In brief

A brief update on cases reported in recent issues of the Commercial Quarterly.

Debate over adequate notice for termination of a long-term joint venture

On 2 June 2006, the Supreme Court granted leave to appeal the Court of Appeal's decision in Paper Reclaim v Aotearoa1. The case involves a dispute between two parties in a joint venture in the wastepaper and recycling industry. The relationship existed for nearly 20 years before falling apart in 2001. One of the issues in the case was to determine what length of notice would have been reasonable to terminate a joint venture of this length. The appeal is on the following grounds:

• whether the Court of Appeal erred in its approach to damages to be awarded to Aotearoa; and
  
  
• whether the Court of Appeal erred in fixing the length of the required notice at 12 months.

There are also two other issues on appeal relating to whether there was a fiduciary cause of action available to Aotearoa and on the issue of costs.

The date for the Supreme Court hearing on these issues has been set for 6 March 2007. Commercial Quarterly will keep you informed of further developments.

Directors' contributions to creditors for failing to act in the best interests of the company

In the Winter 2006 Commercial Quarterly we noted the case of Sojourner and Anor v Robb2. Two creditors had sought contributions from a company's directors on the basis that by "hiving down" the assets of the company they were in breach of their section 131 duty, namely to act in good faith and in the best interests of the company. The court found in favour of the creditors but had requested the parties to provide further details on the number, identity and amounts of other unsecured creditors before it finalised the relief. On 5 October 20063, the court confirmed that other disappointed creditors could recover on the basis of the judgment regardless of whether they had already proved in the liquidation. The court directed the liquidator to notify such creditors of the judgment so they could decide whether or not they wanted to prove.

Wood chemicals cartel

In the 2006 Autumn Commercial Quarterly we reported on the record penalties awarded in the Commerce Commission v Koppers Arch4 case for cartel behaviour in the wood preservative chemicals industry between 1998 and 2002. In October the Commerce Commission had a further round of successes against other participants in the cartel. Osmose New Zealand and Osmose Australia were fined a total of $1.8 million and two Australian-based executives have been fined $100,000 and $20,000 respectively. The Commission is pursuing proceedings against seven further corporate and individual defendants.5

1 Paper Reclaim Ltd v Aotearoa International Ltd (Unreported, CA 70/04, 14/3/2006)

2 Sojouner and Anor v Robb (Unreported, HC Christchurch, CIV 2004-476-000568, 4 July 2006)

3 Sojouner v Robb (Unreported, HC Christchurch, CIV 2004-476-000568, 5 October 2006)

4 Commerce Commission v Koppers Arch Wood Protection (NZ) Limited and Ors (Unreported, High Court, Auckland, 6 April 2006, CIV2005-404-2080)

5 For further information on these cases visit the Commerce Commission's website at www.comcom.govt.nz

Enquiries and information

For more information on any of the cases, articles and features in Commercial Quarterly, please email Diane Graham or call her on 64 9 916 8849.