21 June 2017

Construction: Precast (NZ) v. Any Step

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