C & R Construction Limited v Taharoa Ironsands Limited
[2021] NZHC 2288
•2 September 2021
IN THE HIGH COURT OF NEW ZEALAND HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA KIRIKIRIROA ROHE
CIV-2020-419-87
[2021] NZHC 2288
BETWEEN C & R CONSTRUCTION LIMITED
Plaintiff
AND
TAHAROA IRONSANDS LIMITED
First Defendant
WAYNE SIDNEY COFFEY
Second DefendantTIMOTHY DOUGLAS ROSS and CHRISTOPHER SIMON ROSS
First Third PartiesMARSHALL MAINE
Second Third Party
Hearing: 1 September 2021 Appearances:
Callum Martin for the Plaintiff and First Third Parties Richard Gordon for the Defendants
Rob Towner for the Second Third Party
Judgment:
2 September 2021
JUDGMENT OF ASSOCIATE JUDGE R M BELL
This judgment was delivered by me on 2 September 2021 at 11:00am
pursuant to Rule 11.5 of the High Court Rules
…………………………. Registrar/Deputy Registrar
C & R CONSTRUCTION LIMITED v TAHAROA IRONSANDS LIMITED [2021] NZHC 2288 [2 September 2021]
[1] The defendants apply under r 10.1 of the High Court Rules 2016 for this case to be tried at Wellington. The other parties oppose.
[2] Associate Judge Smith gave the background to this proceeding in his judgment of 21 October 2020:1
The parties and the agreements
[11] Taharoa owns and operates an ironsand mine near Taharoa village, south of Kawhia harbour on the west coast of the North Island. The ironsand it mines there is exported by sea to markets in Asia. C&R owns earthmoving and other related machinery, which it hires to Taharoa for it to use as part of carrying out the mining operations.
[12] In 2015, C&R and Taharoa entered into a written contract under which C&R agreed to hire the heavy earthmoving equipment to Taharoa (the Hire Agreement). The Hire Agreement included terms relating to minimum hours, which entitled C&R to a minimum return on its equipment each month, irrespective of the actual use of the equipment by Taharoa. The Hire Agreement was due to expire on 31 March 2018.
[13] The parties negotiated an extension and variation of the Hire Agreement, for a further three years. A written document recording the agreed extension and variation was executed in April 2018 (the Variation Agreement). The substantial dispute between the parties concerns whether the Variation Agreement properly recorded the actual terms discussed and agreed between the parties in March and April of 2018.
[14] The terms of the Variation Agreement were negotiated by the first third parties (Mr Tim Ross and Mr Simon Ross) for C&R, and by the second third party (Mr Maine) and Mr Robert Smith-Clare for Taharoa. At the time, Mr Maine was Taharoa’s chief operating officer.
[15] The Variation Agreement contains a sentence that has the effect of removing the scheduled minimum hours provisions in the Hire Agreement, and replacing them with a scheduled minimum hours provision for one additional machine only. C&R’s case is that the parties never agreed or intended to remove the existing minimum hours provisions from the Hire Agreement; they simply agreed to supplement those provisions so that they would apply to the additional machine. C&R contends that the variation does not accurately record the common intention of the parties, and that it should be rectified accordingly.
[16] Taharoa denies the rectification claim. It says that it intended the removal of the minimum hours provisions in the Hire Agreement, and that the Variation Agreement as signed correctly reflected that intention.
[17] Following the execution of the Variation Agreement, C&R continued to render invoices on a “minimum hours” basis, notwithstanding that charging on that basis was limited by the Variation Agreement to only the additional
1 C & R Construction Ltd v Taharoa Ironsands Ltd [2020] NZHC 2765 at [11]–[35].
machine. Taharoa’s senior management, including the second defendant Mr Coffey, realised this in or about April 2019. They complained to C&R.
[18] C&R (having presumably gone back and reviewed the Variation Agreement) accepted Taharoa’s position on the overcharging. It acknowledged that Taharoa had overpaid it for its services during the 11 months ended February 2019, “due to the inadvertent errors of both parties”. Over five months in 2019, C&R refunded to Taharoa the full amount Taharoa believed it had overpaid. The amount repaid by C&R was approximately $750,000.
[19] On 19 July 2019, the parties executed a written settlement agreement which was said to be in full and final settlement of all outstanding issues between the parties.
[20] Later in 2019, C&R changed its stance. On 1 October 2019 its solicitors wrote to Taharoa contending that the continued charging on the minimum hours basis after the Variation Agreement was signed reflected the parties’ real intention when they signed the Variation Agreement.2 The present proceeding, seeking rectification of the Variation Agreement, was issued in April 2020.
C&R’s statement of claim
[21] In addition to its claim for rectification of the Variation Agreement, C&R pleads two additional causes of action. In its second cause of action, it alleges that Taharoa and Mr Coffey made misleading or deceptive statements about their intentions during the negotiations and when executing the Variation Agreement, contrary to s 9 of the Fair Trading Act 1986 (the FTA). In its third cause of action, C&R alleges in the alternative that Taharoa has acted in breach of contract by deducting amounts for legal fees and executive time from the sums that were otherwise payable under the Variation Agreement.
Taharoa’s defence and counterclaims
[22] Taharoa denies liability on all of C&R’s causes of action. It then makes four counterclaims against C&R. In its first counterclaim cause of action, Taharoa seeks a declaration (in response to C&R’s third cause of action) that it was entitled to deduct the amounts for legal fees and executive time from the payments it made under the Variation Agreement.
[23] In its second counterclaim cause of action, Taharoa claims in the alternative a declaration to the same effect, on the basis of equitable set-off.
[24] Taharoa’s third counterclaim cause of action alleges breach of s 9 of the FTA relating to the rectification claim.
[25] Taharoa’s fourth counterclaim against C&R is for breach of contract, or repudiation of contract, arising out of a comment allegedly made by a C&R employee to a Taharoa employee on or about 23 December 2019. In this cause of action, Taharoa says that the C&R employee threatened to remove the
2 It appears that C&R reached that view after its solicitors interviewed Mr Maine, who had left his employment with Taharoa in May 2020.
earthmoving machinery C&R had hired to Taharoa, in circumstances where C&R knew that such removal would effectively force Taharoa to stop operating. The threat by the C&R employee is alleged to have been a deliberate attempt to obtain leverage over Taharoa, to assist C&R achieve its desired outcome on the rectification argument. Taharoa alleges that C&R adopted a course of action from 1 October 2019 (which included but was not limited to the 23 December 2019 threat), which was designed to place pressure on Taharoa.
[26] Taharoa says it was compelled by C&R’s pressure and threats to put in place back-up arrangements for the hire of earthmoving equipment, as “insurance” against breach or repudiation by C&R. Taharoa counterclaims “full holding costs” (unspecified) for C&R’s breach or repudiation of contract, and/or for misleading or deceptive conduct by C&R under the FTA.
Taharoa’s third party claims
[27] Taharoa has issued third party claims against Mr Tim Ross and Mr Simon Ross of C&R, and also against its former chief operating officer, Mr Maine.
[28] The claims against Mr Tim Ross and Mr Simon Ross allege breach of s 9 of the FTA. Taharoa alleges that Mr Tim Ross and Mr Simon Ross knew at all material times after the Variation Agreement was signed that C&R had no entitlement to invoice Taharoa for the “minimum hours” charges. It alleges that Mr Tim Ross and Mr Simon Ross were parties to a determination by C&R to concoct the allegations of rectification, when all parties knew full well at the time of executing the Variation Agreement that neither C&R nor Taharoa intended to continue on the basis of the “minimum hours” charging regime that had previously applied. It says that Mr Tim Ross and Mr Simon Ross were parties to C&R’s conduct in sending a “fabricated” invoice to Taharoa on 1 October 2019, seeking payment of the “minimum hours” payments that C&R had earlier agreed to refund to Taharoa.
[29] In addition, Taharoa says that Mr Tim Ross and Mr Simon Ross were actively involved in C&R inducing Mr Maine (for reward) to breach his duty of confidence to Taharoa, and that they were directly or indirectly knowingly concerned in C&R’s alleged breaches which are the subject of Taharoa’s fourth counterclaim cause of action. Mr Tim Ross and Mr Simon Ross are said to have aided, abetted, counselled or procured C&R’s contravention of s 9 of the FTA.
[30] In its third party claim against Mr Maine, Taharoa pleads three causes of action. First, it alleges that Mr Maine breached certain duties of confidentiality owed to it. Secondly, it says that Mr Maine was guilty of the tort of deceit. Thirdly, it says that Mr Maine was an accessory to misleading and deceptive conduct by C&R, and is liable as such under s 9 of the FTA.
[31] Taharoa says that Mr Maine had the day-to-day carriage of the negotiations with C&R for the Variation Agreement. It contends that it instructed Mr Maine that the “minimum hours” provisions in the Hire Agreement were already commercially onerous for Taharoa, and that it would be uneconomic for Taharoa to agree to extend the Hire Agreement on the basis of that charging regime. It says that Mr Maine was told that the Variation Agreement was not to include the “minimum hours” provisions.
[32] Taharoa pleads that Mr Maine then took legal advice for Taharoa on the terms of the Variation Agreement, in the form in which it was subsequently executed by the parties. After taking the legal advice, Mr Maine told Mr Coffey that the “minimum hours” obligations would no longer form part of the contract. He is also alleged to have told Mr Coffey that C&R had taken its own legal advice on the draft Variation Agreement before it executed the document.
[33] After Mr Maine left his employment as chief operating officer with Taharoa in May 2020, Taharoa contends that he remained subject to a strict duty of confidence not to disclose or otherwise use any confidential information belonging to it. It alleges that, in breach of that duty of confidence, Mr Maine disclosed to C&R confidential and commercially sensitive information. That information is said to have led to C&R making its unfounded claim for rectification of the Variation Agreement.
[34] Taharoa also alleges that Mr Maine has failed to take steps to mitigate his breach of duty, by refusing to disclose to Taharoa the extent to which he has disclosed its confidential and commercially sensitive information to C&R. Mr Maine is alleged to have continued to breach the duty of confidence by making further disclosures of confidential information to C&R. Taharoa says that, either directly or indirectly, Mr Maine has been rewarded by C&R for disclosing confidential and commercially sensitive information to it.
[35] In its alternative claim in deceit, Taharoa alleges that the disclosures made by Mr Maine to C&R were, to Mr Maine’s knowledge, erroneous in material ways. It says that Mr Maine’s false representation of existing facts to C&R has caused loss to Taharoa. In the alternative, Taharoa alleges that Mr Maine is liable to it as an accessory, on C&R’s breaches of s 9 of the FTA.
[3] There have been developments since Associate Judge Smith’s decision. Taharoa has now withdrawn its fourth cause of action in the counterclaim against C & R Construction.3 C & R Construction has amended its statement of claim, including adding a cause of action for contractual mistake.
[4] C & R Construction carries on business in the Waikato. It has its head office in Cambridge, just south of Hamilton. While Taharoa mines iron sand at Taharoa near the Kawhia harbour, a remote place, it has its head office in Wellington. While r 5.1(1) of the High Court Rules 2016 directs that a proceeding should be filed in the registry of the court nearest to the principal place of business of the defendant,4 C & R Construction used the option available under r 5.1(2) of filing the proceeding in the registry closest to where it has its business, saying that material parts of its cause of
3 See Associate Judge Andrew’s decision of 28 May 2021 – C & R Construction v Taharoa Ironsands Ltd [2021] NZHC 1222 at [4].
4 High Court Rules 2016, r 5.1(a).
action arose closer to where it has its business than where Taharoa Ironsands Ltd carries on business. It relied on these matters:
(a)Under the hire agreement and the renewal/variation the machinery was hired at the mine at Taharoa, in the Waikato.
(b)Taharoa offered to roll over the hire agreement at a meeting at C & R Construction Ltd’s office in Cambridge on 14 March 2018.
(c)C & R Construction negotiated the renewal/variation by email and telephone from its Cambridge office.
(d)Taharoa and Mr Coffey, the second defendant, made representations under the Fair Trading Act at a meeting at the Waitomo Caves Hotel on 27 March 2019 and at C & R Construction Ltd’s Cambridge office of 4 April 2019.
[5] For Taharoa Mr Gordon was critical of C & R Construction using that option, but that is a legitimate litigation step and the plaintiff is not to be criticised for doing so. The defendants’ remedy is to do what they have done in this case: to apply for the case to be tried in another registry. I note incidentally that Taharoa Ironsands Ltd waived its right to challenge the registry chosen by C & R Construction Ltd by filing a statement of defence.5 Mr Gordon accepted that this was not an application to transfer to another registry under r 5.1(5) of the High Court Rules.
[6]Taharoa has applied under r 10.1 of the High Court Rules:
(1)The place of trial is the town where the registry of the court in which the statement of defence is to be filed is situated.
…
(4)Despite subclauses (1) to (3), the court may at any time order that the proceeding be tried at a place—
(a)that the parties consent to; or
5 Inder v Commissioner of Crown Lands [2010] BCL 44 (HC); Morgan v Sovereign Assurance Co Ltd [2013] NZHC 1195, (2013) 21 PRNZ 593; and see AC Beck McGechan on Procedure (online loose-leaf, Thomson Reuters) at [HR5.1.16].
(b)where the proceeding can be more conveniently or more fairly tried.
[7] The other parties do not consent and accordingly Taharoa needs to show that the proceeding can be more conveniently or more fairly tried in Wellington than in Hamilton. The choice is only between those courts. The parties’ submissions suggest that the case might also be heard in Auckland but the volume of work now being heard in Auckland does not make it desirable to transfer this proceeding to that court. This case could not be heard in Auckland until 2023, later than available hearing dates in Hamilton and Wellington.
[8] In Consumer Council v Pest Free Service Ltd the Court of Appeal adopted the following submissions by counsel, Mr Barton:6
Put in another way, the plaintiff’s nomination is not in itself probative of convenience or fairness. In his submission questions of relative convenience and fairness should be considered simply on such relevant material as may be placed before the Court. A change of venue should be ordered if on an overall consideration of such material the Court is affirmatively satisfied that the action can be more conveniently and fairly tried elsewhere. Mr Barton further submitted that the onus on an applicant to satisfy the Court ought not to be regarded as some way especially difficult to discharge.
[9] Similarly, in Krone (NZ) Technique Ltd v Connector Systems Ltd, Eichelbaum J said:7
A comparison between relative advantages and disadvantages of the existing and proposed venue is involved requiring a balancing exercise. The plaintiffs’ initial nomination of venue in itself is not probative of convenience. The onus on the applicant should not be regarded as in some way especially difficult to discharge. … The factual matters to be taken into account may of course be of different weight or emphasis depending on the particular stage of the proceedings when application is made.
[10] An application to change the place of trial is not the time to review the merits of the proceeding. The case is contested. The matters in issue will require a careful examination of the facts. Oral testimony will be important. The question is whether it is more convenient for that inquiry to take place in Wellington than in Hamilton.
6 Consumer Council v Pest Free Service Ltd [1978] 2 NZLR 15 (CA) at 18.
7 Krone (NZ) Technique Ltd v Connector Systems Ltd (1988) 2 PRNZ 627 (HC) at 631.
[11] No party suggests that the choice of place of trial will affect their ability to present their case effectively at the hearing. There is no suggestion of a loss of access to justice because the case will be away from their place of business. The inquiry is more about convenience than about fairness.
[12] Costs awards may to some extent mitigate any inconvenience for the successful party. If the case is heard in Wellington but C & R Construction succeeds, Taharoa will have to pay the plaintiff its expenses for having to go to Wellington. Conversely, if Taharoa succeeds at a hearing in Wellington, C & R Construction will not have to pay the expenses of Taharoa’s witnesses coming to Hamilton. That position applies in reverse if the trial is in Hamilton.
[13]Convenience is usually considered with regard to:
(a)parties;
(b)witnesses;
(c)counsel;
(d)time before there will be a hearing in the current court or the proposed new venue.
The list is not exhaustive, but for this case counsel did not raise any other matters.
[14] Taharoa says that it anticipates calling evidence from five to seven witnesses, including senior officers of the company. All but one of its witnesses lives in Wellington. The other lives in Christchurch. Mr Coffey, the second defendant, lives in Wellington. It does not offer any specific evidence that a hearing in Hamilton, as opposed to a hearing in Wellington, will disrupt its business. It seems unlikely that the mining of iron sands will come to a halt because its executives, normally based in Wellington, will spend time in Hamilton during the trial. As Taharoa’s witnesses are apparently not required to be at the mine for the day-to-day, hands-on running of the company, it appears that the business of the company can run on while its executives give evidence in court. The inconvenience to Taharoa is more that their witnesses will
have to travel to Hamilton and stay there away from home during the hearing. With cell phones and laptops, much executive work can be done remotely. The stay-at- home requirements imposed under COVID-19 lockdowns have taught us that.
[15] C & R Construction says that its senior officers and staff are all based in Cambridge, not far from Hamilton. It and the first third parties, Messrs Ross, intend to call six to ten witnesses. All live in the Hamilton area. That will include three of the company’s executive directors and two members of its office staff who work daily in the business. Mr Timothy Ross deposes that a trial in Wellington would be more disruptive to its business than a trial in Hamilton. The executive directors are closely involved in the company’s day-to-day operations. They are regularly out on site, working with clients, and assisting their managers. The current sites are in the Hamilton and Auckland areas. Where necessary they need to be available to respond to matters as they arise. They also work over the phone but say that they would be better able to run the business if based in Hamilton rather than in Wellington.
[16] Mr Timothy Ross also wants his brother, Mike, to attend the trial. Mike is a director but is not a party. Mr Martin could not say that he would give evidence. Mike suffered a stroke a few years ago and is confined to a wheelchair. He has poor eyesight. There are difficulties with him travelling, especially by plane because he needs to be physically assisted out of his wheelchair and into the airplane seat. It would be difficult for him to attend a trial in Wellington. It would be easier for him to access a court by car. It is not clear that every director needs to attend court. Many companies have little difficulty in running cases without all their directors coming to court. Mike Ross’s attendance may be a “nice-to-have” but is not essential. His inability to attend a hearing in Wellington does not count as serious inconvenience.
[17] C & R Construction has given more persuasive evidence of the potential disruption to its business. Even so, I do not regard the inconvenience as severe. Individuals can suffer greater inconvenience if they have to travel far from home to attend court. Think for example of the solo parent with young children to look after, the sharemilker who has to milk twice daily and the dairy farmer during calving.
[18] I put little weight on the convenience of counsel. All will come from out of town. It is important not to let the convenience of counsel prevail over the interests of the parties and witnesses. None of the parties is represented by Hamilton counsel. It is interesting that the defendants have instructed Auckland counsel for the case. Mr Maine, the second third party, who lives in Wellington, has instructed Auckland solicitors and Auckland counsel. C & R Construction has instructed Auckland solicitors. That suggests that the parties have arranged their legal representation on the basis of the case being heard in Hamilton rather than Wellington.
[19] In its written submission Taharoa said that a hearing in Wellington could be obtained much earlier than a hearing in Hamilton. If so, that is a very strong factor for moving the case to Wellington. It was submitted that a trial would not be available in Hamilton for another two years, whereas a hearing could be obtained in Wellington in early to mid-2022. I made my own enquiries. The manager of the Hamilton High Court has advised that there is a three-week hearing slot available beginning 31 October 2022. Associate Judge Johnston in Wellington has advised me that no hearing would be available in Wellington until the second half of 2022, but he is confident it could be heard before the end of that year. Mr Gordon said that he had been similarly informed when he inquired of the Wellington Court. I can give this case a fixture in Hamilton to begin for three weeks on 31 October 2022. If the case is transferred to Wellington, there will be a lag before a case management conference is convened and a hearing date can be allocated. Overall, there is not much in it as to the timing of a trial.
[20] It was also submitted that Hamilton was inappropriate because it is a provincial circuit court with a limited number of courtrooms and no permanent sitting Judges. Against that, the Wellington Court has 10 permanent sitting Judges and a dozen available courtrooms. Some registries have infrequent sittings. But that is not the case with the Hamilton High Court. Cases, including lengthy hearings, are heard regularly and frequently in Hamilton. An Associate Judge comes on circuit to Hamilton every four weeks. From the court’s point of view, there is no particular difficulty with hearing this case in Hamilton. It is more likely that the Judge who will hear the case will come to Hamilton on circuit from Auckland. That, however, is part and parcel of
judicial life. It does not count against Hamilton that the Judge hearing the case will be on circuit.
[21] Weighing all matters up, Taharoa will not suffer significant inconvenience in the case being heard in Hamilton rather than in Wellington. Conversely, C & R Construction Ltd has shown that it will be more inconvenient to it if the case is heard in Wellington than in Hamilton, but again the inconvenience may not be insurmountable. I come to the same conclusion as Eichelbaum J in Krone (NZ) Technique Ltd v Connector Systems Ltd:8
So in respect of the trial itself I reach the same conclusion as in regard to the position at the earlier stage, namely that there is no overall balance of convenience either way. It is simply one of those situations where it would suit each side best to have the litigation in its home town and the other side will necessarily suffer some inconvenience or disadvantage. Accepting, as noted earlier, that the onus is not an especial or difficult one, such as it is the defendant has been unable to discharge it.
[22] Accordingly, I dismiss the application for the trial to be heard at Wellington. I give this case a fixture for three weeks beginning 31 October 2022. I direct a telephone case management conference in the week beginning 27September2021 to give trial directions, including fixing the close of pleadings date.
[23] Taharoa Ironsands Ltd is to pay costs on the application to the plaintiff and the second third party. If counsel cannot agree costs, memoranda may be filed. Any memoranda as to costs should not be filed and served later than the end of September 2021.
Solicitors:
…………………………………….
Associate Judge R M Bell
Wilson Harle (Chris Browne/Callum Martin), Auckland, for the Plaintiff and First Third Parties MinterEllisonRuddWatts (Richard Gordon/Ashley Kirk), Wellington, for the Defendants
Cook Morris Quinn (Chris Morris), Auckland, for the Second Third Party
Copy for:
Marc Corlett QC, Auckland, for the Plaintiff and First Third Parties
Rob Towner, Richmond Chambers, Auckland, for the Second Third Party
8 Krone, above n 7, at 632.
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