SHANGHAI JULIANNENG TRADING CO LIMITED v MIRAKA LIMITED [2020] NZCA 442

SHANGHAI JULIANNENG TRADING CO LIMITED v MIRAKA LIMITED [2020] NZCA 442 [21 September2020]IN THE COURT OF APPEAL OF NEW ZEALANDI TE KŌTI PĪRA O AOTEAROACA242/2020[2020] NZCA 442BETWEEN SHANGHAI JULIANNENG TRADING COLIMITEDApplicantAND MIRAKA LIMITEDRespondentCourt: Miller and Courtney JJCounsel: M R Crotty and L H Mau for ApplicantL A O'Gorman and A N Birkinshaw for RespondentJudgment:(On the papers)21 September 2020 at 3 pmJUDGMENT OF THE COURTThe application for special leave to appeal is dismissed.____________________________________________________________________REASONS OF THE COURT(Given by Courtney J)Introduction[1] Shanghai Julianneng Trading Co Ltd (formerly Milk New Zealand (Shanghai)Co Ltd or "MNZ") and Miraka Ltd (Miraka) are parties to a supply and purchaseagreement for UHT milk (the Agreement). They are in dispute about the interpretationand effect of Minimum Volume obligations and liquidated damages provisions inthe Agreement. The dispute was the subject of an arbitration by the Hon Robert FisherQC. The Arbitrator awarded Miraka common law damages of $5,941,000 (the AwardAmount).[2] On appeal, the High Court confirmed the award to the extent that MNZremained liable to pay damages in the sum of the Award Amount.1 Walker J refusedleave to appeal the decision.2 MNZ seeks special leave to appeal.3[3] The principles that apply to an application for special leave are those set out inCooper v Symes, which were approved by this Court in Downer Construction (NewZealand) Ltd v Silverfield Developments Ltd:4(a) The appeal must raise some question of law capable of bona fideand serious argument in a case involving some interest, public orprivate, of sufficient importance to outweigh the costs and delay ofthe further appeal.(b) On a second appeal, the Court of Appeal is not engaged in the generalcorrection of error. Its primary function is then to clarify the law andto determine whether it has been properly construed and applied bythe Court below.(c) Not every alleged error of law is of such importance either generallyor to the parties, as to justify further pursuit of litigation that has beentwice considered and ruled upon by a Court.Application for special leave[4] MNZ's proposed questions of law are whether the High Court:a) applied the wrong standard of review;b) erred in finding that the Agreement did not exclude the right to commonlaw damages in circumstances where:i) the parties had agreed on a liquidated damages framework;1 Milk New Zealand (Shanghai) Co Ltd v Miraka Ltd [2019] NZHC 2713 at [100].2 Milk New Zealand (Shanghai) Co Ltd v Miraka Ltd [2020] NZHC 697.3 Arbitration Act 1996, sch 2, cl 5(6).4 Cooper v Symes (2001) 15 PRNZ 166 (HC) at [12]; approved in Downer Construction (NewZealand) Ltd v Silverfield Developments Ltd [2007] NZCA 355, [2008] 2 NZLR 591 at [33].ii) compensation based on actual damages was proposed andexpressly rejected during negotiations; andiii) the peak month and seasonal shortfall obligations for milk supplyoverlap; andc) erred in in law in finding that MNZ's compliance with its notificationobligations was a condition precedent to Miraka's Minimum Volumeobligations.[5] MNZ submits that these questions meet the pre-requisites for special leavebecause:a) the determination of one or more of the questions will substantially affectthe rights of the parties as the Award Amount is substantial;b) the questions of law are of significant precedent value to the parties as theAgreement will continue to govern the trading relationship between them;c) the case law in New Zealand on the standard of review to be applied forappeals against arbitral decisions is unclear;d) a determination by this Court on one or more of the questions of law willhave important precedential effect as regards the standard of review, aswell as the interpretation and effect of liquidated damages provisions in thecontext of a supply agreement; ande) there is no particular urgency surrounding the determination of theunderlying disputes.[6] We agree that, in an appropriate case, the standard of review in an appeal underthe Arbitration Act 1996 is a question that would justify consideration by this Court.In particular, it would be helpful to consider the effect of cases decided in otherjurisdictions since Bryson v Three Foot Six Ltd.5 However, we are not satisfied thatconsideration of this issue would alter the outcome in the present case. It is apparentthat Walker J did not simply defer to the Arbitrator's conclusions but conducted herown assessment on the correct interpretation of the agreement. As a result,consideration of the standard of review adopted in the High Court will not lead to anydifferent conclusion.[7] The questions of interpretation do not concern any error in understanding oflegal principles or the general law and therefore fall outside this Court's primaryfunction on a second appeal of clarifying the law and determining whether it has beenproperly construed and applied by the court below. Granting leave in this case wouldbe contrary to the principle that arbitral awards should be final.6[8] In summary, we do not consider that the proposed appeal has a reasonableprospect of success. It is not in the interests of justice for Miraka to be put to theexpense and delay of another appeal, given than both the Arbitrator and the High Courtreached the same conclusions on the questions of interpretation.Result[9] The application for special leave to appeal is dismissed.Solicitors:Russell McVeagh, Auckland for ApplicantBuddle Findlay, Auckland for Respondent5 Bryson v Three Foot Six Ltd [2005] NZCA 34, [2005] 3 NZLR 721.6 Gold and Resource Developments (NZ) Ltd v Doug Hood Ltd [2000] 3 NZLR 318 (CA) at [51]–[52].