IN THE HIGH COURT OF NEW ZEALAND WELLINGTON REGISTRY

CIV 2007-485-002168

BETWEEN	BODY CORPORATE 344862 (WELLINGTON)
First Plaintiff

AND	ALAMIR COMPANY LIMITED Second Plaintiff

AND	NOVA GAS LIMITED Third Plaintiff

AND	K2G LIMITED FORMERLY KOPI 2 GO LIMITED
Fourth Plaintiff

AND	E-GAS LIMITED First Defendant

AND	E-GAS 2000 LIMITED Second Defendant

Hearing:	6 July 2010

Counsel:	AM Stevens and SB Kellett for third plaintiff
LJ Taylor and BE Ross for defendants

Judgment:	8 July 2010 at 11:00am

JUDGMENT OF ASSOCIATE JUDGE FAIRE [on application for strike out]

Solicitors:	Izard Weston, PO Box 5348, Wellington for plaintiffs
Kensington Swan, PO Box 10 246, Wellington for defendants

BODY CORPORATE 344862 (WELLINGTON) V E-GAS LTD  AND ANOR HC WN CIV 2007-485-002168
8 July 2010

The application

[1]       The third plaintiff applies to strike out a number of paragraphs in the first and second defendants’ statement of defence and counterclaim and its replacement document, which is entitled The particularised statement of defence and counterclaim.

[2]       The first issue raised in this application is:

is  the  judgment  of  Dobson J  delivered  on  23 September  2008  a  final judgment which has the effect of ruling that an allocation agreement dated
29 June   2004   rolled   over   and   therefore   binds   the   defendant   after
30 September 2006 in circumstances where the principle res judicata or issue estoppel applies?

[3]       Counsel were agreed that in respect of the three grounds advanced by the plaintiff I should rule on the issue referred to in the previous paragraph as a matter of principle.   They anticipate that with my ruling they could apply it to cover the specific paragraphs in the two pleadings referred to in [1] above.   Accordingly, I proceed on that basis and do not specifically record the paragraphs that are sought to be struck out.

The rules relied upon in support of the application

[4]       The application is made in reliance on r 15.1 and, in the alternative, on the court’s inherent jurisdiction.   The relevant part of r 15.1 for the purpose of this application is as follows:

15.1	Dismissing or staying all or part of proceeding

(1)	The court may strike out all or part of a pleading if it—

…

(d)	is otherwise an abuse of the process of the court.

Applicable principles

[5]       The court’s approach to a strike out application was summarised in Attorney- General v Prince and Gardner as follows:

A striking-out application proceeds on the assumption that the facts pleaded in the statement of claim are true.  That is so even although they are not or may not be admitted.  It is well settled that before the Court may strike out proceedings the causes of action must be so clearly untenable that they cannot possibly succeed.   (R Lucas & Son (Nelson Mail) Ltd v O’Brien [1978] 2 NZLR 289 at pp 294-295; Takaro Properties Ltd (in receivership) v Rowling [1978] 2 NZLR 314 at pp 316-317); the jurisdiction is one to be exercised sparingly, and only in a clear case where the Court is satisfied it has the requisite material (Gartside v Sheffield, Young & Ellis [1983] NZLR
37 at p 45; Electricity Corporation Ltd v Geotherm Energy Ltd [1992] 2
NZLR  641);  but  the  fact  that  applications  to  strike  out  raise  difficult questions  of  law,  and  require  extensive  argument  does  not  exclude
jurisdiction (Gartside v Sheffield, Young & Ellis).

[6]       The  principles  referred  to  above  were  endorsed  in  Couch  v  Attorney- General.

[7]       The court can have regard to evidence either put forward in opposition or support of the application provided it does not contradict that which is pleaded in the statement  of  claim:  Attorney-General  v  McVeagh.      Although  r 15.1  permits  a striking out of part of a pleading the court discourages partial strike out applications: Apple Fields Ltd v New Zealand Apple and Pear Marketing Board and Whitman v
Airways Corporation of New Zealand Ltd.

[8]       A partial strike out of a pleading may be justified where the portions to be struck out support a cause of action which relies on different facts to the remaining causes of action in the claim.  That is because both the preparation for trial and the time of the trial itself may be substantially reduced thus justifying the benefit of the interlocutory examination.

Background

[9]       I borrow, as a sufficient summary of the background facts, matters that were conveniently recorded by Dobson J when he was required to determine a summary judgment application filed by the third plaintiff against the two-named defendants. His Honour recorded as follows:

Nature of the claims

[1]        The present application for summary judgment arises in proceedings that involve claims and counterclaims between two vigorous competitors in the retail gas supply market. The third plaintiff (“Nova”), which is essentially driving these proceedings, is owned by  Todd  Energy  interests.  The  defendant  E-Gas  companies  (“E- Gas”) were described in submissions as being independent of producer interests, but are apparently associated with Shell’s involvement in the gas industry in New Zealand. Although at various times  during  the  dispute,  distinctions  were  drawn  between  the conduct  of  the  two  defendant  companies,  it  is  sufficient  for  the issues I will address in this judgment to treat them as both being in the same position. I treat Mr Hunt’s evidence for both companies as not making a distinction that is material, notwithstanding that the two companies have different shareholders.

[2]        The remaining plaintiffs represent various categories of commercial gas consumers who sought to terminate gas supplies from E-Gas in order to transfer their supply to Nova. The position of those in the categories of the first and second plaintiffs has been resolved and they have taken no part in the present argument.  The fourth plaintiff (“K2G”) was representative of some 153 remaining customers who sought to transfer from E-Gas and still had issues to resolve (“remaining transferring customers”  - “RTCs”). The  number  and status of other gas users said to be in the same position as K2G was not agreed, but that does not require immediate resolution.

[3]        To the extent that K2G sought relief against E-Gas in its own right, this was resisted on additional grounds that the contract between those parties included an arbitration provision which applied and therefore E-Gas sought a stay of that part of the proceedings so that the E-Gas/K2G dispute could be referred to arbitration.

[4]        Summary judgment was sought in respect of all of five causes of action. The first related to obligations said to arise pursuant to what is an industry code operating between the competing retailers of gas, reflected in a Reconciliation Code settled in 2000 (“the Code”) and an Allocation Agreement concluded between the allocation agent responsible for administering the allocation of gas among retailers using  the  relevant  distribution  system,  and  those  gas  retailing

companies in 2004 (“the Allocation Agreement”). Declarations were sought as to the extent of obligations on E-Gas in the circumstances of requests for transfer of customers to a new retailer, and also relief by  way  of  injunction,  orders  for  specific  performance  and/or damages.

…

Foreshadowed counterclaims

[8]        For its part, E-Gas raised a number of matters which it submitted would constitute valid counterclaims, or found an equitable set-off. Submissions for E-Gas foreshadowed claims of misrepresentation by Nova  to  affected  E-Gas  customers,  misleading  and  deceptive conduct in respect of the business of E-Gas presumably constituting conduct in breach of s 9 of the Fair Trading Act 1986, and constituting unlawful interference with the contractual relations between E-Gas and its customers. In addition, E-Gas complains that Nova is itself in breach of the Allocation Agreement and Reconciliation Code. No statement of defence has been filed, but it will apparently be alleged that the misrepresentations made to E-Gas customers means  that they have  not  made  a  genuine  election  to change gas retailers, and that any transfer of those customers to Nova can be resisted because Nova has not acted in a “fair and equitable manner”, which standard of conduct is required of all retailers by the Code.

[9]        The extensive evidence includes diverse criticisms of various aspects of the conduct of both E-Gas and Nova. Mr Taylor for E-Gas forcefully claimed the moral high ground, possibly with some justification on the weight of the respective criticisms. However, much of that depended on E-Gas’s view that Nova’s interpretation of clause 48 of E-Gas’s standard terms was “untenable”, so that much of  E-Gas’s  criticism  of  Nova  would  need  to  be  seen  in  a substantially different light, if E-Gas’s view on clause 48 is not correct.

[10]   Submissions  for  E-Gas  drew  particular  attention  to  12 representations, each claimed to seriously misrepresent, and in some cases defame, E-Gas. A recurring theme in those statements was that E-Gas rates were very expensive, or higher than they need be, or “above  the  market  rate”  when  there  was  no  formal,  identified “market rate”. The reality was that Nova was able to offer lower rates in some cases, and in some cases substantially lower rates, although E-Gas could quibble about the accuracy of percentage differences cited by Nova representatives. The commercial reality is that once E-Gas responded to Nova’s aggressive campaign, in many cases it elected to match the lower rates which some of its customers had found sufficiently attractive to justify transferring to Nova.

[11]      In Nova’s marketing initiatives to urge E-Gas customers to transfer to Nova, Nova personnel indicated that Nova would assume responsibility for freeing such customers from their existing obligations to E-Gas. This was no doubt part of a strategy designed to make a decision by the customer to change as easy for them as

possible. Among the strategies that Nova deployed (but not necessarily as  a first step in the dealings  for all customers  who indicated they would change) was the assertion of a unilateral right for the customer to terminate the contract with E-Gas, upon payment of a penalty, the extent of which was calculated by reference to the terms of clause 48 in E-Gas’s standard terms. E-Gas denies that clause 48 is to be interpreted so as to afford a unilateral right of termination to the customers.

[12]	The application for summary judgment was supported or opposed by
25 affidavits (including 21 completed at various stages for the plaintiffs) and numerous volumes of documents. Whereas the relationship between E-Gas and Nova, as competing retailers of gas, was governed by the Allocation Agreement and the Code, the relationship  between  E-Gas  and  its  own  customers (in  particular K2G) has been governed by successive iterations of standard form contracts used by EGas. In these circumstances, a preliminary plea for E-Gas was to the effect that the factual and legal complexity of these various relationships was such as to render the dispute entirely inappropriate for resolution in whole or in part by way of summary judgment. Whilst superficially attractive, that submission cannot adequately  be  considered,  without  covering  a  good  deal  of  the ground it seeks to avoid.

[10]	To that summary I add the following:

a)        The allocation agreement came into force on 1 October 2004.   By clause  3.1  it  remained  operative  until  30 September  2006.    It  is automatically renewed for a further two years on the same terms and conditions unless the parties to the agreement otherwise agree;

b)	The plaintiff’s application for summary judgment was filed in May

2008.    The  application  was  determined  by  Dobson J’s  judgment delivered  on  23 September  2008.      His  Honour  determined  the application before him pursuant to the former High Court Rules and, in particular, r 136.    I make mention of this position because the judgment applied the law which permitted summary judgment to be entered at that time for part of a claim; and

c)	The events which are subject of complaint in this proceeding but form

the basis for the relief sought in the prayer following the first cause of action relate to customer switches in 2007.  The importance of that is that it relates to a period beyond the defined period for the operation of the allocation agreement.   The plaintiff’s case, therefore, relies specifically on clause 3.2 of the allocation agreement and its provision that the allocation agreement effectively rolls over for a further two years beyond 1 October 2006.

The grounds advanced in opposition

[11]     Mr Taylor, in summary, advanced the following matters in opposition:

a)        Although the judgment of Dobson J pronounced a declaration in final form, it did not specifically determine the issue of the defendants’ liability arising out of the allocation agreement in the period subsequent to 1 October 2006.  Accordingly, it provides no basis for a plea of res judicata or issue estoppel;

b)        The plaintiff’s alternative basis for the striking out of the passages from the statements of defence and counterclaim based on a claim of equitable estoppel, or estoppel by representation, cannot succeed because  the  plaintiff  cannot  satisfy three  important  matters  which must be met before a successful plea can be applied; and

c)        Even if issue estoppel or equitable estoppel were found to arise, this is not  an  appropriate  case  to  determine  whether  the  pleading  under review is an abuse of process.

[12]     The notice of opposition, in this case, was filed late and technically requires the leave of the court for it to be entertained.  I announced to counsel that time would be most productively spent by analysing the merits of the strike out application because that aspect would, in the scheme of things, be the most important consideration  in  relation  to  any  application  for  leave  to  oppose  out  of  time. Counsel’s argument proceeded on that understanding.

The judgment of Dobson J

[13]     The res judicata/issue estoppel matter requires a careful consideration of the judgment of Dobson J given on the summary judgment application.  It is necessary to determine the scope of the declaration that he made.

[14]     The third plaintiff’s primary basis for seeking an order striking out parts of the defendants’ pleading is that Dobson J’s decision determined an issue raised by the first and second defendants’ pleading.  The pleadings were filed subsequent to the judgment.  Although the third plaintiff’s case was put on the alternative basis that either res judicata applied or issue estoppel applied, as submissions were refined Mr Stevens correctly concentrated on issue estoppel.

[15]     In  Joseph  Lynch  Land  Co  Ltd  v  Lynch   the difference  between the two concepts was noted and, importantly for this case, it was observed that:

Issue estoppel is concerned with the prior resolution of issues rather than causes of action … issue estoppel precludes a party from contending the contrary of any precise point which, having once been distinctly put in issue, has been solemnly and with certainty determined against him.

[16]     Reference was also made to Fidelitas Shipping Co Ltd v V/O Exportchleb:

within one cause of action, there may be several issues raised which are necessary for the determination of the whole case. The rule then is that, once an issue has been raised and distinctly determined between the parties, then, as a general rule, neither party can be allowed to fight that issue all over again.

[17]     Mr Stevens referred to cases where the application of this principle had been dealt with in strike out applications, subject to the court’s overriding discretion: Carl-Zeiss-Stiftung v Rayner and Keeler Ltd & Ors (No 3);  Indiana Publications
(NZ) Ltd & Ors v Prasad   (leave to appeal to the Supreme Court was refused);

Prasad v Indiana Publications (NZ) Ltd & Ors.

[18]     Mr Taylor  put  in  issue  whether  his  Honour  was,  in  fact,  exercising  a jurisdiction pursuant to the summary judgment rules because he submitted that the judgment did not deal with the whole case or simply with liability.  That matter can be answered quite shortly.  The summary judgment rule permits adjudication on part of  a  claim.    Mr Taylor  acknowledged  that  the  declaration  itself  was  final  and binding,  although  he  questioned  whether  it  was  an  exercise  of  the  summary judgment jurisdiction.  In my view, the point in issue comes back to the question I have earlier posed which requires a determination of the scope of the declaration that was made by Dobson J in his judgment.

[19]     The authorities have defined the circumstances which must be present before a  plea  of  issue  estoppel  applies.    I  extract  from  the  authorities  the  following questions which must be answered in the plaintiff’s favour if the plea applies in this case, namely:

a)        Was the issue raised by the defendants’ current pleading distinctly put in issue in the application which was determined by judgment by Dobson J? Joseph Lynch Land Co Ltd v Lynch

b)        If  so,  was  the  issue  fundamental  to  the  decision  pronounced  by Dobson J? Talyancich v Index Developments Ltd, Oranga Holdings Ltd v Duke, Humphries v Carr;;and

c)        Did the judgment of Dobson J finally determine the issue raised in the defendants’ pleading? Carl-Zeiss-Stiftung v Rayner and Keeler Ltd & Ors (No 3), Joseph Lynch Land Co Ltd v Lynch.

[20]     The authorities also require that the same parties must be before the court and they must be litigating in the same capacity as they are in the second decision:

Laughland v Stevenson,  Shiels v Blakeley.   This matter does not require further examination  because  the  parties  who  are  litigating  are  the  same  and  they  are litigating in precisely the same capacity.

Was the issue distinctly put in issue in the summary judgment application?

[21]     The issue can be shortly summarised as this : were the first and second defendants bound by the allocation agreement for the period commencing 1 October
2006, and in particular dealing with the issues which are the subject of the claim which are alleged to have occurred in 2007?

[22]     The application for summary judgment pleaded under the Grounds section of the application that:

i.	The third plaintiff and the first and second defendants were parties to the allocation agreement;

ii.	The allocation agreement was automatically renewed for a further term from 1 October 2006 to 30 September 2008;

iii.	The allocation agreement provided that the parties to it may enforce the obligations under the Gas Industry Reconciliation Code of 1 July
2000 against each other.

Similar allegations appear in the amended statement of claim.

[23]     The  affidavit  of  Charles  Alistair  Teichert,  sworn  on  behalf  of  the  third plaintiff and in support of the application for leave to seek summary judgment and for summary judgment gives evidence as to the application of the 2004 agreement for the period beyond 1 October 2006.

[24]     The first defendant’s notice of opposition to the application for summary judgment did not plead to the three specific matters that I have mentioned under the Grounds  section  of  the  application  for  summary  judgment.    What  it  and  the affidavits in opposition did, was to raise issues as to the proper application of the

Code with respect to customer switches in 2007.  The same position was adopted in counsel for the first and second defendants’ submissions.

[25]     An affidavit was filed by Gregory Robbins.  He appeared as junior counsel for the third plaintiff in the hearing before Dobson J.  His evidence is not contested and, indeed, is accepted by Mr Taylor.  That evidence is that:

a)        Mr Taylor advised the court that the defendants accept that the Code is enforceable; and

b)        The defendants accepted that the Code and the allocation agreement continue to bind the first and second defendants and that the first and second defendants accepted that they had rights and obligations under the Reconciliation Code.

[26]     His Honour considered he was determining one of the live issues in this proceeding.    At  [93]   of  his  judgment  he  refers  to  his  determination  of  the contractual interpretation points as narrowing the remaining issues in the case.  That indicates to me that his Honour was, in fact, giving summary judgment in respect of part of the claim, in his view.

[27]     At  [13]    of  the  judgment  his  Honour  refers  to  a  set  of  contractual interpretation issues which require consideration.   He addresses the specific issue raised by a summary judgment  application, namely whether it is appropriate to determine those issues on the application or whether they require further evidence or, for some other reason, should only be determined at trial.

[28]     The judgment then proceeds to analyse the defendants’ standard terms of supply.  This is a document which specifies the relevant terms that apply between the defendants and their customers.   His Honour concluded that it is appropriate to determine whether a customer has a right to terminate such contract before its term
has expired and at [41]  he gives a declaration to that effect.   It is noted that the

determination he makes is made in respect of clauses which appear in the 2005 and

2006 standard terms used by the defendants.

[29]     The judgment next considers the application of the Code and the allocation agreement.  The following extracts from the judgment are particularly important in determining the question of whether the issue was distinctly put in issue in the summary judgment application:

a)	At [46]

An Allocation Agreement … was completed in June 2004 between
… the “Allocation Agent”, and a series of retailers of gas, including Nova and E-Gas. … Before any retailer of gas could share in distribution downstream from the “receipt points”, it had to become a party to the Allocation Agreement.

b)	At [47]

Clause 10.1 of the Allocation Agreement provided that each of the parties  agreed  to  be  bound  by  the  Code  and  to  perform  their respective obligations as provided in the Code. By this means, the obligations  in  the  Code  are  claimed  by  Nova  to  be  enforceable against E-Gas.

c)	At [48]

E-Gas does not dispute that binding obligations were assumed under the Code. Rather, it argues that the obligations to transfer are subject to an exception where the customers in question already have a fixed term contract  with  their  existing  retailer.  E-Gas  also  argues  that Nova cannot insist on enforcing the provisions in the Code in respect of customers where it is itself in breach of the obligations to conduct itself “in a fair and equitable manner”.

d)	At [50]

…  The  essential  question  on  interpretation  of  the  Code  and Allocation Agreement is whether, assuming any fixed term contract has been properly terminated, the incumbent retailer is thereafter obliged to facilitate the transfer by the process specified in the Code and the Allocation Agreement.

	
e)	At [52]

I do not consider that the Code can be given its full effect if parties		
		are entitled to deny an obligation to facilitate transfer of an existing
customer, on the pretext that the new retailer to whom the transfer should  be  effected  has  not  conducted  itself  (in  the  view  of  the
incumbent) “in a fair and equitable manner”. The structure of the
Code contemplates that timely transfers will occur. Clause 5.7 provides that “any step or other action taken by any party pursuant to Section 5 is to be without prejudice to any rights or liabilities that party   may   have   at   law.”   That   would   leave   any   claims   or counterclaims  between  parties  to  an  Allocation  Agreement  for breach either of the reciprocal obligations under the Code or the Allocation Agreement to be resolved by means other than disrupting the orderly process of transfer provided for in those documents.		

[30]	
The	
passages  just  cited  then  lead  to  the  Judge’s  conclusion  and	
the	
declaration which he pronounced.  At [54]:

In terms of the relief sought under the first cause of action, the third plaintiff is entitled to a declaration defining the extent of the obligations on the defendants arising under the Allocation Agreement and the Code. The extent of that declaration is as follows:

That the customer transfer protocol in clause 5 of the Code, incorporated by reference in the Allocation Agreement of 29 June
2004,   represents   enforceable   obligations   on   any   retailer   in
accordance with its terms. Those obligations apply in circumstances including where a  fixed  term contract  has  been terminated  by a customer subject to E-Gas’s standard terms who has complied with the requirements on the customer under clause 48 of those terms. E- Gas cannot refuse to effect a transfer on the ground that it considers the new retailer has acted in other than a fair and equitable manner.

[31]     When  I  consider  the  material  which  I  have  set  out  in  this  part  of  this judgment I conclude that the issue of whether the allocation agreement imposed enforceable obligations on the first and second defendants after 1 October 2006 was distinctly put in issue.  The defendants accepted that such obligations were imposed and advised the judge accordingly.   I cannot see that there would have been any purpose  served  by  the  judge  making  the  declaration  he  did  if  the  allocation agreement  did  not  impose  enforceable  obligations  after  1 October  2006.    That position was essential to the declaration that he made.

[32]     Mr Taylor submitted that the judge did not address whether the agreement rolled over.  In my view the submission overlooks:

a)	That the issue of roll over was expressly put in issue in the Grounds

section of the application for summary judgment;

b)        The judge asked and sought counsel for the defendant’s confirmation that the allocation agreement applied after 1 October 2006;

c)        As I have said, there would appear to be no point in making the declaration he did, if the allocation agreement did not apply to the defendants in respect of the period post-October 2006 and which is expressly the period in respect of which the relief is sought; and

d)        The only evidence of the enforceability of the code is by a party being a party to the allocation agreement.  This, again, simply reinforces the need for a determination that the allocation agreement applied beyond
1 October 2006.  Without that position, the declaration would serve no useful purpose at all.

Was the issue raised by the defendants’ current pleading fundamental to the making of the declaration?

[33]     In discussing the first issue, namely, whether the issue was distinctly raised I necessarily have had to move into a consideration of this question.  My analysis in the last paragraph discloses that there is simply no point in making the declaration if the   allocation   agreement   did   not   apply   in   the   period   post-October   2006. Accordingly, I am satisfied that the issue was fundamental to the decision which his Honour made when he granted the declaration.

Did the judgment finally determine the issue?

[34]     In Westpac Banking Corporation v MM Kembla (New Zealand) Ltd  the Court of Appeal in analysing the respective positions of a summary judgment and a strike out determination said:

[60]      Where a claim is untenable on the pleadings as a matter of law, it will not usually be necessary to have recourse to the summary judgment procedure because a defendant can apply to strike out the claim under R 186. Rather R 136(2) permits a defendant who has a clear answer to the plaintiff which cannot be contradicted to put up the evidence which constitutes the answer so that the proceedings can be summarily dismissed. The difference between an application to strike out the claim and summary judgment is that strike-out is usually determined on the pleadings alone whereas summary judgment requires evidence. Summary judgment is a judgment between the parties on the dispute which operates as issue estoppel, whereas if a pleading is struck out as untenable as a matter of law the plaintiff is not precluded from bringing a further properly constituted claim.

[35]     That  passage  was  part  of  the  passages  cited  with  approval  in  Jones  v

Attorney-General.

[36]     A judgment given on a summary judgment application is a final judgment on the issue which is determined.  The issue which was determined in this case concerns the enforceability against the defendants of the allocation agreement in the period post-1 October 2006 and before the new agreement took effect some two years later.

[37]     Mr Taylor submitted that the determination was not a final determination:

a)	Because it had been given on an interlocutory application;

b)	He submitted that the roll over aspect of the allocation agreement had not been determined; and

c)	Because the declaration was given in the course of an interlocutory application the cautions expressed in Joseph Lynch Land Co Ltd v

Lynch to effect that the court must consider whether it is reasonable to regard the earlier decision as a final determination and expressed in Mullen v Conoco Ltd as only applying where the ruling is “so clear and so specific as regards a particular defence or potential defence”, should be observed with the result that I should not make a ruling that there has been an abuse of process.

[38]     Nothing has been put before me to suggest that it is not reasonable to regard Dobson J’s  decision  as  a  final  determination  of  the  issue.    The  only  evidential material  placed  before  me  is  found  in  Mr Hunt’s  affidavit.    He  is  the  general manager of both defendants.   His sole statement on the subject is at 3.2 of his affidavit of 8 April 2010 where he said:

The E-Gas group’s position is that the roll over provision in the allocation agreement was not triggered, because the parties to the allocation agreement agreed, prior to the expiry date, that the allocation agreement would not be renewed.

[39]     The allegation is a bald allegation without any particularisation.  It asserts, in effect, a variation to the allocation agreement terms itself without saying when it occurred, who was involved and precisely why what is in effect a variation was entered into.  It further advances a position which is contrary to the understanding of why an allocation agreement was needed in the first place.  I have earlier referred to
[46] where his Honour had concluded on the evidence before him, that before any

retailer of gas could share in distribution downstream from the receipt points, it had to become a party to the allocation agreement.  Short of any explanation as to how the  defendants  could  operate  without  being  a  party  to  an  allocation  agreement beyond 1 October 2006 I am forced to conclude that there is simply no substance to Mr Hunt’s assertion and it certainly provides no grounds for refusing the plaintiff’s claim that an issue estoppel has arisen and that the defendants’ pleading is an abuse of process.

[40]     My determination of the first ground advanced in support of the strike out application is sufficient to determine this application.  It is therefore not necessary to make a final determination on the alternative ground of equitable estoppel.

The alternative grounds

[41]     Counsel were agreed that if this application turned on the question of whether an equitable estoppel arises, three matters must be proved, all of which are subject to an overriding requirement that it is in the interests of justice to hold that an equitable estoppel applies.  Those three matters are:

a)	That a representation has been made;

b)	That it was relied upon by the third plaintiff; and

c)	That the reliance was to the third plaintiff’s detriment.

[42]     The principal basis for an allegation that a representation has been made is based primarily on the acknowledgement made to his Honour in the course of the summary judgment application by counsel for the defendants.  Other matters were raised by counsel that,  in my view, are not significant.   When it comes to the question of reliance, the third plaintiff’s position is that it has informed customers of the effect of the summary judgment and has spent considerable time and incurred costs on the assumption that the representation that the allocation agreement continued in force applied.  When it comes to detriment the argument raised is that the declaration made by his Honour would simply be of no effect.  I am not satisfied that this ground could stand on its own as a basis for finding an abuse of process. The real and substantial question is what the effect of Dobson J’s summary judgment was.

[43]     I do not overlook that a further alternative was raised by Mr Stevens and that is a general discretion to find an abuse of process.  For the reasons set out in the last paragraph I do not consider that that by itself could justify the striking out of the proceeding.   These last two grounds are clearly alternative to the major ground

advanced by the third plaintiff founding an abuse of process.  By themselves, in my view,  they do  not  justify  a  conclusion  that  the  pleading  now  advanced  by  the defendants  is  such  an  abuse  of  process  that  it  should  be  struck  out  on  this application.

The leave application

[44]     The third plaintiff took the position that the notice of opposition was filed out of time and therefore required leave.  Associate Judge Gendall, in setting the fixture, directed that both that question and the substantive application be heard at the same time.   I am in complete agreement with that approach because the real issue that required determination here was the merits of the strike out.  I do not wish, however, to  condone  non-compliance  with  the  rules  as  to  timeliness  for  the  filing  of documents and compliance with court directions.  In this particular case, however, justice is best served, in my view, by going straight to the merits of the application. That is the reason why I am not analysing further the careful submissions advanced by Mr Stevens on the leave application.

Decision

[45]     The third plaintiff is entitled to an order striking out those provisions of the statement  of  defence  and  counterclaim  which  deny  the  enforceability  of  the allocation agreement for the period beyond 1 October 2006.  The application, itself, identifies numerous paragraphs in the statement of defence and counterclaim which plead to the contrary.  They must be removed.  If counsel cannot agreement on the precise paragraphs to be removed memoranda in support, opposition and reply shall be filed at seven-day intervals and I will make a precise ruling having regard to the decision given in this case.

Costs

[46]	The third plaintiff has been successful in this application to strike out and is accordingly entitled to costs against the defendants based on Category 2 Band B,
together with disbursements as fixed by the Registrar.

JA Faire
Associate Judge