NATIONAL PLANT AND EQUIPMENT PTY LIMITED v P MUNDY HEAVY EQUIPMENT LIMITED [2019] NZHC 2879

NATIONAL PLANT AND EQUIPMENT PTY LIMITED v P MUNDY HEAVY EQUIPMENT LIMITED[2019] NZHC 2879 [5 November 2019]IN THE HIGH COURT OF NEW ZEALANDAUCKLAND REGISTRYI TE KŌTI MATUA O AOTEAROATĀMAKI MAKAURAU ROHECIV-2019-404-2443[2019] NZHC 2879BETWEEN NATIONAL PLANT AND EQUIPMENTPTY LIMITEDPlaintiffAND P MUNDY HEAVY EQUIPMENTLIMITEDDefendantTeleconference: 5 November 2019Appearances: D R Kalderimis and D Street for the plaintiffC Lord for the defendantJudgment: 5 November 2019JUDGMENT OF JAGOSE JThe judgment was delivered by me on 5 November 2019 at 5.00pm.Pursuant to Rule 11.5 of the High Court RulesRegistrar/Deputy RegistrarSolicitors/Counsel:Chapman Tripp, WellingtonCraig Griffin & Lord, Auckland[1] The plaintiff's without notice application for preservation orders came beforeme as duty judge this morning, and I directed it be determined after hearing fromcounsel by telephone conference at 2.15 pm today.[2] The application was foreshadowed to the defendant on 1 November 2019,absent satisfactory undertakings, to be made on 4 November 2019. The defendant'snew solicitor, Christopher Lord, identified then he was seeking instructions. Theapplication was therefore made, on a Pickwick basis given Mr Lord's engagement.1Background[3] The plaintiff ("NPE") has been in negotiations for much of this year to acquiresix Komatsu trucks from a Brazilian company ("U&M"), through the defendant("PMHE").[4] Agreement was reached on 13 September 2019 for acquisition of the vehiclesat a total price of US$13.2 million, on terms including payment of "10% uponP[urchase] O[rder] (Non refundable)". PMHE subsequently issued an invoice for thepurchase price, on terms including payment of "10% immediately – non refundable".No payment then was made (even if a purchase order issued).[5] On 25 September 2019, U&M advised NPE the vehicles no longer wereavailable to it, except as a back-up to another (accepted) offer. On 27 September 2019,NPE paid PMHE US$1.32 million. On 19 October 2019, PMHE advised NPE thevehicles "are sold" to the other purchaser. On 21 October 2019, NPE sought refund ofits payment. In subsequent correspondence, PMHE said to NPE:You defaulted on our contract by not paying the deposit on time. The invoice[I] issued to you says non refundable, had you paid the deposit on time wewould not be in this position.and later:You were told [by] me and U&M there were other buyers, you chose to rollthe dice.1 Pickwick International Inc (GB) Ltd v Multiple Sound Distributors Ltd [1972] 1 WLR 1213 (Ch).My invoice said non-refundable, you paid late and missed your chance topurchase.[6] NPE claims PMHE is liable to it for the US$1.32 million, as money had andreceived.Preservation orders[7] Under rule 7.55 of the High Court Rules 2016, NPE seeks an order the US$1.32million, as a fund to which NPE claims a right in the proceeding, be paid into court.[8] The payment is of a fund, an identifiable sum of money to which PMHE itselfhad no ultimate entitlement (but rather as stakeholder for either U&M or NPE). OnNPE's case, it is a prime candidate for a restitutionary claim, such being "to correctnormatively defective transfers of value, usually by restoring the parties to their pre-transfer positions".2[9] NPE says the US$1.32 million knowingly was paid to PMHE, no longer non-refundably to secure the vehicles' availability from U&M, but refundably as a showof NPE's good faith as a back-up purchaser. Whether the latter is true must depend ontrial, but the former certainly must be true. At the time of the payment, the vehicles nolonger were available to NPE. Yet, in the face of NPE's assertion the payment wasrefundable, PMHE relies only on the terms of sale.[10] At the hearing, Mr Lord explained he had been instructed to engage counsel,and sought a few days' adjournment for that purpose. He observed PMHE's backaccounts had been "frozen", he presumed in response to NPE's solicitors' notificationof the dispute to the bank. (The bank confirmed after the hearing it had "suspendedtransacting on accounts relating to the dispute".) But Mr Lord could not advise of thecontents of the accounts; neither could he offer any undertaking in the interim.[11] The fungibility of money means there is a meaningful risk the fund may bedissipated simply in the ordinary course of commerce, in which PMHE engages. The2 Investment Trust Companies v Revenue and Customs Commissioners [2017] UKSC 29, [2018]AC 275 at [42].bank's suspension is not subject to NPE's consent. Such together provide good reasonfor making the primary orders sought. PMHE will have leave to apply on short noticeto the duty judge for their discharge.[12] I am not prepared to make the subsidiary information order sought by NPE.Such is not necessary for preservation purposes. Neither am I prepared to award NPEcosts at this juncture, but will reserve them.Result[13] In reliance on NPE's undertaking as to damages, I:(a) grant the orders numbered 1.1 and 1.2 in NPE's application dated 4November 2019;(b) reserve PMHE leave to apply on short notice to the duty judge for theorders' variation or rescission; and(c) reserve costs for determination in conjunction with the proceeding.—Jagose J