August 2009

Overseas Reach of the Commerce Act:  The Court of Appeal confirmed the application of the Commerce Act to encompass conduct committed overseas by persons resident or carrying on business in New Zealand if it affects a New Zealand market.  It does not require positive conduct in New Zealand.

No Fiduciary Relationship:  The Court comprehensively rejected arguments of fiduciary duty in an agreement between corporates that had expressly negated any fiduciary relationship.

Breach of First Right of Refusal:  The High Court dismissed a summary judgment application and discussed the various obligations under the first right of refusal.

Fair Value:  The High Court, following the CA in Thexton, declined a summary judgment application as Section 149 (director dealing in shares) of the Companies Act may apply such that “fair value” may not involve any minority discount (regardless of contractual arrangements).

Silent Directors:  The High Court held a “silent” director (the person took the directorship on as a favour to a compatriot) liable for the actions of the other director who carried out the day-to-day operation of the business.

Exclusion Clause Upheld:  The High Court, assuming misrepresentations could be proved, was satisfied an express clause excluding liability for pre-contractual representations was fair and reasonable and should be enforceable between the parties.

Joint Venture Settlement Agreement “of all claims” Upheld:  Two joint venturers on a corporate joint venture reached a settlement agreement stated as constituting “full and final settlement … of all claims whatsoever”.  The Court held it was not limited to claims on foot at the time.

As from 1 March 2009 New Zealand has introduced a 90 day probationary period whereby a persons employment can be terminated without cause.  This is restricted to businesses with less than 20 employees and is subject to good faith obligations.  This is yet to be tested and is considered likely to give rise to alternative claims, e.g. breach of good faith or discrimination.

A discussion document proposing changes to the Securities Regulations aimed at reducing compliance costs and improving flexibility for issuers and disclosure to investors has been released in response to the recommendations of the Capital Market Development Taskforce.

The Commerce Commission recently cleared Fullers Group to acquire Kiwi Kat, an operator of passenger ferry services in Auckland.

The Commission has also released a draft supplementary guideline on the "failing firm" argument.

Quigg Partners has recently had the pleasure of advising:

• on New Zealand matters concerning new GM acquiring key parts of old GM;

• on New Zealand matters concerning the international purchase of Alcan Packaging operations by Bemis;

• Wesfarmers Industrial on the acquisition of Expresspak;

• Henry Schein on its acquisition of the Ebos dental business;

• a global technology company acquiring a New Zealand business;

• a global industrial on the sale of its New Zealand business;

• on New Zealand matters concerning Australian capital raisings (including Virgin Blue, Hastie Group and Aristocrat);

• on New Zealand matters concerning the global restructuring plan of AIG;

• on New Zealand matters concerning Viterra Inc. acquiring ABB Grain;

• NZX Allied Farmers on corporatisation of Allied Farmers Rural;
• Third Avenue Management on Knott Partners partial takeover of NZX Rubicon Ltd.