Autoterminal was refused an interim injunction blocking Hohua Hemi from supplying Japanese used car imports for 2 Cheap Cars, allegedly in breach of agreements to have Autoterminal New Zealand Ltd as sole importer.
Robert Stone controls Autoterminal; Mr Hemi, Japanese supplier IBC Japan Ltd. Both companies form part of a joint venture in the used car trade the two have operated for over twenty years. Business is not running smoothly. Litigation between the two is under way in several jurisdictions around the world.
In the New Zealand courts, Mr Stone alleges Mr Hemi is cutting him out by supplying car dealers directly, without importing through Autoterminal. He alleges Mr Hemi is breaching a July 2014 ‘vehicle supply agreement’ between IBC Japan and Autoterminal and also in breach of two supplementary agreements dated 2016 and 2017. Mr Hemi disputes the existence of the 2016 and 2017 agreements. He doesn’t have copies. Mr Stone has only hard copies. There is no email trail identifying pre-contract negotiations. The supplementary agreements between Autoterminal and IBC Japan were allegedly signed at a time when Mr Stone was in control of both companies. Mr Stone says digital copies of the contracts were lost when a business laptop and backup, both held by a business associate, were stolen. Mr Hemi points out that if the supplementary agreements were created using Google Docs, as alleged, then copies should be available on the web.
Justice Woolford said he did not have to decide whether the supplementary agreements did exist; no interim injunction would be granted to enforce them. If proved to exist and to be breached, damages would be an adequate remedy. IBC Japan is in a position to pay damages. It is currently owed at least $40 million by Autoterminal. Payments to IBC Japan by Autoterminal do not fall due until customers pay Autoterminal.
Justice Woolford also raised questions about enforceability of the disputed 2016 and 2017 supplementary agreements. They appear to have the effect of substantially reducing competition, in breach of the Commerce Act, he said.
Autoterminal New Zealand Ltd v. IBC Japan Ltd – High Court (19.11.18)
19.005