Precast
and Any Step. Two companies torn apart
by personality clashes at management level but left yoked together in a
twenty-five year exclusive licence agreement.
After bitter High Court litigation, they were gently advised by Justice
Fitzgerald to instead make use of the mediation and arbitration clauses in
their licence agreement.
Mr Paul Cane at Precast
and Mr Peter Evans at Any Step did not have many kind words to say about each
other. After five preliminary court hearings and an eight-day High Court trial,
Precast (NZ) Ltd and Any Step Ltd were told they had to find a way to get their
relationship working. Any Step owns rights
to a re-usable, adjustable mould for pre-casting concrete stairs used in
commercial and residential construction.
Precast has manufacturing operations in Auckland and Otaki with
exclusive licensing rights to use and sell the Any Step mould in New Zealand. After an amicable 2009 start to their
twenty-five year business agreement, the relationship between Mr Cane and the
board of Any Step became strained and ultimately dysfunctional. Precast sued, alleging Any Step was party to
an underhand deal for the supply of a precast mould to a NZ-based precaster in
breach of Precast’s exclusive NZ licence.
Any Step countersued, alleging Precast was undermining overseas
marketing initiatives in direct breach of a “support” clause in their
agreement.
Justice Fitzgerald said
wording of the support clause did not require Precast to actively seek out
overseas leads or contacts. It was
required to pass on to Any Step product enquiries coming from overseas. Mr Cane and Mr Evans had clashed over how Any
Step’s product should be promoted overseas.
Mr Cane took the view he was best placed; his company used the mould and
he could give potential customers a first-hand view of its benefits. There were allegations Mr Cane was not
passing on overseas expressions of interest with the intention of driving down
Any Step’s value. Any Step alleged Mr
Cane was looking to buy up the company.
Justice Fitzgerald said these allegations arose at a time when Precast
was a ten per cent shareholder of Any Step and Mr Cane was an Any Step
director. He was acting as a director of
Any Step when pursuing these potential sales.
I am not satisfied that Any Step has proved to the requisite legal standard
that Mr Cane breached his duties as a director, she said. Mr Cane was dumped from the Any Step board in
May 2013. Precast sold its ten per cent
stake to Mr Evans.
Justice Fitzgerald
ruled Any Step was not in breach of the exclusive licencing agreement when an
Australian customer on-sold a mould to Ashburton precaster, McIntosh Precast
Ltd. Precast alleged selling via
Australia was a set-up, a subterfuge designed to get around Precast’s exclusive
NZ rights. Email traffic with Australia both
before and after the Australian sale showed that Any Step was aware the
licencing agreement prohibited it making NZ sales and that Any Step was
perplexed by actions of the Australian buyer.
The twenty-five year
exclusive licence agreement is to continue running its course, the court
ruled. Any Step was ordered to keep
supplying Precast with rubber extrusion strips needing replacement as part of
the precasting system.
Precast
NZ Ltd v. Any Step Ltd – High Court (21.06.17)
17.070