Compcorp Ltd v Force Entertainment Centre Ltd - [2003] NZCA 98

IN THE COURT OF APPEAL OF NEW ZEALAND
CA212/02
BETWEENCOMPCORP LIMITED

Appellant

ANDFORCE ENTERTAINMENT CENTRE LIMITED

Respondent

Hearing:21 May 2003

Coram:Gault P
Robertson J
Baragwanath J
Appearances: P J Dale for Appellant

G J Christie and M A Gold for Respondent

Judgment:13 June 2003

JUDGMENT OF THE COURT DELIVERED BY GAULT P

[1]       This appeal is against the judgment of Chambers J delivered in the High Court at Auckland on 26 September 2002 in which he refused the appellant’s application for summary judgment. The dispute between the parties relates to the interpretation of a deed of settlement entered into in May 2000 to record their agreement in full and final settlement of claims arising out of a contract for the construction of the Force Entertainment Centre in Auckland. The respondent, for whom the centre was built, is now named Sky City Metro Ltd, though no notice of that change has been filed.
[2]       Some background against which the deed of settlement was executed is material. The Force group of companies, of which the respondent was a member, had borrowed money to finance the construction of the centre on terms that included sale of the shares in the respondent to a party referred to as MTM after practical completion of the centre. MTM had put up $50 million to permit the Force group to engage the appellant to build the centre for Force. MTM had contracted with Force to buy the shares in Force. When it did, Force would have the means to pay the appellant.For reasons that are not immediately relevant MTM declined to proceed with the purchase and litigation ensued between the Force group and MTM. It was in the expectation that MTM would be obliged to proceed with the purchase that the terms of the deed we must construe were agreed.
[3]       The appellant’s claims for payment under the construction contract (which were in excess of the original contract price) were rejected by the respondent. The dispute between them was resolved in these terms:
2.CONTRACT PRICE
2.1The parties agree that the final price under the Contract for the completion of all work and the remedying of all defects is $40,100,000 (“the Contract Price”);
2.2Force has at the date of this deed paid to CL $37,023,000 of the Contract Price;
2.3Force will pay to CL the sum of $3,077,000 (“the Sum Outstanding”) in the manner and at the times set out in clause 3 in settlement of the Sum Outstanding on the Contract price.

3.PAYMENT
3.1Force will pay the Sum Outstanding to CL in the following manner and at the following times:
3.1.1The sum of $650,000 will be paid to CL by Force within 3 working days after this deed has been signed and executed by both parties;
3.1.2The sum of $555,000 will be paid to CL by Force on 20 July 2000;
3.1.3The sum of $300,000 will be paid to CL by Force on 20 September 2000;
3.1.4The balance of any Sum Outstanding will be paid to…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Compcorp Ltd v Force Entertainment Centre Ltd

Details

AGLC: Compcorp Ltd v Force Entertainment Centre Ltd [2003] NZCA 98
Case: [2003] NZCA 98
Decision Date: 13 June 2003

CaseChat Overview and Summary

In the case of Compcorp Limited v Force Entertainment Centre Limited, the Court of Appeal of New Zealand considered an appeal against the High Court's refusal of the appellant's application for summary judgment. The dispute centred on the interpretation of a deed of settlement entered into in May 2000 to settle claims arising from a contract for the construction of the Force Entertainment Centre in Auckland. The appellant, Compcorp Limited, had completed the building of the centre, and the respondent, Force Entertainment Centre Limited, had taken possession. The construction contract price was agreed upon, but the payment of the outstanding balance was contingent on certain conditions being met, including the sale of the shares in Force Entertainment Centre Limited to a third party, MTM. However, the sale to MTM did not proceed, leading to the current dispute.

The key legal issues the Court had to decide were whether the obligations to pay the remaining balance of $1.577 million and an additional $500,000 were triggered by the sale of the shares in Force Entertainment Centre Limited to a third party. The appellant argued that since the sale did not proceed, the remaining balance should be paid immediately. The respondent argued that the payment obligations were contingent on the sale and that since it did not occur, the appellant was not entitled to the remaining balance. The Court also had to consider whether the failure of the contingency could be relied upon by the respondent and whether there were any implied terms in the contract.

The Court of Appeal held that the obligations to pay the remaining balance and the additional $500,000 were not contingent on the sale of the shares. The Court found that the sale was an identification of the time of payment, not a condition of liability. The Court also found that the obligation to pay the remaining balance would arise when the respondent was in funds, which occurred upon the recapitalisation of the Force group. However, the Court held that the claim for the additional $500,000 was truly conditional and required the stated eventuality to have occurred. The Court found that the respondent was not required to take reasonable steps to ensure the occurrence of the contingency and that the settlement with MTM was not a waiver of the condition. The Court also rejected the defence of common mistake, finding that the parties must have contemplated the prospect of something less than full success against MTM.

The Court of Appeal allowed the appeal and ordered the entry of summary judgment for the sum of $1.577 million with interest. The appeal in respect of the claim for the additional payment of $500,000 was dismissed, and the matter was remitted to the High Court. Each party was ordered to bear their own costs in both the High Court and the Court of Appeal.

Orders