claim falls wholly within 1 or moreof the paragraphs of rule 6.27; and(ii) the court should assume jurisdiction by reason of the matters setout in rule 6.28(5)(b) to (d); or(b) that, had the party applied for leave under rule 6.28,—(i) leave would have been granted; and(ii) it is in the interests of justice that the failure to apply for leaveshould be excused.(2) If service of process has been effected out of New Zealand under rule 6.28,and the court's jurisdiction is protested under rule 5.49, and it is claimedthat leave was wrongly granted under rule 6.28, the court must dismiss theproceeding unless the party effecting service establishes that in the lightof the evidence now before the court leave was correctly granted.(3) When service of process has been validly effected within New Zealand,but New Zealand is not the appropriate forum for trial of the action, thedefendant may apply for a stay, or for a dismissal of the proceeding underrule 15.1.(4) This rule is subject to section 27(1) of the Trans-Tasman Proceedings Act2010 (see rule 5.49(7A)).[8] Also material is r 15.1:Dismissing or staying all or part of proceeding(1) The court may strike out all or part of a pleading if it—(a) discloses no reasonably arguable cause of action, defence, or caseappropriate to the nature of the pleading; or(b) is likely to cause prejudice or delay; or(c) is frivolous or vexatious; or(d) is otherwise an abuse of the process of the court.(2) If the court strikes out a statement of claim or a counterclaim undersubclause (1), it may by the same or a subsequent order dismiss theproceeding or the counterclaim.(3) Instead of striking out all or part of a pleading under subclause (1), thecourt may stay all or part of the proceeding on such conditions as areconsidered just.(4) This rule does not affect the court's inherent jurisdiction.Discussion[9] Notwithstanding the Court of Appeal's rejection r 5.49 objections to thisCourt's jurisdiction are "all or nothing",2 but can be upheld in relation to individualcauses of action, I have my doubts such objection reductively may be applied toaddress individual components of a cause of action, such as here "to the extent that thegoverning law is now said to be the law of Australia". That should not matter now,2 Wing Hung Printing Co Ltd v Saito Offshore Pty Ltd [2010] NZCA 502, [2011] 1 NZLR 754 at[68].given Wiles Group's withdrawal of those allegations. But BPI argues its objectioncontinues to have resonance in its application to stay or dismiss the Fair Trading Actand passing off causes of action.[10] The issue arises through BPI's reliance on r 6.28(5)(b)'s "serious issue to betried on the merits", which is argued to offer a lesser threshold for stay or dismissalthan the more orthodox alternative r 15.1's "no reasonably arguable cause of action".Under the former rule, "the Court must be satisfied there is a serious legal issue to betried and that there is a sufficiently strong factual basis to support the legal rightasserted".3 If there is a materially different threshold, then it only is the cause of actionbe "sufficiently plausible".4 But some sense no different threshold ultimately isintended can be drawn from r 6.29(3)'s reference to r 15.1.[11] The argument is — in exercising discretion to assume jurisdiction overWiles Group's objected proceedings, served on BPI out of New Zealand without leave— I must dismiss the claim unless Wiles Group establishes the relevant criteria underr 6.29(1), which includes I should assume jurisdiction by reason of, among otherthings, r 6.28(5)(b)'s "serious issue". The difficulty with that argument here is BPI'sobjection is made only "to the extent that the governing law is now said to be the lawof Australia", which no longer is maintained (and was not made in relation to the FairTrading Act claim in any event). Without the foundation objection, no question ofassumption of jurisdiction arises.5[12] Instead, I address BPI's application under r 15.1 alone. The principles arewell-understood: pleaded facts are presumed true; the target pleading must have noprospect of success; and the jurisdiction is exercised only in clear cases.6 An 'abuse of3 At [37], citing Harris v Commerce Commission [2009] NZCA 84, (2009) 12 TCLR 379 at [57]–[61].4 At [41].5 Unaddressed in argument is if BPI's submission to this Court's jurisdiction, by filing its defenceto Wiles Group's original claim, necessarily includes the prospect of amended pleadings (whichmay introduce fresh causes of action): High Court Rules, r 7.77. If not, BPI's appearance underprotest to jurisdiction was due within 10 working days of the amended claim's service, whichappears not to have been met: rr 5.49(1) and 7.77(6). Given this judgment's result, I have notneeded to determine these issues.6 See Gartside v Sheffield, Young & Ellis [1983] NZLR 37 (CA) at 45; Attorney-General v Princeand Gardner [1998] 1 NZLR 262 (CA) at 267; and North Shore City Council v Attorney-General[2012] NZSC 49, [2012] 3 NZLR 341 at [146], all endorsed by the Supreme Court in Sandman vMcKay [2019] NZSC 41, [2019] 1 NZLR 519 at [113].the process of the court' is "improper use of [the court's] machinery";7 use of thatprocess "for a purpose or in a way significantly different from its ordinary and properuse".8[13] Wiles Group alleges BPI's application to register a trade mark in New Zealandis misleading or deceptive conduct in trade in breach of ss 9 and 10 of the Fair TradingAct, or otherwise of a mark so confusingly similar to Wiles Group's assertedintellectual property to pass itself off as associated with Wiles Group. BPI argues itsfiling the application for registration is neither 'in trade' nor misleading or deceptive,whether of some substantial proportion of consumers or otherwise, and points outthere is a statutory process for trade mark registration opposition to be addressed,9which should be to the exclusion of any collateral challenge. Thus BPI argues thesecauses of action disclose no reasonably arguable cause of action or otherwise are anabuse of process, justifying their stay or dismissal.[14] I cannot say the Fair Trading Act cause of action has 'no prospect of success'.BPI is pleaded to be in trade, carrying on business as a licensor and distributor ofautomotive chemicals, which may or may not extend to its application for registrationof trade marks. Neither can I say such application could not relevantly be misleadingand deceptive, however implausible. Those are matters for trial.[15] While the grounds for trade mark registration opposition appearunconstrained,10 under s 17(1) of the Trade Marks Act, the Commissioner: must not register as a trade mark or part of a trade mark any matter—(a) the use of which would be likely to deceive or cause confusion; or(b) the use of which is contrary to New Zealand law or would otherwise bedisentitled to protection in any court .7 Simon Goulding, DB Casson and William Blake Odgers Odgers on Civil Court Actions (24th ed,Sweet & Maxwell, London, 1996) at [10.15] as cited in Commissioner of Inland Revenue vChesterfields Preschools Ltd [2013] NZCA 53, [2013] 2 NZLR 679 at [87].8 Attorney-General v Barker [2000] 1 FLR 759 (QBD) at 764.9 Trade Marks Act 2002, s 47.10 Rob Batty and Kevin Glover Intellectual Property Law (online ed, LexisNexis) at [TMA47.4].But those are not a precise analogue for these causes of action. Instead, the act ofseeking registration is pleaded to be in breach of the Act or, if the cross-referencedpleading is understood,11 to constitute passing off.[16] Nonetheless, the balance of these causes of action focus on alleged confusinguse of Wiles Group's asserted intellectual property. Opposition conceivably couldinclude the act of seeking registration was itself confusing or contrary to law. If so, theopposition process — which includes a right of appeal12 — may offer "an alternativeand more appropriate method of resolution", and maintenance of these two causes ofaction thus would be an abuse of process.13[17] In weighing up the alternative, ultimately I conclude contended illegality inseeking registration sufficiently is distinct from any opposition to registration in itselfnot to warrant stay or dismissal of these two causes of action. There is no 'clear case'for their strike out. I cannot say these causes are "'so certainly or clearly bad' that[they] should be precluded from going forward".14Result[18] BPI's application is dismissed.Costs[19] As advised to counsel, costs were reserved pending this judgment. If it assists,my preliminary view is costs should lie where they fall — that is, be borne by the partyincurring them — because both parties have obtained roughly equal degrees of successand failure: BPI obtaining Wiles Group's withdrawal of the Australian law references,but Wiles Group resisting BPI's attempt to strike out the last two causes of action.11 The drafting of these causes of action leaves much to be desired. In particular, other than BPI'sapplication for registration, the pleading of contended contravening conduct is anticipatory: thatotherwise unparticularised use of intellectual property "would be" in breach of the Act andconstitute passing off. The passing off pleading particularly is dense: it appears to cross-referenceback to "aforesaid conduct" alleged as Fair Trading Act breach.12 Trade Marks Act, s 170.13 Reihana v Rakiura Titi Committee [2018] NZCA 325, [2018] NZAR 1652 at [15]–[16].14 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725 at [33], citing W v Essex CountyCouncil [2001] 2 AC 592 (HL) at 601.[20] If that is not accepted by the parties and they cannot otherwise agree, costs arereserved for determination on short memoranda each of no more than five pages —annexing a single-page table setting out any contended allowable steps, time allocationand daily recovery rate — to be filed and served by any party claiming costs withinten working days of the date of this judgment, with any response or reply to be filedwithin five working day intervals after service.Next steps[21] I direct:(a) BPI file and serve any defence to Wiles Group's amended claim dated5 November 2021 (omitting the withdrawn paragraphs) within10 working days of the date of this judgment; and(b) the proceeding be called in a duty judge list for the week commencing12 September 2022 for further case management directions.—Jagose J