IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2014-404-2552 [2018] NZHC 2780

BETWEEN	SCC (NZ) LIMITED
Plaintiff	

AND	
SAMSUNG ELECTRONIC NEW ZEALAND LIMITED
Defendant	

Hearing:	13-16, 20-24, 27 and 29-31 August 2018	

Appearances:	
R M Dillon and T A Hwang for the Plaintiff
M Kersey, J Edwards and R Langdana for the Defendant	

Judgment:	
26 October 2018	

JUDGMENT OF JAGOSE J

This judgment was delivered by me on 26 October 2018 at 2:00 p.m. pursuant to r 11.5 of the High Court Rules 2016.

Registrar/Deputy Registrar

……………………………………

Solicitors:
Queen City Law, Solicitors, Auckland
Russell McVeagh, Solicitors, Auckland

SCC (NZ) LTD v SAMSUNG ELECTRONIC NEW ZEALAND LTD [2018] NZHC 2780 [26 October 2018]

Contents

Introduction ..................................................................................................... [1] Background...................................................................................................... [6] Applicable legal principles ............................................................................ [22] Outbound calling ........................................................................................... [23] Warranty process ........................................................................................... [48] Thompson wage recovery.............................................................................. [69] Support emails ............................................................................................... [85] Continuing calls ............................................................................................. [96] Relocation costs ........................................................................................... [106] Remuneration for additional services .......................................................... [120] Business exit plan ........................................................................................ [136] Use and occupation of SCC’s premises ....................................................... [147] Repudiation of second Agreement............................................................... [159] Fair Trading Act ........................................................................................... [185] Counterclaims for ‘mute’ / ‘hold’ damages ................................................. [188] Result ........................................................................................................... [198] Costs ............................................................................................................ [199] Postscript ..................................................................................................... [201]

Introduction

[1]       This proceeding principally concerns the scope of compensable services – either in contractual terms, or under claims in quantum meruit – provided by the plaintiff (“SCC”) to the defendant (“Samsung NZ”) during the term of two contracts. A significant aspect of SCC’s claims in the proceeding is SCC’s characterisation of the contracts as providing for ‘piecework’, meaning payment for each aspect of SCC’s diverse  services  for  Samsung. At  the  parties’ request,  in  this  judgment,  I  only determine liability (and not quantum) on the various claims and counterclaims.

[2]       SCC is a call centre operator, which provided services to Samsung NZ, a distributor of electronic goods. They were party to contracts dated 31 July 2007 and
28 February 2012, each styled an “Authorized Call Centre Service Agreement”. Under the contracts, in which SCC is referred to as the “Contractor”, SCC acted as customers’ conduit to Samsung, and appeared to customers to be Samsung.

[3]       Upon Samsung NZ reaching the view SCC had manipulated processes to inflate its invoices, it gave SCC notice, by letter of 24 July 2014, to terminate the latter Agreement. SCC made claim on Samsung NZ in the ensuing negotiations, which eventually gave rise to the present litigation.

[4]       SCC disputes Samsung NZ was entitled to terminate the Agreement, and raises claims against Samsung NZ for resulting damages (alternatively, under s 9 of the Contractual Remedies Act 1979, now s 43 of the Commercial and Contract Law Act
2017), as well as on eleven contended contractual breaches during the agreements’ course (on three of which it alternatively claims to recover in quantum meruit). And it says Samsung NZ’s conduct in trade – including the alleged contractual breaches – was misleading and deceptive in terms of s 9 of the Fair Trading Act 1986, for which it also seeks damages.

[5]       Samsung NZ denies any such liability. It raises counterclaims against SCC to recover contended overpayments made under the agreements, allegedly obtained by SCC’s own misleading and deceptive conduct under s 9, on which it alternatively seeks damages.

Background1

—SCC is formed

[6]       The Korean conglomerate, Samsung (of which Samsung NZ is a subsidiary), originally  operated  in  New  Zealand  through  its Australian  subsidiary,  Samsung Electronic Australia Pty Limited (Samsung Australia). By 2007 it became apparent Samsung’s New Zealand operation – in which Samsung products were distributed by local companies, which also provided warranty service – required local support for customers.

[7]       To this end, Samsung made contact with SCC’s current sole director, Jang-Shik Yoon.  Mr Yoon  previously  worked  for  Samsung  in  Korea,  including  by  selling Samsung products into Australia and New Zealand. In that capacity, he met SCC’s other original director, David Thompson, who at that time was importing Samsung products into New Zealand. Mr Yoon and Mr Thompson became friends, and when Mr Yoon later immigrated to New Zealand they continued to work together.

1           In this judgment, for reasons I explain at [201] and following, I distinguish witnesses’ evidence- in-chief (given by reading, or having taken as read, their written statements at trial) from their oral evidence in response to questions from counsel (whether given in chief, under cross-examination, or on re-examination). For the same reasons, I have left the judgment’s recitation of documentary material, and the oral evidence, without editorial correction.

[8]       After Samsung’s contact, Mr Yoon joined up with Mr Thompson to offer call centre services to Samsung. Mr Yoon took up shares in a pre-existing shelf company owned by Mr Thompson, which was renamed SCC for the purposes of providing call centre services to Samsung. Mr Yoon, Mr Thompson and SCC’s initial employees undertook some training in Australia to familiarise themselves with the Samsung business operation.

—first Agreement

[9]       After the training, Samsung Australia entered into a contract dated 1 July 2007 with SCC (the “first Agreement”). The first Agreement recited:

Samsung is a manufacturer and/or importer and wholesale distributor of certain electronic Products under the brand name “Samsung” in Australia and New Zealand.

Samsung has requested the Contractor and the Contractor has agreed to service the needs of an inbound and outbound call centre for Samsung and supply pre-sales, service and technical information of the Products under Samsung range and scope of products distributed throughout New Zealand. To offer warranty assistance to Mobile Phone and I.T product and ensure the successful transfer of Audio Visual and White Goods related calls to Radiola New Zealand for the consideration and on the terms and conditions contained in this Agreement.

The Contractor also agrees to perform out bound calls and Customer follow up in relation to all escalated issues to ensure a resolution that is both agreeable to Samsung and to the Customer within the bounds of the Samsung way of working and internal control framework.

[10]     The contracted services were particularised in the body of the first Agreement

– subject to specified key performance indicators (“KPIs”) which, if not met, could escalate to the contract’s termination. In return for these services, the first Agreement’s Schedule 2 provided:

A Service Fee shall be payable of NZD 43,018 plus NZ GST per month based on a minimum of 5250 calls per month, based on an average talking time of 5 minutes per call.

Any additional payments must be agreed to in advanced by Samsung and this must be in relation to call volume, or service improvement.

The rates will be for the term of the Agreement. Any increase on rates must be agreed to by Samsung and these reasons must be raised in monthly operational meetings and be fully justified and have documented support.

[11]     The  ‘Service  Fee’ was  drawn  from  calculations  set  out  in  a  spreadsheet submitted to Samsung by SCC as its “Offer to Samsung”. It is unclear if the spreadsheet is formally part of the first Agreement (the version in evidence being dated
5 July 2007, after the parties’ entry into the first Agreement). Handwritten annotations in both English and Korean appear to have been added subsequently by Mr Yoon. Still, the spreadsheet plainly endorses the first Agreement’s calculation of the Service Fee. I take the view the spreadsheet is informative of the foundation for the Service Fee set out in the first Agreement, rather than being part of the agreement itself.2

[12]     The spreadsheet begins with a monthly operational budget for SCC (including premises rental, wages, and other costs) in the amount of the Service Fee. The spreadsheet then identifies the Service Fee to be equivalent to $1.60 per minute for a “minimum of 5250 calls per month, based on an average talking time of 5 minutes per call”. The relevance of that divisor is in the spreadsheet’s Note 4:

This   offer   is   based   on   SAMSUNG   Guarantee   minimum   rate   of NZD 43,018 / month.  That  is  5,000  calls,  5.0  min  average  talk  time, inbound/outbound incl. email. Above minimum rate, extra charges based on NZD 1.60 / min for call/e-mail.

[13]     In fact, the ‘minimum’ number of calls was soon exceeded, and SCC invoiced (and Samsung Australia paid) in accordance with those “extra charges” for every incoming and outgoing call (at actual average talk times) and email. Despite schedule
2’s specified Service Fee, and the anticipation any additional payment “must be agreed to in advanced by Samsung” (of which there is no evidence), no issue was or is taken with those ‘extra charges’. From the financial year ending 31 March 2009, SCC annually invoiced Samsung Australia in the order of $1 million, being roughly twice the stipulated Service Fee.

—second Agreement

[14]     Although  the  first Agreement  was  for  a  three-year  term,  “automatically renewed  for  subsequent  One  (1)  year  periods  unless  otherwise  terminated  in

2           The document evidenced as the first Agreement includes two pages after what appears to be the final page of the contract: the spreadsheet, and an annotated copy of page 13 of the first Agreement (which is the first page of its Schedule 1, specifying KPIs). I find the latter also is not directly part of the first Agreement, but an annotated copy of one of its pages (the annotations being to circle each KPI’s percentage requirement).

accordance with this Agreement”, Samsung Australia entered into a second contract with SCC dated 1 March 2012 (the “second Agreement”).3  The second Agreement recited:

Samsung is a manufacturer and/or importer and wholesale distributor of certain electronic products under the brand name “Samsung” in New Zealand.

As part of Samsung’s operations, Samsung requires the provision of various inbound and outbound call centre services together with the operation of a web self-service and web chat service and the management of Samsung social media portals.

The Contractor specialises in the provision of inbound and outbound call centre services and has agreed to operate and provide for the benefit of Samsung and Samsung’s clients the web self-service and web chat service and the management of Samsung social media portals.

The parties wish to record in this agreement the basis on which the Contractor will:

(i)        provide inbound and outbound call centre services for Samsung;

(ii)      respond to all online Customer enquiries;

(iii)	create  and  manage  a  Samsung Web  Self-Service and Web  Chat service; and

(iv)      manage Samsung Social Media Portals.

The second Agreement was also for a three-year term, with a one-year extension, unless otherwise terminated. It made no reference to the first Agreement.

[15]     Again, the contracted services were particularised in the body of the second Agreement – and again subject to specified KPIs, now primarily disciplined by incentive payments and penalty deductions, rather than by escalation to termination. A variable monthly Service Fee was payable for such services, based on inbound and outbound calling, inbound emails, and back office functions performed during the month in issue. The Service Fee was principally to “be calculated in accordance with the  …  ‘Pricing’  table  as  adjusted  in  accordance  with  the  Incentive/Penalty Programme …”. The pricing table provided in part:

3           The document evidenced as the second Agreement also included, between its Schedules 1 and 2, an annotated copy of pages 14 and 15 of the first Agreement (which are the second and last pages of that Agreement’s Schedule 1, specifying KPIs). As with the annotated copy of page 13 included with the document evidenced as the first Agreement, the annotations were to circle each KPI’s percentage requirement. I find these pages are not part of the second Agreement at all.

Activity	Logic	Cost	Remarks		
Inbound

Outbound

Email

Back Office	Inbound Calls x ATT x minute rate

Happy Calls …

Number of E- Mails inbound as registered by ERMS

Number of FTE’s required to perform back office functions
…	$1.73 per minute

$6.20 per call

$5.20 per email

$3,750 per
FTE	SENZ pays building costs

Based on BI Data

Based on reported ERMS inbound
volume

2 FTE Required	In-source solution	

While not defined in the second Agreement, ‘ATT’ is accepted to mean ‘average talk[ing] time’ (although what that itself may mean is not agreed). ‘BI Data’ is defined in the second Agreement as “the Samsung nominated Business Intelligence System”; and “ERMS” as “the email reply management system of Customer emails sent from the Samsung website”. (And ‘FTE’ means ‘full time equivalent’.)

[16]     The second Agreement was amended twice, first by an “Addendum” dated 18

April 2013 to include inbound webchat activity as contributing to calculation of the Service Fee, and then in March 2014 seemingly in ratification of the parties’ informal agreement with effect from July 2013 to adjust contracted services and applicable fees.

[17]     Under the second Agreement, SCC’s annual invoices to Samsung Australia continued to grow, from nearly $1.3 million for the financial year ending 31 March
2013, to over $1.7 million for the financial year ending 31 March 2014.

—novation and termination

[18]     In late 2013, Samsung decided formally to establish a New Zealand subsidiary, Samsung NZ. Although the novation agreement itself was not in evidence, it appears agreed all Samsung Australia’s “rights, benefits, obligations and liabilities” under the two Agreements were transferred to Samsung NZ under a novation agreement dated

13 December 2013, signed by Samsung Australia, Samsung NZ, and SCC. This proceeding has continued against Samsung NZ alone, on that basis. (Reference in this judgment to ‘Samsung’ alone refers to either Samsung Australia or Samsung NZ, depending on the date of the event.)

[19]     After internal concerns were raised, Samsung NZ investigated aspects of SCC’s services and invoices. As part of that investigation, Mr Yoon met at least twice over the period of a week with a Samsung NZ senior manager, Woo Suk (William) Choi, and a senior executive attending from Samsung’s headquarters in Korea, Gi Young Lee. In the last meeting, on 23 July 2014, Mr Lee advised Mr Yoon the second Agreement would be terminated. By letter of 24 July 2014, Samsung NZ formally concluded SCC falsely created entries in ERMS (used to quantify in part the fee payable to SCC), and otherwise manipulated systems and processes to inflate its invoices to Samsung. Samsung NZ took the view such was in irremediable breach of the second Agreement, entitling Samsung NZ to terminate it.

[20]     Terms for SCC’s exit were discussed before and after issue of the 24 July 2014 letter. SCC sought to negotiate a compensated exit; Samsung NZ sought SCC’s “business exit plan” to transition to a new service provider, including finalisation of SCC’s invoicing. Ultimately Mr Yoon made a claim on Samsung NZ which largely provides the foundation for this proceeding (although Samsung NZ also counterclaims in reliance on contended manipulation by SCC of call durations).

[21]     Samsung  NZ  made  arrangements  for  a  staged  transition  from  SCC  to Transcom, intended to commence from 6 October 2014. SCC disputed Samsung NZ was entitled to terminate the second Agreement, and the transition arrangements did not proceed. After some initial position-taking and negotiations, SCC issued this proceeding, including an application for an interlocutory injunction against Samsung NZ. The application was dismissed on 31 October 2014.4 Samsung NZ terminated its relationship with SCC on 4 November 2014.

4	SCC (NZ) Ltd v Samsung Electronics New Zealand Ltd [2014] NZHC 2692, [2015] NZCCLR 1.

Applicable legal principles

[22]	There is no material dispute about the principles applicable to contractual interpretation. They are generally to determine from construction of the agreements:5

… what a reasonable and properly informed third party would consider the parties intended the words of their contract to mean[,] … aware of the commercial or other context in which the contract was made and of all the facts and circumstances known to and likely to be operating on the parties’ minds.

I now turn to address the claims and counterclaims in this proceeding.

Outbound calling

[23]	This is SCC’s first cause of action, claiming an entitlement under the second

Agreement to be paid for every outbound call.

—contractual provisions

[24]	Under clause 4.1 of the second Agreement, SCC was to:

… provide the Services from the Agreed Location at all times during the Agreed Hours in accordance with Samsung’s Warranty Process for Warranty Claims in a timely, efficient, proper and workmanlike manner using reasonable care, skill and diligence: …

Clause 1.1 defined ‘Services’ as meaning:

… the services in relation to the Products to be provided by the Contractor to Samsung as set out in schedule 6 and includes any additional services agreed as part of any Statement of Work; …

Schedule 6 in turn provides:

The Contractor will provide the following supported channels; voice, email, online messaging via Web Chat, ERMS, Web Self-Service and Social Media Portals. Both Inbound and outbound Services are to be provided. Outbound Services mean voicemail call-backs, follow-up call-backs, emails and messaging to identified Samsung Customers or other Individuals.

5	Vector Gas Ltd v Bay of Plenty Energy Ltd [2010] NZSC 5, [2010] 2 NZLR 444 at [19] per Tipping
J.

[25]     Clause 8.1 of the second Agreement then provided, “Samsung will pay the Contractor the Service Fee for the provision of the Services”, which is defined at clause 1.1 as “the service fee specified in schedule 3 or any other service fee agreed between the parties from time to time, expressed in New Zealand Dollars (NZD) and exclusive of GST”. Schedule 3 contained the Pricing Table set out in part at [15] above.

[26]     The table relevantly provided:

Activity	Logic	Cost	Remarks	
…	…	…	…	
Outbound	Happy Calls (see note below)*	$6.20 per call	Based on BI Data	

…

*Outbound Happy calls Formula:

(Execution ratio(%) x Target Count) plus (40% of Unable to progress ratio x
Target Count).

The maximum chargeable number of calls in any monthly period is 30% of the warranty target count.

[27]     ‘Happy Calls’ are not defined precisely in the second Agreement, but they were a carry-over from the first Agreement, which required as one of the KPIs “[a]s warranty jobs are completed, the following month 25% of these need to be surveyed”. They are, in essence, follow-up contact with a proportion of customers, to check on their satisfaction with warranty services provided. The second Agreement’s Schedule
2 also specified a KPI “Happy Call Execution Ratio”, to:

… measure the volume of customer satisfaction surveys undertaken by the Call Centre where Happy Call surveys will be automatically generated by Samsung’s system and the Contractor will be responsible for contacting that number of  customers and conducting a  telephone survey and accurately recording the Customers response to the Happy Call survey.

That Schedule also required SCC monthly:

To have obtained a response from at least 15% of all customers who have received a Happy Call survey from Samsung and to accurately record those responses.

[28]     ‘Happy Calls’ transpired to be difficult to meet in those terms, seemingly because customers were hard to contact, or resistant to providing the necessary degree

of response. SCC’s monthly reports to Samsung illustrated increasing number of

‘Happy Calls’ were unable to be progressed, while the number of responsive ‘Happy Calls’ reduced well below the desired 15 per cent. Ultimately, Samsung relieved SCC of ‘Happy Calls’; the March 2014 amendment to the second Agreement provided:

The execution of the ‘Happy Call Calling’ function is removed from SCCNZ to  become  the  responsibility of  Samsung. All  reference to  ‘Happy Call Calling’ in the Services Agreement is deleted from [Schedules 2, 3, and 4].

—SCC’s argument

[29]     SCC’s contention is it was to be paid $6.20 for every outbound call made under the second Agreement. It says that is the plain meaning to be taken from the Pricing Table, which only expressed a formula limiting the maximum chargeable number of
‘Happy Calls’ in any month.

[30]     SCC observes ‘Happy Calls’ are just one sort of outbound service. Another is

‘Exchange Customer Satisfaction Calling’, for which there is no specified charge (or other mention in the second Agreement), but of which SCC was also relieved by the March 2014 amendment, which acknowledged such was “currently provided in relation to the Services Agreement by SCCNZ”. And there are other forms of outbound calling: any “voicemail call-backs [and] follow-up call-backs … to identified Samsung Customers or other Individuals”.

[31]     Further, the March 2014’s exclusion of reference to “Happy Call Calling” was said to leave the pricing table to read:

Activity	Logic	Cost	Remarks	
… Outbound	…	…
$6.20 per call	…
Based on BI Data	

[32]     By SCC’s assessment, it made some 170,000 outbound calls under the second Agreement, for which it was paid only for some 25,000 ‘Happy Calls’, and therefore claims $890,946.57 (exclusive of GST) for the balance.

—analysis

[33]     For the reasons I explain below, I construe the column “Logic” in the pricing table at Schedule 3 to the second Agreement to mean ‘how the relevant component of the Service Fee is to be calculated’. Construed in context, the second Agreement does not require payment for all outbound calling.

[34]     First, despite SCC’s monthly Service Fee under the first Agreement being calculated by reference to every incoming and outgoing call and email, SCC appears to have ceased calculating the Service Fee to be invoiced to Samsung by reference to outgoing calls other than ‘Happy Calls’ from the time the second Agreement came into force. Clause 8.4 of the second Agreement required SCC to “prepare and provide to Samsung on a monthly basis … an invoice for all of the Services provided by the Contractor to Samsung during the previous month”. Clause 8.5(a) required each invoice to “contain sufficient information to enable Samsung to establish the accuracy of the invoice, including a breakdown of the Services provided and the Service Fee payable”. The few SCC invoices under the second Agreement in evidence illustrate its calculation of the Service Fee to be invoiced to Samsung by reference to outgoing
‘Happy Calls’ only.

[35]     Mr Yoon contended in his written statement in reply:

SCC has always maintained that call-backs are payable. Since or on around
2012 as the number of call-backs escalated and SCC was performing call- backs as additional services for the benefit of Samsung, I requested Samsung to pay for these services.

The documentary evidence, however, showed Mr Yoon did not raise payment for other outgoing calls until after the second Agreement’s first year. On 9 April 2013, Mr Yoon emailed Samsung NZ’s Head of Service, Naveen Dowlath, copied to Mr Choi, to say:

During the first year in the contract terms, we found that with the increasing sales of complicated smart mobile phone and Smart TV series there has been an increasing number of Call Back work from CCC to customers most of them are required by customers to provide with technical assistance which is set as “call back” in G-CIC and booked by General agents in case they can not assist customers with technical issues.

Samsung does not allow us to Transfer call to Tech advisor. As soon as transferred, talk time is not valid for those technical calls. Also volume of NZ CCC it is hard to set dedicated Call Back agents (Tier 2 Support) and so we

have been provided Call back work to customers during last year at no cost, but call back is getting important and it is now at the time of requiring almost one manpower work.

As explained previously, we would like Samsung review our Call Back work for the claim from March 2013.

(“CCC” is an occasional reference to SCC used by Mr Yoon.)

[36]	Mr Choi responded:

If you need to invoice with amended amount. You should discuss in advance. That is proper manner in business.
I  was  very  disppointed  that  you  invoice  the  outbound  call  without confirmation with Samsung.

Who  decide  outbound  call  price?  Who  confirmed  that  you  invoice  the outbound call?

And also, Samsung never asked you that below blue color. Please don’t make any misunderstanding.

“Samsung does not allow us to Transfer call to Tech advisor.” Samsung will verify your request again and let you know asap.

(Mr Choi’s reference to “that below blue color” appears to refer to that following the quoted text from Mr Yoon’s email set out at [35] above, and seems to refer to the “Tier
2 Support”. That is a separate – but, as will be seen, related6 – issue to that of outbound

calls, raised on another of SCC’s claims in this proceeding.)

[37]	Mr Yoon pursued Samsung NZ for its response. By email of 27 May 2013, Mr Choi advised:

Basically, Samsung encourage first time fix call which means that Agents are fixed issues when customer call immediately.

To do that, I would like to reinforce to transfer function from your 1st tier
Agents to 2nd tier Agents rather than call back customers.

You are able to charge us to include into in-bound call talking time.

6	At [96]-[105] below.

[38]     After Mr Yoon continued to pursue the issue “for more than 40 minutes” in what was intended to be a “quick meeting” with Mr Dowlath, Mr Dowlath explained he needed until early June 2013 to discuss the issue with Samsung NZ’s managing director. When Mr Yoon threatened to go over Mr Dowlath’s head to Samsung NZ’s board members, Mr Dowlath endorsed Mr Choi’s position, and added in his email of
5 June 2013:

I have therefore made a decision under duress…

With the information at hand, from discussing with you and Andrew, from discussing SENZ position with William & from my many years of experience setting up and managing a call centre & technical helpdesk,

I cannot agree for SENZ to pay for outbound calling at this stage.

[39]     In   email   response   the   same   day,   Mr Yoon   accepted   Mr Choi’s   and

Mr Dowlath’s positions, saying:

As Samsung does not want to support the technical call back outbound, CCC will consider to form Tier 2 staff (in the beginning one or two) who will take transfer calls from General agent and support General agents while on the call where technical assistance required.

[40]     Also of note is Mr Yoon’s acknowledgement in that last email, “[c]urrent tier

2 agents also take inbound general calls as we are get paid mostly with inbound calls”. That supports an inference SCC accepted the Service Fee was not to be calculated by reference generally to outbound calls (which, on the evidence of invoices under the second Agreement, would have increased the Service Fee by about a third).

[41]     Second, under this head of claim and others, SCC’s counsel, Ross Dillon, sought to characterise the two Agreements as “piecework” contracts: that is, they specified a rate for each and every activity to be carried out under them. That is not a sustainable characterisation of the Agreements, which instead expressly provide for SCC’s remuneration for provision of the Services by payment of a monthly “Service Fee”. Clause 8.1 of the second Agreement makes that plain: “Samsung will pay the Contractor the Service Fee for the provision of the Services”. ‘Services’ is defined as meaning:

… the services in relation to the Products to be provided by the Contractor to Samsung as set out in schedule 6 and includes any additional services agreed as part of any Statement of Work.

(For completeness, ‘Product’ means “a product sold under the brand name "Samsung" falling within the Product categories specified in schedule 1”, which non-exclusively categorises audio-visual products, white goods, IT products, and others included “as required by Samsung in its absolute discretion”, as well as “general calls”.)

[42]     Schedule 6 to the second Agreement required SCC to provide specified pre- sales, post-sales and general support “for enquiries received” from Samsung’s customers through “voice, email, online messaging via WebChat, ERMS, Web Self- Service and Social Media portals”, in which “[b]oth inbound and outbound Services are to be provided”. Those ‘channels’ self-evidently are broader than the initial four activities by which the Service Fee is to be calculated. An obvious omission is the on- line services, despite their prominence in the second Agreement’s recitals, and express inclusion in clause 4’s articulation of the “Contractor’s services”.7

[43]     The April 2013 addendum included some of that on-line activity for calculation of the Service Fee, additionally stipulating:

Activity	Logic	Cost	Remarks	
Inbound	1 on 1 Live
Chat	(80% of the inbound per minute rate)*(Average Inbound Talk time per Mthly Invoice)*(Qty
of Live Chats)	Qty is based on Live Chat System. Excludes GST	

The presence of the Addendum illustrates the pricing table in its original incarnation did  not  provide  a  rate  for  every  activity,  without  some  explanation  for  SCC’s
agreement to reduce its entitlement (to 80 per cent) for these inbound calls.

7	Clause 4 provides:

The Contractor will at all times during the Term:
…
4.13	create and or manage a Web Chat service for Customer enquiries on the Samsung website, as agreed by the parties;
4.14	manage any Social Media Portals as agreed by the parties;
4.15	create and or manage a Web Self-Service facility, as agreed by the parties …

[44]     Third, the March 2014 deletion of “All reference to ‘Happy Call Calling’” from the second Agreement’s Schedules 2, 3, and 4 is not happy contractual drafting. The words ‘Happy Call Calling’ appear nowhere in those schedules (or elsewhere in the second Agreement). Instead, Schedule 2 provides a “Happy Call Execution Ratio” KPI; Schedule 3 stipulates “Happy Calls” in relation to outbound ‘Logic’ and KPI incentive payments and penalty deductions; and Schedule 4 exemplifies calculation of the monthly KPI evaluation score by reference in part to “Happy Call”. Deletion of
‘all reference’ to ‘Happy Calls’ is to delete the whole of its reference, meaning the entirety of the applicable KPI (rather than to leave it as an ‘Execution Ratio’ KPI), the whole of the outbound activity row in Schedule 3, and the whole of the ‘Happy Call’ row in Schedule 4.

[45]     For these reasons, although Mr Dillon colourfully denied the column displayed any logic at all, on the face of the pricing table, the ‘logic’ is of its identification of the components going to make up the monthly Service Fee. Construed in context, the second Agreement does not require payment for all outbound calling.

[46]     The point is emphasised by the provision in Schedule 3’s provisions for calculation of incentive payments and penalty deductions. The former articulates the calculation as a percentage of “the amount payable to the Contractor for the relevant month for any Inbound and Email Handling plus charges invoiced for successful Happy Calls as per the Pricing Table in this Schedule”; the latter as “the amount payable in respect of any inbound and E-Mail Handling transactions and any successful Happy Calls as per the Pricing Table in this Schedule”. There is no rationale for omitting from those calculations a significant portion of payments due to SCC. Notably, when the second Agreement added ‘1 on 1 Live Chat’ to the Service Fee calculation, that activity is categorised as “Inbound” transactions, bringing it within the incentive payment and penalty deduction regime.

[47]     This head of claim fails.

Warranty process

[48]     This is SCC’s second cause of action, claiming Samsung’s actions to have diverted work which otherwise would have given rise to compensable calls to SCC.

—contractual provisions

[49]     As has been seen,8 clause 4.1 of the second Agreement referred to “Samsung’s

Warranty Process”. That phrase is defined at clause 1.1 as meaning:

… the process to be followed in relation to any warranty claim received from any Customer as set out in schedule 9 or such other process as notified in writing by Samsung to the Contractor from time to time.

Schedule 9 sets out the detailed steps SCC is required to take “[u]pon a request from a Customer to service or repair a Product”, leading to SCC’s determination whether the sought activity is “a Warranty Service or non-Warranty Service”, and – if the former – to authorise such service and “arrange the relevant repair process, including booking the service with the authorised service centre”.

[50]     Schedule 6, to which the definition of Services refers,9 specified:

Provide	pre-sale	and post-sale support (clause
4.5)

•	If required by Samsung, the Contractor will provide pre-sales and post-sales support for:
o Brown Goods, White Goods, IT Goods and HHP Goods and B2B Goods to all Customers Including Samsung Business Customers.
•	The Contractor will provide the following support services   for   enquiries  received   via   all   agreed mediums in clause 4 in accordance with clause 4: Pre-Sales Support
o Provide   Samsung   Customer   with   pre-sales information with regard to the Products.
Post-Sales Support
o	Handling  Customer  enquiries  with  regard  to
Products with Defects.
o Support   of   the   Customer   Products   returns process.
o	Diagnosing the Customer complaint to confirm
Product has a Defect.
o If the Product has a Detect, the Contractor will use the Samsung systems to Identify the most appropriate authorised service centre and arrange the relevant repair process, including booking the service with the authorised service centre.
o Firmware    and    software    distribution    and administration support.
General Support
o Handling both general and technical Customer queries.

8	At [24] above.
9	At [24] above.

[51]     Clause 4.5, referred to in the left-hand column above, required SCC to:

… provide the Services in a manner that promotes the goodwill and reputation of Samsung and will bring to the attention of Samsung on a timely basis, any incident or circumstance which will or may affect the goodwill or reputation of Samsung with a view to ensuring:

(a)        the needs of Callers and Customers, dealers and any other Individuals are dealt in a timely and professional manner with via an inbound/outbound call centre;

(b)        the needs of Customers, dealers and any other Individuals are dealt with in a timely manner via the Samsung Web Self-Service and Web Chat service, Samsung Social Media Portals and emails;

(c)        pre-sales information is provided in respect to the Products;

(d)        post-sales service is provided in respect of the Products;

(e)        all Callers’ and Customers’ questions and complaints are followed up and responded to appropriately; and

(f)        the  presence  and  service  performance  of  Samsung  within  New
Zealand is improved; …

[52]    The second Agreement, in these respects, echoes the first Agreement’s requirements of SCC, “[u]pon a request from a Customer to service or repair a Product”, to determine and authorise (but not expressly to arrange) Warranty Service.10

[53]     Significantly, clause 2.1 of the first Agreement appointed SCC “an Exclusive (Mobile Phone and I.T) product Authorized Call Centre”. (That determinedly was not the position under the second Agreement, Samsung resisting Mr Yoon’s wish for such continued express exclusivity, although Mr Yoon argued in cross-examination such could be implied from the second Agreement’s lack of reference to ‘non-exclusivity’).

—SCC’s argument

[54]     SCC’s complaint under this head relates to Samsung’s arrangements to collect customers’ products from retailers and deliver them to authorised repair or service centres (predominantly as Warranty Service), referred to by the parties as the ‘milk run’. It appears New Zealand customers saw the retailer, rather than the manufacturer,

10         Although  ‘Warranty  Service’ is  defined  in  both Agreements  as  meaning  “service  which  is completed subject and pursuant to and strictly in accordance with the terms of the Warranty Card” (emphasis added).

as the first port of call for service or repair of their products (at least while under warranty). Retailers would either book the service with SCC and dispatch the products to the repair or service centre, or go directly to the centre without reference to SCC.

[55]     Samsung made these arrangements to address customer concerns about the time taken to repair or service their products, which were reflected in customer (dis)satisfaction surveys. Samsung is strongly motivated to meet customer concerns, as reflected by a variety of provisions in the Agreements, including for ‘Happy Calls’, and express reservation to Samsung to “take whatever action is required in order to protect the Samsung brand name, level of service or service perception during the Term”. Under the first Agreement, but not the second, that reservation was exercisable “[b]y agreement”; under the second Agreement, that action was to be “reasonably required”.

[56]     SCC initially had no retailer-centric channel; its channels were customer- centric, and anticipated provision of specific customer detail, including name and contacts, for entry and tracking in Samsung’s Global Customer Interaction Centre (“G-CIC”). Customers were required to enter such detail to make email contact via Samsung’s website (that is, ERMS), which automatically was recorded in G-CIC.11
Later, retailers could email customer information directly to SCC (using an “info.nz”

email address established for the purpose), which SCC then entered into G-CIC. Clause 4.9 of the second Agreement in part required SCC to “update the G-CIC and CMS systems accurately with all Customer information, including new enquiries and new information on old enquiries”. That detail permitted Samsung to document its interactions with customers, but only if both customer and retailer used the same details to identify the unique customer.

[57]     Samsung apprehended the delays were contributed by retailer behaviour, in their bulk dealing with customer service or repair requirements, both in their contact with SCC and in dispatch to repair or service centres, rather than on each individual customer contact (as would be the case if customers directly contacted SCC). This behaviour led to heavy and lumpy demand on SCC, particularly at the beginning of

11	At [15] above.

the week, when it was confronted with retailers’ weekend communications (SCC only being required under the first Agreement to operate “Working Hours” – circularly defined as those SCC “is open for business” – and under the second Agreement to operate weekdays from 8:30am to 5:30pm, and Saturdays from 9:00am to 1:00pm).12

[58]     Samsung sought to overcome these issues. When SCC declined to extend its operating hours under the second Agreement, Samsung secured an after-hours call centre service from Transcom, in the Philippines. The March 2014 amendments to the second Agreement included payment for calls made by SCC in response to customer enquiries Transcom was unable to resolve. Samsung also paid for retailers’ courier costs incurred in dispatch to repair or service centres (to incentivise individual, rather than  bulk,  dispatch). When  the  latter  did  not  have  the  desired  effect,  Samsung introduced the ‘milk run’. There is disagreement as to when that process commenced: Samsung says it was “around January 2013”; SCC harbours suspicions it was initiated as early as 2010, and expanded and formalised over time.

[59]     SCC contends, under the first Agreement, it had “the exclusive rights to book the Samsung warranty job”, and Samsung’s ‘deliberate diversion’ of warranty bookings away from SCC was an unnotified and unagreed change to the Warranty Service Process, in breach of at least the second Agreement. Mr Dillon expressly submitted Samsung had no “unilateral right to remove or reduce a revenue source” from SCC.

[60]     SCC says there have been 62,348 warranty service bookings made over the course of the first and second Agreements, without reference to SCC, for which it claims damages in the amount of $324,209.60 (exclusive of GST), calculated at $5.20 for inbound emails as set out in the second Agreement’s schedule 3.13

12         The first Agreement specifies the same hours under a heading “Working Days and Hours” at Schedule 1, “Key Performance Indicators of the Call Centre”, but without other reference to that specification.
13	At [15] above.

—analysis

[61]     Properly  construed,  the  first  and  second Agreements  do  not  entitle  SCC

exclusively to book Samsung warranty repair and service work.

[62]     The ‘exclusivity’ conferred by the first Agreement is not the subject of any more detailed explanation. On its face, SCC’s appointment is as Samsung’s exclusive
‘Authorized Call Centre’, which is defined as meaning:

… an entity approved by Samsung for the needs of consumers via an inbound
/ outbound call centre as well as dealers, and any interested party that may call in order to assist in the post sales service of Samsung Products and pre sales information, follow  up  and  resolution  of  consumer  complaints,  monitor service providers, and resolve escalated issues and improve the presence and service performance of Samsung within New Zealand.

[63]     The definition makes it plain such exclusivity is only as the “entity approved by Samsung for the needs of consumers via an inbound / outbound call centre … within New Zealand”. The definition anticipates performance of SCC’s role would be initiated externally, by “consumers … as well as dealers, and any interested party that may call”, SCC’s role being “to assist” in the specified ways. Nothing in Samsung’s exclusive appointment of SCC confers any monopoly on SCC so to assist. The natural meaning of ‘exclusivity’ in the circumstances is to disentitle Samsung from establishing any other inbound/outbound call centre focused on New Zealand consumer needs. That is further indicated by the first Agreement’s clause 2.3, which reserves rights to Samsung “in its absolute discretion” to approve another entity “to be an Authorized Call Centre”, “[b]y agreement” (inferentially, with SCC).

[64]     Further, any such exclusivity is only in relation to Samsung’s “Mobile Phone and I.T” products. The reference to “Mobile Phone and I.T” is picked up in the first Agreement’s Recital B, where SCC is “[t]o offer warranty assistance” to those products only, while transferring “Audio Visual and White Goods related calls” to Radiola New Zealand, Samsung’s distributor, also acting as a service centre. Mr Yoon contended the first Agreement made provision for SCC’s retention of the latter calls after six months of operation, but was unable to identify such provision. Rather it appeared from his evidence under cross-examination SCC agreed with Samsung to

retain calls previously destined for Radiola. But nothing in the arrangements for such retention extended to any contractual grant of exclusivity for those ‘products’.

[65]     SCC’s lack of monopoly, otherwise than as a consumer call centre for mobile phone and IT products, is reinforced by the first Agreement’s clause 3.1, which identifies the services are to be provided “at the request of Samsung or the Caller” (‘Caller’ being defined as including “a Customer, dealer or a member of the public”). Expressly, under the first Agreement, SCC’s provision of ‘warranty assistance’ is initiated by “a request from a Customer to service or repair a Product under clause
3.1”. SCC cannot insist, for example, a customer or dealer make such a request of it; much less that Samsung not meet its warranty obligations to customers, unless request for the same is made through SCC.

[66]     The second Agreement’s Schedule 9 maintained the same responsive role for SCC under the more formalised ‘Samsung Warranty Process’.14 SCC’s lack of monopoly also is emphasised by the second Agreement’s Schedule 6, which addressed SCC’s continuing ‘warranty assistance’ then in terms of ‘post-sales service’.15 Such was to be provided “[i]f required by Samsung” in relation to specified products; then by SCC “for enquiries received via all agreed mediums” (meaning not exclusively by inbound emails registered by ERMS, which is the calculation of SCC’s claim, but also as a Back Office function – “Email booking from ASCs, Retailers, Customers” – as Schedule 6 provides).16

[67]     SCC’s  post-sales  service  is  not  expressed  by  reference  to  the  ‘Samsung Warranty Process’; rather, following such enquiry, SCC’s role principally is in determining if the particular product is defective in its materials or workmanship, then to “use the Samsung systems to identify the most appropriate authorised service centre and arrange the relevant repair process, including booking the service with the authorised service centre”. Only if it transpires, “[u]pon a request from a Customer to service or repair a Product”, the request is for a “Warranty Service”, does the balance of  the  ‘Samsung Warranty  Process’ apply. Again,  SCC  cannot  insist  Samsung’s

14	At [49] above.
15	At [50] above.
16	At [87] below.

customers only seek warranty service through it, or Samsung only perform those obligations on reference by SCC.

[68]     It is impossible to construe the second Agreement as conferring on SCC effectively control of the gateway to performance of Samsung’s warranty obligations to its customers. SCC’s argument clause 23 of the Agreement prevents Samsung from altering the warranty process significantly exceeds its reach for three reasons. First, SCC does not (and cannot) point to any aspect of the documented Samsung Warranty Process  altered  by  Samsung’s  introduction  of  the  ‘milk  run’  or  comparable
‘diversions’. Next, the very definition of the process incorporates Samsung’s entitlement to change it.17 And last, clause 23 is an ‘entire agreement’ provision,18 which prevents any implied term to the effect the warranty process is only accessible through SCC.

Thompson wage recovery

[69]     This is SCC’s third cause of action, seeking to recover deductions made in

SCC’s invoices on account of the ‘wage’ payable to SCC’s shareholder, Mr Thompson.

—contractual provisions

[70]     Clause 4.2 of the first Agreement relevantly provided:

Samsung shall use its best endeavors to make the payments referred in Schedule 2 to the Contractor within [indecipherable] days after the end of the month in which the invoice supported by all underpinning attachments is submitted to Samsung by the Contractor.

Schedule 2, as has been seen, required payment of a “Service Fee … of NZD 43,018 plus NZ GST per month”.19

17	At [49] above.
18	Clause 23 of the second Agreement provided:

This agreement incorporates the entire terms and conditions agreed between the parties with respect to the subject matter dealt with and all other warranties, representations or implied terms are expressly excluded to the extent permissible by law. No variation to any of the terms or conditions of this agreement shall be effective unless it Is made in writing and executed by or on behalf of all parties.
19	At [10] above.

—SCC’s argument

[71]     As previously outlined, the first Agreement’s ‘Service Fee’ was founded on SCC’s proposed budget.20  Included in the budget was “[w]ages” for two “[g]eneral managers”, understood to be Mr Yoon and Mr Thompson, at an annual expense of
$200,004 between them. After Mr Thompson ceased to have an active role in SCC, by about October 2008 – SCC pleads, “in breach of the first [Agreement] and/or in unlawful   interference   with   the   contractual   relationship   between   SCC   and Mr Thompson” – Samsung required SCC’s monthly invoices to be reduced by an amount equivalent to Mr Thompson’s ‘wage’, and SCC complied. SCC seeks now to recover those reductions from Samsung NZ, in the amount of $316,666.00 (exclusive of GST).

—analysis

[72]     There  is  no  evidence  of  the  contractual  relationship  between  SCC  and Mr Thompson, or any evidence from Mr Thompson. SCC’s claim turns almost entirely on  a  Korean  language narrative dated  31  July 2014,  authored  by  Mr Yoon  and translated by him into English.21  The narrative covers events from 2007 to 2012, purports  to  record  verbatim  statements  by  various  Samsung  representatives  and Mr Yoon’s responses over that period, and is in part rhetoric, in part hearsay, and generally a work of advocacy.

[73]     So far as the present claim is concerned, Mr Yoon wrote, Samsung “asked me
‘Dismiss business partner ‘David’ from the call centre’” in March 2008. In his first written statement, he said the request “was made to me several times in person during meetings in Auckland, mostly in Samsung’s offices”. Mr Yoon’s note records, in reply to his opposition, “Samsung pushed again with reason ‘at small company two directors are not ecomonical and so one should go’”. Then, in December 2008:

20	At [12] above.
21	As with other of Mr Yoon’s translations (see [131] below), the document in evidence was presented under cover of a registered “Notarial Certificate”, issued by the Consulate of the
Republic of Korea, attesting to Mr Yoon’s confirmation to a consular official “the attached
translation is true to the original”. But that was not universally correct: see note 45 below.

Mr C. G. Kim from [Samsung Australia] visited NZ and asked a meeting with me where he decided Samsung will not pay Dave’s salary as he no longer work at contact centre. This is part of HQ mission that Samsung has to cut 30% of cost in every field.

Me: We are not a part of Samsung, just outsourcing company to provide service and get paid by rate that we work

[74]     Those exchanges are against the backdrop of Mr Yoon and Mr Thompson, shortly after establishing SCC, also briefly operating a Samsung retail store in Auckland’s  Newmarket,  allegedly  at  Samsung’s  insistence,  which  Mr Thompson managed instead of acting as SCC’s general manager. Mr Yoon’s written statement says “David did not return to work at SCC after the shop had closed”. The store’s lack of success is blamed on Samsung’s refusal to supply its product (but after its contended insistence Mr Yoon and Mr Thompson secure an eight-year lease “in the heart of expensive Newmarket”).

[75]     Mr Yoon’s written statement adds Mr Kim’s demand in October 2008 for Mr Thompson’s exit, saying Samsung would not continue to work with SCC while Mr Thompson remained. Further:

Samsung was no longer prepared to pay SCC the set rates per call because this had originally been set based on a calculated budget that included a salary for David, but now that David was no longer working for SCC, Samsung would not pay the set rate.

Fearing Samsung “would find a way to terminate the first [Agreement]”, Mr Yoon started  negotiations  in  October  2008  to  buy  Mr Thompson  out  of  SCC.  The negotiations concluded successfully in October 2009, when Mr Thompson resigned from SCC. Meanwhile, Mr Yoon’s written statement said “[a]t the request of Samsung, I reduced each monthly invoice by $8,333 because Samsung confirmed that if this were not done, they would simply not pay SCC”.

[76]     Strikingly, Samsung raises no evidence in response to those contentions, such as they are. Instead, in submission, it developed its own conspiracy theory: Mr Yoon sought to remove Mr Thompson as SCC’s co-owner, and secured that exit for a bargain basement price, so as to be able to claim all SCC’s profit for himself.

[77]     If any of these contretemps mattered, I may not have been able to draw any conclusion from the evidence. However, it is clear not only Samsung contracted to pay SCC $43,018 per month, but also did not demur from payment of the ‘extra charges’ levied during the term of the first Agreement.22 If the first Agreement only established SCC’s right to be paid $43,018 per month, clause 4.2’s requirement for “the invoice supported by all underpinning attachments” would be otiose. Purposively construed, the first Agreement intended monthly payment of at least $43,018 per month, but such larger sum as may be justified on invoice by reference to the per call/email rate. The first Agreement embodies Samsung’s obligation to pay accordingly on invoice.

[78]     From January 2009 until commencement of the second Agreement in March

2012, SCC’s monthly invoices to Samsung recorded two lines:

1.         Flat Fee (for 5,250 calls) : IT Monitor/Printer, Mobile
- $8,333 (David)

2.         Extra Fee (Inbound + Outbound) : incl CE Products

The commencement date for the “(David)” deduction, coming ten months after Samsung first raised the issue, is not explained. There is no contemporaneous evidence of any express protest or reservation on SCC’s part, but clause 15.3 of the first Agreement provided:

The rights of any party shall not be prejudiced or restricted by any indulgence or forbearance extended to any other party and no waiver by any party in respect of any breach shall operate as a waiver in respect of any subsequent breach.

[79]     Samsung’s counsel, Matthew Kersey, argues seriatim:

(a)	“Samsung should not have needed to pay the salary of someone who no longer worked at SCC”;

(b)       Mr Thompson’s  departure  “was  a  valid  variation  to  the  [f]irst

Agreement”; and

(c)	the invoiced “(David)” deductions constituted SCC’s waiver of any claim for their payment.

22	At [13] above.

[80]     The first argument mischaracterises the spreadsheet’s foundational budget as being Samsung’s obligation to meet. Instead, Samsung’s obligation was to make payments of at least $43,018 per month, and such larger sums as may be justified on invoice by reference to the per call/email rate.

[81]     The second submission overlooks nothing in the first Agreement committed SCC to making Mr Thompson available to it. Instead the definition of ‘Key Person’ meant:

… the primary contact or representative of the Contractor being at the time of the Commencement Date as detailed in schedule 5 or such other person as approved by Samsung from time to time;

And Schedule 5 only identified Mr Yoon as SCC’s “Managing Director” and Andrew MacDonald as SCC’s “Call Centre Manager”. There was no evidence of any other person being approved by Samsung. SCC continued to pay Mr Thompson his ‘wage’ after Mr Thompson ceased working at SCC to manage the Samsung retail store in Newmarket from February 2008, and after SCC commenced the monthly “(David)” deductions, until Mr Thompson sold out of SCC in October 2009.

[82]     On the third submission, waiver requires:23

… one party, by his conduct, [to lead] another to believe that the strict rights arising under the contract will not be insisted upon, intending the other should act on that belief.

But there is no evidence either Samsung believed SCC had abandoned its entitlement to the whole of the contractual ‘flat fee’, or SCC intended Samsung to act on such a belief. At best SCC’s intention was only Samsung pay on invoices, which is not dependent on Samsung’s belief as to their foundation. Given clause 15.3’s reference to ‘indulgence or forbearance’, waiver cannot lightly be inferred here. The invoice’s explicit deduction, alongside identification of the full ‘Flat Fee’, is at least as consistent with reservation of the deduction for later argument as it is with abandonment of any hope for its payment.

23	W J Alan & Co Ltd v El Nasr Export Co [1972] 2 QB 189 (CA) cited in Bell v BDO Spicers
Manawatu Ltd [2012] NZHC 1598 at [45].

[83]	However, Mr Yoon’s oral evidence under cross-examination was he had raised the “(David)” deductions to secure the second Agreement’s one-year extension:24

Q.        … So when you negotiated the second agreement in 2012, you didn’t raise the issue with Mr Thompson, Mr Thompson’s salary, did you?

A.        I, as I indicate in the brief, I had a meeting from (inaudible 10:39:55) from Samsung, Mr Lee. I had a contract to Samsung local company, Australia and New Zealand later, but all the negotiation was Samsung ask, Samsung New Zealand ask Samsung Headquarter to come have a meeting because they can have I think, have a discussion with me because their approach to me is unacceptable. That is in the contract, you cannot, but it was more than three years keep pushing me so I couldn’t accept.

Q.        Sorry Mr Yoon, you’re talking about the general negotiation on the second agreement aren’t you, that you weren’t happy with?

A.        I explained the process why (inaudible 10:40:40) I explain about this happening, as I indicate when (inaudible 10:40:44) came because Samsung here asking to talk to me. I explain this is happening and I indicate and he understand what happened. So I explain fully I was (inaudible 10:40:58) by this deduction, but contract is different, that’s why Mr Lee said, in the contract he will provide three years plus one year more, (inaudible 10:41:11) achieve the KPI because to compensate to my loss.

Q.        You’re saying that the second agreement structure was to compensate for loss because of Mr Thompson?

A.	Yeah, Samsung, no, no, no.

Q.	It’s nothing to do with Thompson is it?

A.        No, ‘cos Samsung my point is that Samsung (inaudible 10:41:38) I thinks against the contract so I had this is loss to us and Mr Lee proposed three years, but I said because of (inaudible 10:41:44) be provide three year first and extra one year. So second contract comes that way.

Q.        But you didn’t raise the issue in relation to Mr Thompson’s payments again when negotiating the second contract, did you?

A.	No, I told him and that’s why he extend the one year.
Q.	Because of the Mr Thompson issue was why you extended one year? A.	I explain again. Mr Lee, I explained the full story of what happened,
then he accept my loss, which was Samsung didn’t pay, didn’t think that amount for almost two or three years. So that’s why then okay, we can discuss for changing for the second agreement, then how much make the (inaudible 10:42:38) and how much salaries, everything

24	At [14] above.

(inaudible 10:42:46) talking to the Auckland base. So then he offered me three years, then I say, “Three years not enough,” because he understand and then okay he will add one year, the automatic one year to extend, to cover that cost, that’s what agreed.

The transcript’s “inaudible” is better understood as “incomprehensible”. English is not Mr Yoon’s first language and, although he is expressive and unrestrained in it, he was often difficult to understand. Mr Yoon’s oral evidence also was discursive, and he took every opportunity under cross-examination to narrate his broader dissatisfaction with Samsung. But I took the essence of the above exchange to be the second Agreement’s one-year extension was negotiated to compensate for SCC’s earlier “(David)” deductions, made at Samsung’s insistence.

[84]    It cannot be said the negotiations themselves constituted an accord and satisfaction, effective to discharge Samsung’s liability. Instead, the parties’ entry into the second Agreement containing the one-year extension gave the negotiations that effect, as an “accord executory”. In Humphries v Carr, the Court of Appeal accepted the Victorian Court of Appeal’s explanation in Osborn v McDermott as an ‘adequate summary’ of the relevant principles:25

First, there is the mere accord executory which, on the authorities, does not constitute a contract and which is altogether unenforceable, giving rise to no new rights and obligations pending performance and under which, when there is performance (but only when there is performance), the plaintiff ’s existing cause of action is discharged. Secondly, at the other end of the scale is the accord and satisfaction, under which there is an immediate and enforceable agreement once the compromise is agreed upon, the parties agreeing that the plaintiff takes in satisfaction of his existing claim against the defendant the new promise by the defendant in substitution for any existing obligation. Somewhere between the two, there is the accord and conditional satisfaction, which exists where the compromise amounts to an existing and enforceable agreement between the parties for performance according to its tenor but which does not operate to discharge any existing cause of action unless and until there has been performance.

Although nothing in the negotiations itself constituted any separately enforceable agreement, the foundation for the one-year extension to the second Agreement means Samsung’s entry into it fully compromised SCC’s claim under this head. The claim fails.

25	Humphries v Carr [2012] 1 NZLR 742, [2012] 1 NZLR 742 (CA) at [20] citing Osborn v
McDermott [1998] 3 VR 1 (CA) at 10.

Support emails

[85]     On this fourth cause of action, SCC claimed payment at $5.20 per email in respect of 26,795 incoming emails, and to recover a similarly calculated $89,320 for some 17,100 emails deducted by Samsung from SCC’s August 2014 invoice. (The deduction relates to Samsung’s grounds ultimately to terminate the second Agreement.26)

[86]     In response to my questioning, Mr Dillon accepted in his closing submissions the $5.20 per email claim was untenable and was not to be pursued, but sought to amend the claim to engage instead the relevant aspect of the Service Fee reflected by Back Office activity as set out in the second Agreement’s Schedule 3. The proposed amended claim was to read:

By clause 8.1 of the second [Agreement], [Samsung] was required to pay SCC for Back office function email as set out in Schedule 3 of the agreement. Pursuant to clause 4.6 of the Second Schedule of the second [Agreement], between 1 March 2012 and October 2014 SCC has dealt with 26,795 email, for which it has not been paid, in breach of the terms of the second [Agreement] and the novation. A further amount of $89320.00 of such email work was unilaterally deducted from SCC’s tax invoice dated 8 August 2014, representing a further 17,100 email.

[87]     As has been seen, clause 8.1 required Samsung to “pay the Contractor the Service Fee for the provision of the Services”.27  The relevant row of Schedule 3 provided:

Activity	Logic	Cost	Remarks	
… Back Office	…
Number of FTE’s required to perform back office functions as detailed in Table Back Office Functions in Schedule 6.	…
$3,750 per FTE	…
2 FTE Required	

And Schedule 6 provided:

Table: Back Office Functions:

The functions listed below are to be carried out by the Call Centre: Email booking from ASCs, Retailers, Customers
Weekly Mobile OBF from Telegistics and Bright Point and OCL Making weekly and monthly report

26	At [19] above.
27	At [25] above.

HR and Payroll
Internal Training
Internal IT Management
Customer Refund Process
Meeting attendances with Samsung
Service Job Tracking if required by Samsung (To be discussed)

[88]     Clause 4.6, referred to in the proposed amended claim, is SCC’s general obligation to:

… provide professional, helpful and informative assistance to Customers, including providing general and technical advice and handling customer complaints from Customers calling via the inbound call centre or making online enquiries via the Samsung Web Chat service, Social Media Portals, Web Self-Service, ERMS, other emails and any other agreed online format, in accordance with the best practice policies in the KMS system and Samsung’s policies and procedures.

[89]     The emails at issue are those stipulated at the first row of Schedule 6’s table. I understand SCC’s proposed amended claim to be for an increased number of FTE said to be required to perform the additional 26,795 (and 17,100) email bookings. So far as the proposed amendment otherwise is concerned, I required SCC formally to seek leave to make it.

[90]     SCC’s application for such leave says the substance of the issue between the parties “has always been [SCC] was being required to perform excess work, without payment from [Samsung], in breach of the terms of the relevant contracts”. It concedes the $5.20 calculation is “incorrect”, and contends the “correct” calculation is “the
‘FTE’ for back office function”. The proposed amendment does not quantify the amended claim, or identify how it should be calculated. Both will require further evidence, at least for any quantum hearing.

[91]     SCC requires leave to amend, because HCR 7.7(1) prohibits amendment “after the close of pleadings date without the leave of a Judge”. It is common ground leave requires an applicant to cross the “three formidable hurdles” of establishing leave is in the interests of justice, will not significantly prejudice other parties, or cause significant delay.28 Those are weighed against the principle “parties should have every

28         Elders Pastoral v Marr (1987) 2 PRNZ 383 (CA) at 385. Relevantly, the successful leave application was made on the 63rd day of a civil trial, also in the course of the plaintiffs’ closing addresses, although by arrangement most of the defendants’ closings had yet to be given.

opportunity to ensure that the real controversy goes to trial so as to secure the just determination of the proceeding”.29  That principle was articulated in terms of the former HCR 187, which permitted filing of an amended pleading “at any time before trial” (with leave, if after the setting down date). Here, of course, the amendment was sought about as late as could possibly be countenanced, in SCC’s closing submissions, after all the evidence had been heard, and Samsung’s closing submissions had been made.

[92]     More significantly, the proposed amendment seeks, at this latest of hours, to recast SCC’s claim under this head on a different basis, imposing a “heavy burden” on SCC in discharging the onus for leave.30 Even if SCC is content to rely on its present evidence for liability alone, and more so if SCC seeks to give further evidence, Samsung is entitled to avoid inevitable prejudice by further testing SCC’s witnesses in cross-examination, and leading its own evidence on the new threshold. This would necessitate delay in determination of what already has been a three-week hearing, four years after the proceeding initially was filed. Such may be addressed between the parties by a substantial wasted costs order in Samsung’s favour. But there is still the uncompensable drag on scarce Court and judicial resources, particularly if required to return months later to the dispute, and at the expense of other proceedings affected by the need to make more time for determination of this proceeding.

[93]     SCC’s claim for payment here is another example of Mr Dillon’s ‘piecework’ characterisation: that every aspect of SCC’s activities under the second Agreement stands individually to be counted and paid. As I have said (and will later exemplify),31 that is not a sound submission. The claim can only be made here by disregarding the
‘Back Office’ row’s remark “2 FTE Required”, in favour of some determination (if not by agreement) of the number of FTEs “required to perform back office functions” in
Schedule 3.

29	Shanton Apparel Ltd v Thornton Hall Manufacturing Ltd [1989] 3 NZLR 304 (CA) at 309.
30	Body Corporate 325261 v McDonough [2014] NZHC 1821 at [13] citing Swain-Mason & Ors v
Mills & Reeve [2011] EWCA Civ 14 (citing Worldwide Corporation Ltd v GPT Ltd & Anor [1998] EWCA Civ 1894).
31	At [41] above (and [133] below).

[94]     I doubt that is a tenable interpretation of the second Agreement, given clause

8.1’s “Samsung will pay the Contractor the Service Fee for the provision of the Services”, and Schedule 3’s “The Service Fee payable by Samsung to the Contractor will be calculated in accordance with the following ‘Pricing’ table …”. The claim’s indeterminable nature is illustrated by SCC’s proposed amendment not particularising either the amount sought to be recovered in damages, or the means for its calculation. Given the proposed amendment’s inevitable prejudice and consequential delay, it is not in the interests of justice to permit SCC to argue for an alternative course to the same characterisation in respect of this aspect of its claim.

[95]     SCC’s application for leave to amend its claim is dismissed. Its claim under this head, conceded by SCC to be ‘incorrect’, also is dismissed.

Continuing calls

[96]     This is SCC’s fifth cause of action, claiming to include time spent on internally transferred calls, for calculation of that portion of the Service Fee based on ‘Inbound’ activity under the second Agreement.

—contractual provisions

[97]     Again, I lay out the applicable row from the pricing table in the second

Agreement’s Schedule 3:

Activity	Logic	Cost	Remarks		
Inbound	Inbound Calls x ATT x
minute rate	$1.73 per minute	SENZ pays building costs	In-source solution	

As previously noted, it is accepted ‘ATT’ means ‘average talk[ing] time’.32 As has been seen, the longer ‘talking’ phrase was used in the first Agreement, and the shorter
‘talk’ phrase in the spreadsheet underpinning calculation of the first Agreement’s

monthly Service Fee.33

32	At [15] above.
33	At [10]-[12] above.

[98]	Also material is the “Average handling time” KPI, set out in the second

Agreement’s Schedule 2:

KPI	Average handling time. (AHT)	
Definition	Average time to handle calls
(AHT = Talk time + Hold time + ACW time)	
KPI Standard	The handling time of all calls taken on a monthly basis
must not exceed an average of
AV: 245 secs. WG: 245 secs IT: 300 secs HHP: 300 secs
General: 160 secs	
Measurement Period	Measured monthly	
Source Document	Average handling time will be evidenced by CMS.	

“ACW” is accepted to mean ‘after call work’: some seconds of administrative work before the call centre worker returns (or, after a longer period, is returned) to the queue to receive incoming calls. The acronyms in the third row refer to some of the product categories referred to in the second Agreement’s Schedule 1: Audio Visual, White Goods, Information Technology, and Hand Held Products; and CMS is defined to mean “the Samsung nominated Content Management System”. That system was the Avaya CMS. “Average Talk Time”, “Average Hold Time”, “Average ACW Time”, and “Average Handling Time” are all metrics drawn from Avaya.

[99]     Finally, the March 2014 amendment included:

2.2       Samsung will pay for ‘Extension in Calls’ based on the actual system count, at the rate of [($1.73 x Average Talk Time) x Total Calls Received] for this function, calculated monthly. Samsung will carry out random call monitoring on these calls to verify they are for the purpose of:

a)	Transferring customers to tier 2 skilled agents; or

b)	The extension of calls transferred for non English speaking customers.

“[N]on English speaking” predominantly meant Korean language, although doubtless others could be accommodated.

—SCC’s argument

[100]   SCC’s argument is the second Agreement, properly construed, always provided for ‘Extension in’ calls to be included as part of “ATT”. It says there is no justification for ‘stopping the clock’ on internal reference of an incoming call from one customer service agent to another. On recalculating ATT to include time incurred on ‘Extension in’ calls, SCC claims $25,615.92 (exclusive of GST) under this head. (Of course, if
‘ATT’ is to have that meaning, then so too has the Average Handling Time KPI, meaning incentive payments and penalty deductions also may require recalculation.)

—analysis

[101]   SCC’s monthly reports depicted a screenshot of “Avaya CMS Stats” showing the ‘Average Talk Time’ engaged in by call agents. Its monthly invoices under both the first and second Agreements drew directly on Avaya’s Average Talk Time statistic. (The statistics separately included “Ext In Call” and “Ext In Time” and “Average Ext In Time”, although whether the last was a subset of “Average Talk Time” is not discernible from the statistics themselves.)

[102]   However, at least by the time of the second Agreement, the parties would have recognised  ‘ATT’ was  an  acronym  for  that Avaya  CMS statistic.  In  the  second Agreement, ‘ATT’ was a term of art, not susceptible to further interpretation. It meant what the Avaya statistic measured. Unless and until the parties provided an alternative dictionary, which they did not, they were bound by that measure.

[103]  Notwithstanding the substantial evidence addressed to the question, it is immaterial whether SCC knew ATT ceased to be measured on internal transfer of a call. Also immaterial is whether such internal transfer was necessary or desirable, its representation and warranty under clause 9.1 of the second Agreement being “it, and its employees and agents, have all skills necessary to provide the Services”.34 Properly construed, the reference to ‘ATT’ in the pricing table was to the statistic measured by

34         Clauses 4.10 and 4.11 of the second Agreement make it plain SCC’s obligation was not just to have the necessary skills within its customer service representatives group, but that its “suitably trained, qualified and skilled CSRs” “all … are trained and have a high level of knowledge with regard to Products, best practice processes and Samsung processes, relevant IT systems and customer service skills” (emphasis added).

Avaya, relied on by SCC in raising its invoices under both the first and second

Agreements.

[104]   The March 2014 amendment to pay for ‘Extension in calls’, as if they were inbound calls in themselves, similarly would have no foundation if ATT was already calculated as including those transferred calls. But the amendment plainly conditions which transferred calls will be paid – namely, those to ‘Tier 2’ skilled, or Korean language, agents.

[105]   SCC’s claim under this head fails.

Relocation costs

[106]   This is SCC’s sixth cause of action, to recover management costs and expenses incurred in relocating to new premises.

[107]   SCC’s call centre originally was located in buildings shared with Samsung, initially in separately leased premises in Apollo Drive in Auckland’s Mairangi Bay. They moved with Samsung into shared premises first in Orbit Drive in Mairangi Bay, and later in Warehouse Way in Auckland’s Northcote. In April 2014, Samsung advised SCC it wished to expand into the area occupied by SCC, and invited or directed SCC to find new premises, desirably on a 12-month lease. Ultimately SCC identified suitable new premises, albeit on a two-year lease, at Piermark Drive in Auckland’s North Harbour, to which Samsung directed SCC relocate. After relocating, SCC submitted a claim for some $9,000 in relocation costs, which Samsung paid.

—contractual provisions

[108]   Clause 6.2 of the second Agreement relevantly provided:

… Samsung will grant to the Contractor a limited non-exclusive licence to use that part of Samsung’s premises stipulated by Samsung from time to time free of charge for the sole purpose of providing the Services (Limited Licence). The Contractor acknowledges that:

…

(c)        Samsung may at  any time  require the Contractor to provide the
Services from an alternative location stipulated by Samsung, provided

that Samsung will meet the reasonable costs of the Contractor in moving to the new location; …

[109]   Somewhat contradictorily, Schedule 8 to the second Agreement provided:

SCHEDULE 8 – GENERAL RESPONSIBLITIES

For the avoidance of doubt, the following table outlines the responsibilities of each party in relation to both transition and ongoing requirements:

Description	Included in
Cost per
Call	Cost Owner	Detail	
…	…	…	…	
Costs associated with
moving the Call
Centre operation	No	The requestor	Costs associated with a
change in location of the Call Centre will be borne by the party requesting the change	
Building Costs –
Rent, Facility Management, Parking, etc	No	SAMSUNG	As this is an in-source
agreement, all related housing costs will be met by Samsung.	

[110]   SCC also relies on clause 7 of the second Agreement (which has no clause 7.1):

7.	STATEMENT OF WORK

7.2     If at any time during the Term, Samsung requires additional services, Samsung will issue a Statement of Work to the Contractor setting out the nature and extent of the additional services required by Samsung.

7.3     Upon a Statement of Work having been issued, the Contractor will notify Samsung in writing within 5 Working Days of whether it is prepared to provide the additional services specified in the Statement of Work and the cost of providing those additional services (Contractors’ Notice).

7.4     Upon receipt of  the  Contractors’ Notice, Samsung will  notify  the Contractor of whether it accepts the terms set out in the Contractors’ Notice and provided that nothing in this clause will require Samsung to accept any terms or conditions set out in the Contractors’ Notice.

7.5	Upon acceptance of any Contractors’ Notice by Samsung:

(a)     the Statement of Work and Contractors’ Notice accepted by Samsung will constitute a binding amendment to this agreement, and

(b)      to the extent that there is a conflict or inconsistency between clauses of this agreement and any Statement of Work, the clauses of this agreement will prevail over the terms of any Statement of Work to the extent of the conflict or inconsistency, unless and

only to the extent that the clauses of this agreement and/or the schedules to this agreement have been specifically referred to and expressly amended by the provisions of the relevant Statement of Work.

—SCC’s argument

[111]   SCC now claims a further $9,940 (exclusive of GST) expenses incurred in relocating to the new premises. This represents a sum equivalent to one month’s rent of the new premises at $4,940 (said to reflect Samsung’s saved expense in not engaging an agent to locate the new premises, and compensating Mr Yoon for his time and effort in such location), and $5,000 for furniture and other outfitting of the new premises. (SCC’s second amended statement of claim also infers the former expense stands as damages for Samsung’s alleged breach of clause 6.2(c) of the second Agreement.) Mr Yoon raised these additional claims with Samsung’s Mr Lee in the context of the second Agreement’s termination, but Samsung did not pay them.

—analysis

[112]   None of these expenses, including such as may be levied by an agent in locating commercial premises for lease, is evidenced beyond Mr Yoon’s assertion of them. Mr Yoon’s own assertion of incurring “over $5,000” in furniture and other outfitting costs is not made out on his written statement, which comes to a lesser sum. Mr Yoon’s written statement asserted his services in locating alternative premises “was treated by Samsung and SCC as a request by Samsung for services from SCC (clause 7 of the second [Agreement])”, but there is no other evidence of that either.

[113]   I consider the evidence for SCC’s claim under this head is simply too flimsy to permit my determination of it in SCC’s favour.

[114]   First, it cannot be said Samsung was in breach of clause 6.2(c) of the second Agreement at the time of the relocation. On SCC’s own evidence, Samsung stipulated the alternative location from which it required SCC to provide the Services, and paid the relocation costs claimed by SCC.

[115]   Next, even if Samsung’s invitation or direction SCC find new premises was to be regarded as a Statement of Work for the purposes of clause 7 of the second

Agreement, SCC’s contractual response was to identify whether it was prepared to provide those services, and at what price, with the contractual consequences if accepted by Samsung. There is no contention, or even suggestion, such occurred, or that SCC wished to do so, but was deterred (whether or not by Samsung). SCC’s compliance with Samsung’s invitation or direction thus was entirely voluntary.

[116]   Any saving Samsung may have enjoyed through SCC’s voluntary location of new premises is not refundable to SCC, even had it adequately been evidenced. Neither is it a measure of Mr Yoon’s “time and effort” in locating the new premises, even if that could be part of SCC’s “reasonable costs … in moving to the new location”. For completeness, Mr Yoon’s ‘time and effort’ was not a cost incurred by SCC in moving to the new location, because it is necessarily a cost arising in advance of Samsung’s stipulation of the alternative location from which it required SCC to provide the Services.

[117]   Last, even if adequately evidenced, furniture and outfitting expenses are not a cost incurred in moving to a new location. They may or may not be a cost incurred at the new location, but that is not clause 6.2(c)’s provision. Mr Dillon says, as Samsung paid for partitioning at the new location, so too should it pay for new furniture. There is no evidence of Samsung’s prior payment, or the basis on which it was sought by or paid to SCC. Mr Choi’s written statement said, in March 2014, he and Mr Yoon “verbally agreed that Samsung would cover SCC’s rental costs for the Piermark Drive Lease as long as the Second Agreement was in existence”. But he also said “[a]s far as I am aware Samsung never agreed to meet any of the other costs associated with the Piermark Drive Lease”.

[118]   In cross-examination, SCC’s junior counsel, Tina Hwang, drew Mr Choi’s attention to Schedule 8 of the second Agreement, and obtained his agreement Samsung was the ‘requestor’ in SCC’s final move. But Schedule 8, which is not referred to in the operative part of the second Agreement, was not the basis for SCC’s claim. There is room to consider Schedule 8 relates principally to the transition from the first to the second Agreements, although it refers expressly also to “ongoing requirements”. The final column of the “Building Cost” row refers “an in-source agreement”, similar to the “In-source solution” appearing in the final column of the “Inbound” activity row

in Schedule 3’s pricing table, alongside the remark “SENZ pays building costs”.35

Schedule 8 may not have application to SCC’s relocation separately from Samsung’s premises. Mr Choi’s ‘verbal agreement’ with Mr Yoon would have been unnecessary if Schedule 8 had such application. But no more substantial evidence or any argument was addressed to Schedule 8.

[119]   This claim too fails.

Remuneration for additional services

[120]   Under this head, I address SCC’s seventh to ninth causes of action, each seeking remuneration for particular aspects of SCC’s services to Samsung, and each brought on the basis of a contended implied term for Samsung’s payment to SCC of “a reasonable fee” for provision of those services. (Alternatively, the claims are brought on the basis of a claim to quantum meruit in the same amount.)

—contractual provisions

[121]   So far as implied terms are concerned, “the correct approach to the issue of implication is currently uncertain”.36 The uncertainty is:37

… whether the implication of a term is to be dealt with by applying the same test and, perhaps, addressed as part of the same process as for the interpretation of existing contractual terms.

[122]   The uncertainty is resolved in the United Kingdom,38  in favour of a return towards the orthodox position set out in BP Refinery (Westernport) Pty Ltd, which established the following conditions for implication of terms in a contract:39

(1) it must be reasonable and equitable; (2) it must be necessary to give business efficacy to the contract, so that no term will be implied if the contract is effective without it; (3) it must be so obvious that “it goes without saying”;

35	At [15] above.
36	Ward Equipment Ltd v Preston [2017] NZCA 444, [2018] NZCCLR 15 at [46] citing Mobil Oil
New Zealand Ltd v Development Auckland Ltd [2016] NZSC 89, [2017] 1 NZLR 48 at [81].
37	Ward Equipment Ltd v Preston, above n 36, at [46] citing Attorney-General of Belize v Belize
Telecom Ltd [2009] UKPC 10, [2009] 1 WLR 1988.
38	Marks & Spencer plc v BNP Paribas Securities Services Trust Co (Jersey) Ltd [2015] UKSC 72, [2016] AC 742.
39	At [18] citing BP Refinery (Westernport) Pty Ltd v President, Councillors and Ratepayers of the
Shire of Hastings (1977) 52 ALJR 20 (PC) at 26.

(4) it must be capable of clear expression; (5) it must not contradict any express term of the contract.

[123]   As to those express terms, however, clause 3.1 of the first Agreement provided in part:

The Contractor, at the request of Samsung or the Caller, [is to] provide a professional, helpful and informative assistance in relation to inbound enquiry from Callers within the Location during the Working Hours and otherwise in accordance with the terms and conditions of this Agreement.

…

Further the Contractor shall provide these additional services:

…

(c)        provide helpful professional and correct information to Callers.

And clause 6.2 provided:

Anything which must be done by the Contractor under this Agreement, whether or not at the request of Samsung, is to be done at the cost and expense of the Contractor unless otherwise expressly provided in this Agreement.

[124]   Comparably, clause 4.4 of the second Agreement obliged SCC to “deal with Samsung in good faith, and do such things and sign such documents as are reasonably required for the provision of the Services”.

—SCC’s arguments

[125]   At Samsung’s request (and expense), SCC:

(a)       during the life of the first Agreement:

(i)        replaced, or refunded the cost, of Samsung equipment acquired by relevant customers; and

(ii)      provided   relevant   customers   with   replacement   computer monitors while their Samsung computer monitors were being repaired under warranty; and

(b)       during the life of the second Agreement, provided relevant customers contacting SCC with a USB  memory stick containing a firmware update for particular models of Samsung television.

[126]   Extraordinarily, for that is not the pleading, Mr Yoon’s written statement repeated in relation to each of the three services, “[t]he service was treated by Samsung and SCC as a request by Samsung for services from SCC (clause 7 of the second [Agreement])”. In duplication of the second amended statement of claim, Mr Yoon’s written statement followed that assertion with “[i]t was an implied term … Samsung would pay SCC a reasonable fee” for each service.

[127]   Mr Dillon argues none of those services is the function of a call centre, or capable of being delivered by call or email (as he contends to be the limits of services provided under the first Agreement). Only the second Agreement included “Customer Refund Process” within SCC’s “Back Office Functions”.

[128]   Last,  Mr Dillon  says  SCC’s  fulfilment  of  Samsung’s  requests  is  each  “a separate and standalone agreement”, “ancillary” to the applicable first or second Agreement. He relies on Seton Contracting Co Ltd v Attorney-General as authority for SCC’s entitlement for payment.40 Alternatively, he claims for such in quantum meruit. In either respect, SCC claims $28,320 for the replacement/refund services,
$24,210 for the USB firmware update services, and $9,720 for the monitor exchange services – all exclusive of GST.

—analysis

[129]   As with Mr Yoon’s previous assertion of precisely the same allegation in relation to the claimed relocation costs,41 there is no evidence the parties treated the requests as Samsung’s Statement of Work under clause 7 of the second Agreement. It would be surprising if there was any such evidence, because only the USB firmware update service arose under the second Agreement.42 Even if Samsung’s request for that

40	Seton Contracting Co Ltd v Attorney-General [1982] 2 NZLR 368 at 376.
41	At [112] above.
42	SCC’s claim pleads the service commenced “from July 2012”. Under cross-examination, Mr Yoon agreed it started under the first Agreement, but that appears to be a reference to the timing of
Samsung’s request.

service was to be regarded as a Statement of Work for the purposes of clause 7 of the second Agreement, for the reasons I have earlier stated, SCC’s compliance with Samsung’s last request thus was entirely voluntary.43

[130]   Mr Dillon’s interpretation of call centre functions also is too reductionist a reading of the core services to be provided by SCC under the first and second Agreements. As noted earlier,44 the essence of SCC’s services under the first Agreement is to provide, at Samsung’s or a Caller’s request, “a professional, helpful and informative assistance in relation to inbound enquiry from Callers”. That assistance is distinct from “further” provision of “helpful professional and correct information to Callers”.

[131]   Recipients of the contended ‘additional’ services Samsung requested of SCC during the term of the first Agreement appear to have initiated the same by inbound enquiry:

(a)       in relation to the replacement/refund services, Mr Yoon produced a two-page Korean language email exchange with Samsung, initiated by him. He also produced his translation of his own email – in which he asked “[d]id Samsung approve NZ Customer Exchange/Refund process?”, observing “[w]e are receiving a few of Refund Request from customers and so please advise me when to start this process” – and one line of Samsung’s response: “Samsung will start NZ Customer Exchange/Refund Process from Monday 21 April 2008”;45 and

(b)       in relation to the monitor replacement services, Mr Yoon produced a one-page Korean language email to SCC from Samsung, translated in whole by him, which commenced, “[b]efore we start Product Exchange

43	At [115] above.
44	At [123] above.
45         In response to my query of Mr Dillon as to the accuracy of the translation – especially of Samsung’s response, which ran for nearly a page in Korean language, incorporating a number of English  words  not  replicated  in  Mr Yoon’s  translation  –  Mr Yoon  gave  evidence  the  reply
“contains talking about many other things also regarding service”, but was partly translated into
English only to make the point of Samsung’s request to its English-speaking staff in negotiating SCC’s compensated exit on termination of the Second Agreement. In those circumstances, I am not prepared to infer anything from the untranslated balance of the Korean language email that is not established by its translated sentence.

(SWAP)”, and attached customer requests for the service (as referred to in the body of the email).

In relation to both services provided during the term of the first Agreement, Samsung clearly requested SCC provide that assistance in relation to inbound enquiries. (Initiation by inbound enquiry is expressly pleaded in relation to the USB firmware updates, although that is a service provided under the second Agreement.)

[132]   So far as SCC’s provision of USB firmware updates is concerned, Schedule 6 of the second Agreement expressly provided, under “Post-Sales support”, the Services to be performed by SCC included, “[f]irmware and software distribution and administration support” (which encompasses the USB firmware update service).46
SCC’s obligations in this respect are reinforced by clause 6.1 of the second Agreement, which provided “Samsung’s obligations will be those set out in schedule 7”. That schedule included under the heading “Firmware/software”:

Provide real time access to firmware/software updates and corresponding release notes for such software to the Contractor.

Provide ongoing stock to allow firmware upgrades and other upgrades to be sent out as and when needed.

[133]   All three services, the subject of SCC’s seventh to ninth causes of action, are services already required to be provided by SCC under the first or second Agreements. SCC’s   contention   they   are   not   again   is   founded   in   Mr Dillon’s   incorrect characterisation of those Agreements as providing for ‘piecework’.47  They do not. Instead, the first and second Agreements required SCC to provide identified services, including those separately claimed for here, for which Samsung was to pay a monthly Service Fee.48 Otherwise (at least under the first Agreement) SCC was to bear the cost. It  is  not  without  irony  Mr Dillon  argues  the  first Agreement,  not  having  been terminated in accordance with its terms, continues in effect.49 The requirement under

46	At [50] above.
47	At [41] above.
48	At [10] above.
49	Clause 12 of the first Agreement provided for its termination by Samsung on notice. SCC’s argument for the Agreement’s continuing operation was founded in its clause 15.10, headed “No
Merger”, which provided:

clause 4.4 of the second Agreement SCC “do such things … as are reasonably required for the provision of the Services” has similar effect.

[134]   So construed, there is “no room” to claim in relation to these services either an implied term for additional payment, or in quantum meruit. Seton Contracting Ltd, relied on by Mr Dillon as the sole authority in support of these causes of action, makes that plain:50

Quantum meruit is the generic term used to identify a right to reasonable remuneration for goods supplied or services rendered; the same expression is used irrespective of whether the right to remuneration is an incident attached by implication to a contractual relationship or whether it arises independently of contract in one of the assortment of situations which are classified, for lack of a better term, as quasi contractual. This indiscriminate use of the expression can lead to confusion.

The contractual kind of quantum meruit is no more than the effect of the implication which the law makes when there is a contract for the supply of goods or services which the parties intend shall be paid for by the recipient but in respect of which the contract does not fix the quantum of remuneration: in such a case, there is implied a term that the remuneration will be a reasonable sum. The quasi contractual species of quantum meruit embraces a number of situations which share, as do all quasi contractual situations, a common denominator: they all seem to be traceable to the concept of restitution or undue enrichment. They are a heterogeneous collection, all with respectable and recognised legal credentials. But none of them can be fitted into the dichotomy of tort and contract. What has to be borne in mind is that, by definition, these are all cases in which there is no contractual basis for the plaintiff’s claim. If, in relation to the relevant subject matter, there is a valid and enforceable contract in force between the parties, then the contract and only  the  contract can speak: the  rights and liabilities  of  the  parties are regulated only by the contract: there is no room for quasi contractual rights. Hence we find in the textbooks such statements as “Mere variations do not warrant quantum meruit” - Smellie, Building Contracts and Practice in New Zealand (2nd ed, 1979) p 44.

[135]   Finally, Mr Kersey’s cross-examination of Mr Yoon (replicated at [83] above) continued to query if Mr Yoon had raised these three services with Mr Lee at the time of  negotiation  of  the  second  Agreement.  Mr Yoon’s  responses  were  typically

None of the provisions of this Agreement shall, except to the extent the same shall have been observed, performed or satisfied and discharged in full according to its terms, merge in or be extinguished on the occurrence of any other transaction hereby required or contemplated.
The last four words make it plain the provision is addressing only any transaction arising from the first Agreement. The second Agreement was established independently of the first Agreement, and cannot be understood otherwise than as its comprehensive replacement, necessarily terminating its operation from 1 March 2012, being the second Agreement’s Commencement Date.
50	Seton Contracting Co Ltd v Attorney-General, above n 40, at 376-377.

discursive. Although he appeared to concede “when [he] agreed the new contract, that was to compensate for [his] concerns under the first contract”, and “those other concerns include the refund exchange programme”, I comprehended the totality of his evidence to be, while these three services were concerns under the first Agreement, SCC’s claims for them were not compromised by anything in the second Agreement.

Business exit plan

[136]   This is SCC’s tenth cause of action, to recover costs incurred in fulfilling Samsung’s request for SCC’s business exit plan. It is expressly pleaded to be a request made under clause 7 of the second Agreement, carrying an implied term for payment of a reasonable fee. SCC claims $7,165 (exclusive of GST) as that fee.

—contractual provisions

[137]   I earlier identified the second Agreement’s clause 7,51 and discussed the law on implied terms.52

—SCC’s arguments

[138]   Again, Mr Yoon’s written statement contended “[t]he request by Samsung to prepare the business exit proposal was treated by Samsung and SCC as a request by Samsung for services from SCC (clause 7 of the second [Agreement])”. SCC’s pleading is SCC “accepted” the request. Mr Yoon said he arranged for SCC’s staff to work overtime to meet the request, incurring additional expenses of $7,165. Mr Dillon submits SCC should be paid this sum.

—Analysis

[139]   The evidence about the business exit plan is conflictual. Mr Yoon’s written statement said “on or about” 23 July 2014, Mr Lee asked him:

… to put together a proposal from SCC to Samsung for ending the second call agreement. Mr Lee asked me to include in the proposal all outstanding claims which I believed SCC had against Samsung.

51	At [110] above.
52	At [121]-[122] above.

However, Mr Choi, while acknowledging he had met with Mr Yoon and Mr Lee the preceding day, says he and a Samsung colleague delivered Samsung’s termination notice to Mr Yoon on 24 July 2014. His written statement says, at this time, he:

… verbally requested that SCC prepare a business exit proposal in order to set out the terms on which it proposed to bring the services under the Second Agreement to an end.

The statement added:

SCC did not have to provide a business exit plan, but it was in SCC’s interests do so. This was largely for SCC’s benefit. This would allow both parties to transition to a new call centre provider and give SCC’s staff time to find new jobs. SCC could also issue invoices for outstanding amounts.

[140]   Despite recording the request as coming from Mr Lee, Mr Yoon’s written statement said he “arranged for SCC staff to prepare the information which Mr Choi had requested”. The overtime claimed is evidenced in an email between an SCC employee and Mr Yoon, adding up overtime worked and calculating it at an hourly rate of $30 (as time and a half) to total $7,165. But the email is dated 22 July 2014, the day before Mr Lee is said to have directed SCC’s preparation of a business exit plan, and accounts for overtime worked in the preceding seven days (that is, since 15
July 2014). The email is annotated “(ERMS vs Email support job analysis) 2012.3 ~

2014.6”. That is consistent with Mr Choi’s 15 July 2014 email to Mr Yoon, headed “Duplicate claim ERMS list” and attaching a spreadsheet named “ERMS Analysis (Mar ‘12 - May ‘14).xlsx”. As will be seen,53 the duplicate claim analysis had nothing to do with preparation of the business exit plan, except that Samsung terminated the second Agreement in part on the basis of that contended duplication. So there is no reliable evidence to support the quantum of SCC’s claim under this head.

[141]  However, this judgment relates only to liability. SCC could not ‘accept’ Samsung’s request so as to engage clause 7. As I already have explained, clause 7 anticipates SCC’s proposal, for acceptance by Samsung.54 But Samsung’s request for a business exit plan could not in any event constitute “additional services” to those required by the second Agreement, because its clause 15.3(e) provides, “on termination of this agreement for any reason”:

53	At [167] and [172] below.
54	At [115] above.

… the Contractor must afford all reasonable assistance to Samsung, including providing all necessary documentation and assistance to ascertain the status of the Services and the input required to provide and complete the Services in accordance with the this agreement, reasonably required to transition to an alternative supplier of the Services.

[142]   Despite Mr Choi’s view “SCC did not have to provide a business exit plan”, clause 15.3(e) obliged SCC to provide something essentially indistinguishable from what Samsung sought: “reasonable assistance … reasonably required to transition to an alternative supplier” (which includes identification of outstanding monies due to the outgoing supplier in ‘completion’ of the services).

[143]   Further, clause 2.1 of the second Agreement records SCC’s agreement to provide the contracted Services “on the terms and conditions set out in this Agreement”, for which provision “Samsung will pay the Contractor the Service Fee”. Even if clause 15.3(e)’s obligation is not part of the defined “Services”, it is a term set out in the Agreement. And clause 8.3 provides:

The Service Fee will be deemed to include all incidental expense and disbursements incurred by the Contractor in providing the Services, except for any expenses or disbursements incurred by the Contractor in respect of which Samsung has agreed that the Contractor will be separately reimbursed prior to such expense or disbursement being incurred.

[144]   SCC thus cannot recover the cost it incurred in providing the business exit plan, except on proof “Samsung has agreed [SCC] will be separately reimbursed prior to such expense or disbursement being incurred”. Even if SCC could point to costs incurred after 23 or 24 July 2014, there is no evidence of Samsung’s agreement for their reimbursement.

[145]   Given those contractual provisions, there is again “no room” to imply any entitlement to a reasonable fee.

[146]   SCC’s claim under this head also fails.

Use and occupation of SCC’s premises

[147]   This is SCC’s eleventh cause of action, seeking to recover damages in the amount of a half-share of its rental and outgoings, and other expenses, incurred as a

result of Samsung’s unilateral expansion from its adjoining first floor premises into approximately half SCC’s leased ground floor premises at Apollo Drive in Mairangi Bay from June 2009 for some seven months.

[148]   Bizarrely, Mr Yoon’s written statement yet again repeats the mantra “[t]he unilateral demand by Samsung for SCC to provide the use of half of its premise was treated by Samsung and SCC as a request by Samsung for services from SCC (clause
7 of the second [Agreement])”. As previously indicated,55 if that was such a request,

and Samsung’s subsequent use and occupation of the premises was to be regarded as SCC’s provision of the service, then – without responding to the request – SCC would be taken to have provided the service free. However, in June 2009, the second Agreement had yet even to be contemplated, let alone to come into force.

[149]   Samsung offers no responsive defence or evidence, other than to put SCC to proof by its defence’s denial. Mr Choi’s written statement expressed his expectation “if Mr Yoon believed he was entitled to these amounts, he would have sought to be repaid by Samsung at the time the costs were incurred”.

—factual background

[150]   Mr Yoon’s  written  statement  explained  Samsung  used  approximately  half SCC’s leased space for its own staff from 29 June 2009. It gave SCC one day’s notice of its intention to do so. Samsung’s builders demolished the reception area SCC had created, and removed SCC’s reception area furnishings. The written statement said “SCC’s staff had no choice, but to squeeze into the remaining space”. SCC had to re-cable its power, telecommunications, and computer infrastructure. The written statement explained further re-cabling work was required when SCC’s staff returned to SCC’s full leased space on Samsung’s exit in January 2010.

[151]   Ultimately, SCC claims $45,080 in damages (exclusive of GST) under this head, but Mr Yoon said he longer had invoices for the re-cabling or furniture, as he believed Mr Thompson “attended to these”. There are other difficulties with the computation of SCC’s claim under this head, including the mathematical calculation

55	At [115] above.

of a half-share of the rental, but those would be matters for a subsequent quantum hearing.

[152]   Under cross-examination, Mr Yoon said his earlier evidence SCC relocated to

Orbit Drive in April 2009 was wrong. His written statement provided “[o]n or about

15 April 2009, after the term of the lease for 63 Apollo Drive expired, SCC moved its call centre with Samsung’s office … to … Orbit Drive”. That plainly was narrative drawn from the lease itself, which recorded the Apollo Drive lease’s final expiry date as “15 April 2009”. Mr Yoon maintained Samsung entered SCC’s Apollo Drive premises in June 2009. The written statement of Andrew MacDonald, SCC’s former call centre manager, did not refer to the lease’s expiry. Otherwise it was in identical terms as to SCC’s April 2009  move from Apollo Drive to Orbit Drive, and to Samsung’s 29 June 2009 entry into the premises. Under cross-examination, he said the latter date was wrong, but then agreed he could not recall the “precise date”: “I remember the incident but not the exact date”.

—SCC’s argument

[153]   Mr Dillon submitted in opening, in reliance on Savvy Vineyards 3552 Ltd v Kakara Estate Ltd,56 SCC’s acceptance of Samsung’s occupation and use of the Apollo Drive premises constituted an agreement between them by acquiescence. The content of that agreement could be established by s 210 of the Property Law Act 2007 as a periodic tenancy, terminable on notice, an implied term of which would require the tenant to pay rent.57Alternatively, damages could be recovered in tortious trespass.

—analysis

[154]   Savvy Vineyards concerned the defendants’ non-execution of deeds providing for novation of vineyard agreements:58

The issue comes down to whether, in all the circumstances, although Kakara and Weta had neither executed the deeds that would effect novation nor responded to the invitation to do so, they had by their conduct given their consent or in some other way had become parties to the deeds, with the result that novation occurred.

56	Savvy Vineyards 3552 Ltd v Kakara Estate Ltd [2014] NZSC 121, [2015] 1 NZLR 281.
57	Property Law Act 2007, s 218 and Schedule 3, cl 4.
58	Savvy Vineyards 3552 Ltd v Kakara Estate Ltd, above n 56, at [10].

In the extract relied on by Mr Dillon, Elias CJ and McGrath J explain:59

Whether or not novation of a contract has occurred must be decided on ordinary contractual principles concerning formation of a contract. On that, as Cooke J once put it:

The acid test … is whether, viewed as a whole and objectively from the point of view of reasonable persons on both sides, the dealings show a concluded bargain.

In applying this test the background must be borne in mind. As well, while this is not determinative, difficulties in the traditional approach of analysing the circumstances in terms of offer and acceptance may tell against a contract.

[155]   I cannot discern a ‘concluded bargain’ from Mr Yoon’s evidence. He agreed with Mr Kersey “there was no process to agree to use that part of the premises”. The best that can be said is he was told of Samsung’s intention to enter, to which he objected but did nothing about, except to accommodate it. I cannot tell what the evidence as a whole objectively indicates had been offered, or accepted.

[156]   The evidence is at least as consistent with SCC’s simple acquiescence to Samsung’s use and occupation of its premises. Given SCC’s rental and other outgoings were covered by the Service Fee,60  it is conceivable Mr Yoon did not seek any contribution from Samsung. Other contemporaneous evidence indicates SCC at that time determinedly pursued payment for its services in replacing or refunding the cost of Samsung equipment acquired by relevant customers. The evidence is SCC did not seek any contribution from Samsung for its use of SCC’s premises until responding to Samsung’s invitation to provide a business exit plan in July 2014, some five years after the incursion.

[157] Such acquiescence also provides a defence to trespass, giving Samsung justification to enter and remain, by reason of SCC’s implied licence.61 There can be no suggestion SCC, and Mr Yoon in particular, was not aware of their legal right to exclusive possession of the premises. Under cross-examination, Mr Yoon affirmed

59	At [29] (internal references omitted).
60	At [11]-[12] above.
61	Stephen Todd (ed) The Law of Torts in New Zealand (7th ed, Thomson Reuters, Wellington, 2016)
at [9.2.06(1)]: “[a licence] may also be implied by acquiescence so long as the person alleged to have acquiesced had ‘full knowledge of their legal rights’”.

Samsung should have sublet the premises from him: that was a matter of “common sense in New Zealand or other country”:

I explain, if you want to take trespass, some rules, if you want then they have to negotiate, keep your subcontract or sublease. Even a small house I rent, one room, maybe $20 per week to have a sublease.

[158]   So viewed, SCC’s acquiescence only illustrates SCC’s informed consent to

Samsung’s presence on its premises. SCC’s claim under this head fails.

Repudiation of second Agreement

[159]   This is SCC’s twelfth cause of action, seeking damages in the sum of $607,478 as lost profits and continuing expenses for the balance of the second Agreement’s term after termination by Samsung on 4 November 2014. SCC alleges termination was Samsung’s repudiation of the second Agreement, accepted by SCC.

[160]   Alternatively,  SCC  claims  –  irrespective  whether  Samsung  repudiated  or validly terminated the second agreement – it is entitled to such relief on any valid cancellation of the second Agreement under s 9 of the Contractual Remedies Act 1979 (now, s 43 of the Contract and Commercial Law Act 2017, which applies to any contract made on or after 1 April 1980).62

—contractual provisions

[161]   Clause 15.1 of the second Agreement provided:

In addition to any other right of termination or remedy conferred on the parties under this agreement or by law, either party (First Party) may terminate this agreement at any time and with immediate effect by written notice to the other party (Second Party) if the Second Party:

…

(b)	has committed a material breach of this agreement, where that breach is not reasonably capable of being remedied by the Second Party within
5 Working Days; …

62	Contract and Commercial Law Act 2017, sch 1, cl 4.

[162]   In addition to various of its obligations identified earlier in this judgment,63 clause 8.5(c) of the second Agreement provided each of SCC’s invoices to Samsung “constitute[d] a certificate by the Contractor that all of the Services that are the subject of that invoice have been performed in accordance with this agreement”.

—factual background

[163] In May 2014, Samsung NZ issued SCC with a formal warning for “unprofessional call centre conduct”. Samsung considered SCC used a ‘Mute’ function instead of a ‘Hold’ function, in addressing a customer’s enquiry during a customer’s call other than directly with the customer. Samsung considered such was substandard call centre practice, leaving the customer in silence for extended periods rather than on informed hold (and consequent muzak). When Mr Dowlath raised the practice in a meeting with SCC, Mr MacDonald explained “that’s because we don’t get paid to put customers on hold”. But it is also pertinent time on hold goes to measure the Average Handling Time KPI.64

[164]   SCC’s own manuals emphasised “never use mute”:

It is important that the customer is aware of what is happening throughout the call.

To achieve this effectively, the Agent needs to:

…

Not  put  the  customer  on  mute,  instead  using  the  correct  hold procedure ….

Nonetheless, some of SCC’s internal communications dictated call centre operators use ‘mute’, not ‘hold’, including Mr MacDonald’s observation to some operators “your hold time for yesterday was to high once again. Plse use mute when you are reviewing the case, not hold”, and Mr Yoon’s direction to operators not to use ‘hold’ when making internal enquiries during a call, but to use ‘mute’, “as our talk time is short”.

63	At [24], [51], [56], [88], and [124] above; and above n 34.
64	At [98] above.

[165]  SCC paid close attention to ‘talk time’ in its internal operations, as a predominant factor for its revenues. Talk time was displayed live to each call centre operative on their own equipment, and broadcast to the room on screens. Mr Yoon would ring a small bell in front of operators’ desks if their calls were running long. Although Mr Yoon staunchly resisted ‘mute’ could not professionally be used in particular circumstances, he agreed it should not be used when operators were seeking internal information or advice with the customer still on the line. After receipt of Samsung’s warning letter, he reinforced that point with call centre operators.

[166]   In  June  2014,  on  being  asked  to  approve  SCC’s  May  2014  invoice  for

$148,600, Mr Dowlath asked a Samsung NZ assistant manager, Bridgette Nicholls, to “scrutinise CCC invoices.....please compare to previous 6 months. I am concerned at the increase?”. Mr Dowlath’s written statement explained his concern was SCC’s invoices had not decreased with the introduction of Transcom, handling over 2,000 inbound calls a month.

[167]   Ms Nicholls advised Mr Dowlath explanations were required for “anomalies” she had identified in SCC’s invoices. These included email job bookings to the info.nz email address (a Back Office activity in terms of Schedule 3’s pricing table, on which SCC’s Service Fee was in part calculated as a monthly sum) “being uploaded into the ERMS system as inbound emails” (an Email activity in terms of Schedule 3’s pricing table, on which SCC’s Service Fee also was in part calculated as a per email sum).65
Ms Nicholls identified “this would be double paying the contact centre for each

transaction”.

[168]   Gwang Yong Yoon, Mr Yoon’s younger brother, also worked for SCC. Yong Yoon initially had worked as a call centre operator in 2009, and then returned in 2013 to upload into G-CIC email job bookings received by SCC. His written statements said “[w]e got an overwhelming number of enquiries to our email address”:

[A]lmost every night I would leave to go home and ask the remaining staff who were working late such as Robbie to upload the rest of my jobs to the ERMS System because I could not upload them all in time.

65	At [15] above.

and later clarified ‘in reply’:

[A]t the end of each working day, the excess email bookings that we could not finish as the back office staff were uploaded to the Samsung ERMS system by other SCC agents.

…

Sometimes when I received large lists, and it was clear that I would not be able to attend to all of these the same day, I would forward the list to 3 to 4 staff earlier during the day too. Almost all of the email booking jobs I forwarded to other SCC agents were bulk lists from retailers. I requested the SCC agents to process the email bookings in the Samsung G-CIC System and then upload these jobs for payment in the Samsung ERMS System. Unlike me, their time and services were not paid for by Samsung.

[169]   Ultimately, Samsung identified over 17,000 email job bookings, uploaded into the ERMS system as incoming emails. SCC had included them in the resultant inbound email count in its invoices to Samsung, amounting to some $89,000 invoiced to and paid by Samsung since commencement of the second Agreement in March 2012.

[170] Distinctly from G-CIC, through which SCC interfaced with Samsung’s information systems, repair and service agents interfaced with Samsung’s information systems through G-SPN. The latter was necessary, for example, to access a job booked by SCC for the agent’s attention, or to initiate a job referred directly to the agent by retailer or customer, such as would arise from the ‘milk run’. During Samsung’s investigation into SCC, Samsung identified SCC had created ERMS website enquiries for jobs initiated by agents through G-SPN, and included the resultant inbound email in its invoices’ count of emails for calculation of the Service Fee.

[171]   Jang-Shik Yoon’s written statement explained:

SCC entered some of the service jobs that were diverted from SCC into the ERMS system. These were not jobs that SCC had performed, but they were jobs that SCC were entitled to receive payment for. This was the first and only time SCC entered jobs it did not actually attend to, into the ERMS System.

The total value of the jobs entered were approximately $2,000 and was done to highlight to Samsung its major breach of the contract and get them to talk. The annual turnover by SCC from Samsung around this time was between
$130,000 to $140,000 per month. Entering $2,000 of extra jobs was never done with the intent to actually receive $2,000. I was not after pecuniary gain in doing this. The amount was insignificant. It was done to try to get Samsung to come and talk to SCC as Samsung refused to discuss this and instead stated that it would implement the milk run more aggressively.

[172]   Samsung NZ’s 24 July 2014 notice provided:

Recently it has come to the attention of Samsung Electronics New Zealand Limited (“Samsung”) that SCC (NZ) Limited’s (“SCC”) service and invoicing has a significant number of anomalies which Samsung believes go to the heart of the relationship between the two parties and constitute a material breach of the agreement between Samsung and SCC dated 28 February 2012 (“Agreement”).

Under clause 4.4 of the contract SCC has an obligation to act in good faith in its dealings with Samsung. SCC’s action of falsely creating entries in ERMS for services it did not provide Samsung demonstrate utter disregard of SCC’s obligation of good faith and has destroyed the trust that Samsung had with SCC.

Under clause 4.3(a) of the Agreement, SCC has an obligation to apply the law and any relevant legislation. Falsely claiming amounts for services not rendered on SCC’s invoices is a breach of section 228 of the Crimes Act 1963 for ‘Dishonestly Using A Document’ and may be punishable by imprisonment for up to seven (7) years.

In addition to the above material breaches, SCC’s manipulation of the systems and processes to inflate invoices, such as the use of ‘mute’ by call centre representatives when ‘hold’ should be used, breaches clauses 4.5 and 4.6 of the Agreement. These actions do no deal with customers in a timely or professional manner nor is it providing a professional service suitable for Samsung’s brand.

Under  clause  15.1,  Samsung  may  terminate  the Agreement where  SCC commits a material breach of the Agreement which is not reasonably capable of being remedied by SCC within 5 Business Days. Unfortunately the dishonest practices utilised by SCC have caused a material breach that is not able to be remedied within 5 Business Days. SCC is unable to remedy the breach of its obligation to act in the good faith and the destruction of trust this has caused, nor is it able to remedy a breach of criminal law. As a result, Samsung has no option left but to terminate the Agreement.

Samsung looks forward to working through the operational transition of services from SCC to a new provider and will discuss such details in person.

Samsung reserves all rights to pursue SCC for losses suffered under the Agreement as a result of SCC’s dishonest practices and breaches of the Agreement.

—SCC’s argument

[173]   Mr Dillon argues SCC was not in breach – let alone material breach – of the second Agreement such as would entitle Samsung to terminate it. Instead, he contends Samsung was directed by its Korean head office to transfer the call centre’s functions

to Transcom,66  and to that end, ‘investigated’ SCC to “manufacture a reason or reasons” for its termination. Alternatively, he says, the relief sought on valid cancellation is within my discretion to order, having regard for the matters set out at s
45 of the 2017 Act.

—analysis

[174]   The ‘irremediable’ “material breach” claimed by Samsung NZ is SCC’s breach of its clause 4.4 obligation to “deal with Samsung in good faith”. The notice of termination is clear what is contended to be irremediable is “the breach of [SCC’s] obligation to act in the good faith and the destruction of trust this has caused”. Whether SCC’s  conduct  otherwise  was  in  material  breach  of  the  second Agreement,  or “reasonably capable of being remedied by [SCC]”, is irrelevant.

[175]   Notably, clause 4.4 is one-way: expressly, only SCC is liable to deal with Samsung in good faith. The fact of its unilateral nature illustrates its materiality. It is a positive obligation, more pronounced than any implied limitation to the exercise of contractual discretion.67 In a contract, ‘good faith’ is an obligation that “pose[s] some restriction on the raw and undiluted pursuit of self-interest” beyond the restrictions otherwise specified by the contract itself.68  Without mutuality, I doubt ‘good faith’ alone goes so far as to require unilateral loyalty to some contended common goal.69 In the context of the second Agreement, in which SCC’s representation of its dealings with Samsung’s customers provided a calculation of its revenues, it is at least an obligation for SCC to deal honestly and reasonably with Samsung in its performance of the contract.70

[176]   Mr Dowlath’s  written  statement  explained  Samsung’s  reliance  on  SCC’s performance:

66	At [58] above.
67	Vero Insurance New Zealand Ltd v Fleet Insurance & Risk Management Ltd HC Auckland CIV-
2007-404-1438, 21 May 2007 at [37] and [46]-[47]; and Astrazeneca Ltd v Pharmaceutical
Management Agency HC Wellington CIV-2003-404-5056, 14 June 2005 at [81]-[82].
68	New  Zealand  Licensed  Rest  Homes  Association  Incorporated  v  Midland  Regional  Health
Authority HC Hamilton CP34/97, 15 June 1999 at [143].
69	Compare Heli Holdings Ltd v The Helicopter Line [2016] NZHC 976 at [113].
70	Bhasin v Hrynew 2014 SCC 71, [2014] 3 SCR 495 at [63]-[66] cited in Heli Holdings Ltd v The
Helicopter Line, above n 69, at [114]. See also Vero Insurance New Zealand Ltd v Fleet Insurance
& Risk Management Ltd, above n 67, at [45].

I felt so strongly about the falsifying of the invoices and the mute/hold issue that I thought Samsung had no choice but to terminate the Second Agreement with SCC.  SCC’s conduct went to the very heart of the parties’ business relationship. Even if SCC had been able to repay the falsely invoiced amounts, the trust between the parties had been irrevocably destroyed.

Samsung should not have to continually audit a call centre service provider and scrutinise a service provider’s invoices. The nature of the service and the level of detail in the invoices means there is a huge amount of trust placed in the service provider when it issues the invoices. From a practical perspective, Samsung has to rely on what it is invoiced.

Even if Samsung had the resources for an employee to scrutinise each month’s invoice, the employee would not know what to look for and it would be almost impossible to identify issues of fraud or falsifying of invoices.

[177]   I have no hesitation in finding SCC’s entry of ‘milk run’ jobs as ERMS enquiries to be a breach of good faith. SCC dishonestly represented those jobs as “Customer emails sent from the Samsung website” (being what ERMS is defined to manage).71 Such misrepresentation was unreasonable on the express ground Mr Yoon seeks to justify it – “to highlight to Samsung its major breach of the contract and get them to talk”,72 especially given my finding he has no foundation for that justification73 – and SCC did not foreshadow or later identify the entries to Samsung.

[178]   I have no less hesitation in finding SCC’s entry of email jobs as ERMS enquiries also to be a breach of good faith. Again dishonestly representing those emails as “Customer emails sent from the Samsung website”, the unreasonableness of the conduct is illustrated by SCC’s forthright (if belated) abandonment of the original fourth cause of action. If SCC’s “2 FTEs” was inadequate resource to perform the contract, its recourse lay in addressing that provision rather than subverting another (again, without indication to Samsung).

[179]   I do not overlook SCC’s conduct in this respect commenced at the beginning of the second Agreement, immediately after the “2 FTE” level of resource was negotiated. I therefore do not accept SCC’s conduct was to respond to any unforeseen or unforeseeable change in its operating environment, even if such a response would be of mitigating value.

71	At [15] above.
72	At [171] above.
73	At [61]-[68] above.

[180]   On a finer balance, I find SCC’s use of ‘mute’ also to be a breach of good faith. Given SCC’s manuals, the tipping point is Mr Yoon’s and Mr MacDonald’s ‘short’ and
‘too high’ observations.74 They illustrate SCC’s close regard for the KPIs, and their

potential impact on SCC’s revenues, the alternative ‘mute’ use not being known to or measured by Samsung. Again, SCC’s conduct dishonestly represents SCC’s time handling enquiries from Samsung’s customers was comprised by talk time, hold time, and after call work time alone,75 unreasonably acting contrary to SCC’s own manual’s policies.

[181]   In each of these respects, SCC exhibited no restraint on its ‘raw and undiluted pursuit of self-interest’. The covert nature of SCC’s conduct in these respects supports the ‘irrevocability’ of Samsung’s loss of trust in SCC, making it impossible for SCC to remedy the breaches. Clause 15.2(b) required the breach be “not reasonably capable of being remedied by [SCC]” (emphasis added). The emphasised words are important, because a generally irremediable breach presents a higher threshold to satisfy. Here, the fact of Samsung’s justified loss of trust in SCC is what makes the breaches not reasonably capable of remedy by SCC.

[182]    I hold Samsung validly to have terminated the second Agreement. Particularly given the absence of any express good faith obligation on its part, Samsung’s alleged ulterior motive in securing SCC’s exit is immaterial.76 Even if substantiated beyond the suspicions raised by SCC, it cannot be said SCC’s breaches were in any sense
‘manufactured’ by Samsung. The breaches each were duplicitous and unwarranted, in the face of SCC’s obligation to deal honestly and reasonably with Samsung in its performance of the contract.

[183]   So far as SCC’s alternative claim for relief under the 2017 Act is concerned –

having regard for the matters in s 45, and my findings under this head of SCC’s claim
– it is not just to make any order granting relief to SCC under s 43. There is nothing meriting any result other than as arises directly from the terms of the contract. Even if Samsung had ulterior motive for wishing SCC’s exit (such as substituting Transcom,

74	At [164] above.
75	At [98] above.
76	At [173] above.

as SCC contends), SCC’s conduct means Samsung’s discretion to terminate the second Agreement was not exercised “arbitrarily, capriciously or in bad faith, or unreasonably in the sense that no reasonable contracting party could have so acted”.77

[184]   SCC’s claims under this head again fail.

Fair Trading Act

[185]   This is SSC’s thirteenth cause of action, claiming particular of Samsung’s alleged actions within the three years before commencement of this proceeding to be misleading or deceptive, or likely to mislead or deceive, in breach of s 9 of the Fair Trading Act 1986 (“FTA”). Section 9 provides:

No person shall, in trade, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

[186]   Although the point was not pressed in submission, any question about Samsung NZ’s  liability  for  “antecedent  breaches”  of  the  first  and  second Agreements  by Samsung Australia, as contended to be represented by the novation agreement, does not strike me easily open to characterisation as Samsung’s conduct “in trade”. I apprehend that aspect of SCC’s claim is overcome by Samsung NZ’s acknowledgement  it  bears  any  liability  found  against  Samsung Australia.78   The balance of SCC’s grounds for claiming FTA breach are founded in its claims against Samsung, all of which I have found not to be established.

[187]   SCC’s claim under this head therefore also fails.

Counterclaims for ‘mute’ / ‘hold’ damages

[188]   Samsung counterclaims, under each the first and second Agreements, for damages arising from SCC’s contended breaches of various express and implied terms to the effect SCC’s invoices would not include extended periods of time during which customers’ calls were ‘muted’ (as I have outlined).79 Mr Dillon counters Samsung’s

77	Stephen Kós “Constraints on the Exercise of Contractual Powers” (2011) 42 VUWLR 17 at 20;
see also the cases referred to at footnote [67] above.
78	At [18] above.
79	At [163]-[164] above.

formulation of the obligation not to charge for “the time that customers were put on

‘mute’, other than for very short period of time” illustrates the arbitrary and non- contractual specification.

[189]   As  identified  previously,80   SCC’s  obligations  under  the  first  Agreement included to “provide a professional, helpful and informative assistance in relation to inbound enquiry from Callers”. SCC’s manuals set out its “Call Quality Evaluation Criteria”, at least embodying SCC’s self-imposed criteria for such assistance, as including “Minimises Long Periods of Silence”:

… to achieve this effectively, the Agent needs to … [n]ot put the customer on mute instead using the correct hold procedure as detailed above ….

[190]   Other than incidental resort to the ‘mute’ function was undesired, because “[i]t is important that the customer is aware of what is happening throughout the call”.81
Such incidental resort was explained by Mr MacDonald as being to cover a call operator’s involuntary sneeze, or for a quick discussion with a neighbouring operator, or to retrieve a sample from elsewhere in the call centre’s room, while maintaining active communication with a caller. The manuals reinforced “[u]se hold if the period of silence it drawn out any longer than 30 seconds”.

[191]   Additionally, the Service Fee set out in the first Agreement’s Schedule 2 was “based on an average talking time of 5 minutes per call”. It expressly is anticipating payment only for SCC’s periods of active communication (or “talking”) with callers. By the time of the second Agreement, Avaya’s ‘ATT’ acronym is used, whatever that measured.82 Mr Yoon preferred to be paid for all the time spent on a customer’s behalf, but on re-examination he conceded that was not what the second Agreement provided:

Q.        Let’s be very, very specific. Did you know that ATT did not count hold when you entered into the second call centre agreement?

A.        That time when entering to second agreement 2012, still Samsung wants to use the same formula of the pricing so they want to use the ATT instead of AHT, even still they binding us for the minor KPI AHT. Still they insist to stay with the ATT.

80	At [123] above.
81	At [164] above.
82	At [102] above.

[192]   In circumstances in which ‘hold’ rather than ‘mute’ option was practically available to SCC’s call centre operators – that is, the customer should be apprised of the operator’s intention to suspend active communication, rather than the customer would not know of that suspension – the Average Handling Time KPI anticipated
‘hold’ functionality would be used.83  Clause 4.2 of the second Agreement required

SCC to “use its best efforts to provide the Services in accordance with the KPIs”, which such use of ‘mute’ functionality would breach.

[193]   In those circumstances, SCC’s use of the ‘mute’ function also breached other of SCC’s obligations under the first and second Agreements. Under the first Agreement, it primarily breached SCC’s “professional, helpful and informative assistance” obligation.84  That same obligation appears at clause 4.6 of the second Agreement, which the conduct continued to breach.85 I have also found the conduct to breach SCC’s ‘good faith’ obligation under the second Agreement.86

[194]   Mr Kersey argued the conduct also breached SCC’s obligations to promote and improve Samsung’s reputation and performance,87 but the evidence is at best speculative (and at worst partial) as to whether the conduct risked either. Similarly, I cannot determine from the evidence if customers’ enquiries otherwise generally were not addressed by SCC’s resort to the ‘mute’ function.88 SCC’s ‘mute’ conduct came to Samsung’s attention incidentally, in investigating a customer’s unrelated complaint.

[195]   Last, Samsung alternatively claims SCC’s ‘mute’ conduct is in breach of s 9 of the Fair Trading Act. Samsung relies particularly on the covert nature of the conduct, in the context of a contract in which Samsung is dependent on SCC for accurate calculation of its Service Fee. Given SCC’s contractual liability as I have found it above,89 the alternative is not required to be determined.

83	At [98] above.
84	At [123] above.
85	At [88] above.
86	At [180] above.
87	At [51] above.
88	At [51] above.
89	At [192]-[193] above.

[196]   However, if required to determine the issue, I would have held there was a breach of s 9.90 Under both Agreements, SCC’s invoices represented “actual talking time” and “ATT” as including time not spent in active communication with the caller. This was misleading and deceptive to, or at least likely to mislead and deceive, the recipient of that representation in circumstances in which the duration of SCC’s active communication  was  material.  The  first  and  second Agreements  made  the  calls’ duration material for part calculation of the Service Fee. Samsung was so misled, because the object of the representation was to extend ‘talk[ing] time’ and (at least under the second Agreement) to reduce hold time, both of which went to quantifying Samsung’s liability to pay the Service Fee.

[197]   I have some hesitation in applying the Fair Trading Act’s provision to dealings between commercial parties at arm’s length, in which contracting parties should take reasonable steps to look after their own interests.91 Still, I would have held the ‘mute’ conduct’s invisibility to Samsung made it reasonable for Samsung to be so misled, as the evidence was ‘mute’ functionality was not an operation recorded in Avaya’s statistics.

Result

[198]   Each of SCC’s causes of action against Samsung is dismissed. SCC is liable to Samsung on its first and second causes of action. Samsung’s alternative Fair Trading Act cause of action also is dismissed.

Costs

[199]   In my preliminary view, as the successful party, Samsung should be entitled to its 2B costs and disbursements from SCC.

[200]   If my preliminary view is not accepted by either party, and costs cannot otherwise be agreed between them, costs are reserved for determination on short memoranda of no more than five pages – annexing a single-page table setting out any

90	AMP Finance NZ Ltd v Heaven (1997) 8 TCLR 144 (CA) at 152; and Red Eagle Corp Ltd v Ellis
[2010] NZSC 20, [2010] 2 NZLR 492 at [26].
91	Des Forges v Wright [1996] 2 NZLR 758 (HC) at 765 citing Mills v United Building Society [1988]
2 NZLR 392 (CA).

contended allowable steps, time allocation, and daily recovery rate – to be filed and served by:

(a)	Samsung within ten working days of the date of this judgment;

(b)	SCC within five working days of service of Samsung’s memorandum;

and

(c)	Samsung strictly in reply within five working days of service of the

SCC’s memorandum.

Postscript

[201]   Some of the witnesses’ written statements in the proceeding showed scant regard for the requirements of either s 83(2) of the Evidence Act 2006 or HCR 9.7. The former requires such written statements to be “the personal statement of the … maker”, and not to contain anything that is otherwise inadmissible. The latter relevantly provides:

9.7	Requirements in relation to briefs

(1)     In this subpart, brief, in relation to the evidence of a witness to be called by a party, means a written statement setting out evidence proposed to be given by that witness.

…

(4)	Every brief—

(a)	must be signed by the witness by whom the brief is provided:

(b)	must be in the words of the witness and not in the words of the lawyer involved in drafting the brief:

(c)	must not contain evidence that is inadmissible in the proceeding: (d)	must not contain any material in the nature of a submission:
(e)	must avoid repetition:

(f)	must avoid the recital of the contents or a summary of documents that are to be produced in any event:

(g)	must be confined to the matters in issue.

(5)     If the brief does not comply with the requirements of subclause (4) the court, prior to or during the trial, may direct that it not be read in whole or in part, and may make such order as to costs as the court sees fit.

[202]   Mr Yoon’s 308-paragraph initial written statement, and 555-paragraph written statement “in reply”, in particular, complied only with HCR 9.7(4)’s requirements (a) and (f). Compared to the evidence of his own writing and speaking, as set out elsewhere in this judgment,92 his statements bore all the hallmarks of intensive legal authorship, including substantial submission.

[203]   This is not just a matter of form (such that I required Mr Yoon not to read out passages of his written statement simply repeating SCC’s statement of claim). It is also a matter of substance, as illustrated by, for example, the author’s error over the date of SCC’s relocation (apparently drawn from the date appearing on the lease).93 Precise repetition of that error, and other content, in Mr MacDonald’s written statement exacerbates the sense of legal authorship. Mr Choi’s written statement also showed signs of professional embellishment, distinct from the evidence of his own writing and speaking,94 and the translator’s assistance with his oral evidence.

[204]   SCC’s ‘reply’ statements were particularly objectionable. If reply briefs are permissible at all (for the High Court Rules make no express provision for them), they are strictly to be in reply: responding only to relevant matters raised for the first time in the briefs to which they are replying. The analogy is to be with the constraints applicable to affidavits in reply, for which the High Court Rules do make provision.95

[205]   If permitted at all, reply briefs are not an opportunity to deny the truth of the defendant’s proposed evidence by restating or enlarging on facts already set out in the plaintiff’s statements. That is repetitious and argumentative. Neither are they an opportunity for a plaintiff to keep its powder dry, by putting up a barebones case at the outset, for the substance of its evidence ‘in reply’, after seeing the defendant’s proposed evidence.

92	See, for example, at [35], [39], [40], [73], [83], [157], [191], and note 45 above.
93	At [152] above.
94	See, for example, at [36]-[37] above.
95	HCR 7.26(2).

[206]   A plaintiff’s proposed evidence should be everything on which it requires to rely to make out its case against the defendant. Further oral evidence can be led at trial as may be necessary to amplify some newly-significant point in the plaintiff’s case, or to patch some uncontemplated hole in that case, identified by the defendant’s proposed evidence. Otherwise, a defendant’s evidence is to be tested through cross-examination, and not by denial, argument, or repetition ‘in reply’ from the plaintiff’s witnesses.

[207]   The perversity of any other approach arises when the court is confronted by a plaintiff’s  witnesses’ oral  evidence-in-chief  including  substantial  rejoinders  to  a defendant’s proposed evidence as yet unheard by the court. The problem is compounded as briefs are not filed in advance, enabling a party not to put forward some intended witness, but presented at the time the witness is called to give evidence.96  By analogy with HCR 9.13(1), the plaintiff should require leave for its witnesses to refer to another party’s briefs, yet to be given in evidence.

[208]   As myriad difficulties with Mr Yoon’s written statements became manifest (including  on  Mr Kersey’s  generalised  oral  objection  to  much  of  the  ‘reply’ statement’s content), I gave serious consideration to not permit Mr Yoon’s written statements to be read (or taken as read, discretion to permit which McGechan on Procedure’s commentary expresses doubt),97 and to require his evidence instead to be led. I did not do so partly because of the indeterminate consequences that may have for conduct of this four-year-old proceeding’s three-week hearing, then only in its first day, but principally because any oral evidence direction is required to be given “before the giving of evidence”.98 It is too late if the witness has commenced giving evidence. The only alternative may be a direction the brief “not be read in whole or in part”.

[209]   The consequence is, if compliance with the Evidence Act and High Court Rules is to be obtained in these respects, an obligation falls on counsel to raise any contended non-compliance  as  conveniently  in  advance  of  the  hearing  as  can  be  achieved. HCR 9.11 expressly anticipates such will first be raised between the parties within 20 working days after receipt of the brief. If remaining unresolved, “notice that there is

96	HCR 9.12 and 9.13. See also Andrew Beck and others McGechan on Procedure (looseleaf ed, Brookers) at [HR9.13.01].
97	At [HR9.12.01].
98	HCR 9.10(3).

an admissibility issue must be given to the court by the challenging party” (emphasis added). The remedial nature of the 2014 amendments to Part 9 of the Rules is noted.99

—Jagose J

99         Jarden v Earthquake Commission [2015] NZHC 204 following MacDonald v Tower Insurance Ltd [2014] NZHC 2876, (2014) 22 PRNZ 490 at [16] and [20]; and Parihoa Farms Ltd v Rodney District Council (2010) 20 PRNZ 8. See also Gillian Combe QC “Witness statements in civil cases
– show me the evidence” (paper presented at “Litigation Skills Masterclass” seminar, Stamford
Plaza, Auckland, 25 November 2015) <www.gilliancoumbe.co.nz>.