Coolpak Coolstores Limited v Selwyn District Council

[2019] NZHC 1224

IN THE HIGH COURT OF NEW ZEALAND CHRISTCHURCH REGISTRY

I TE KŌTI MATUA O AOTEAROA ŌTAUTAHI ROHE

CIV-2018-409-827

[2019] NZHC 1224

UNDER

the Contract and Commercial Law Act 2017 and the Fair Trading Act 1986

IN THE MATTER

of a sale and purchase agreement for the property at 111 Detroit Drive, Rolleston

BETWEEN

COOLPAK COOLSTORES LIMITED

Plaintiff

AND

SELWYN DISTRICT COUNCIL

Defendant

AND

R D HUGHES DEVELOPMENT LIMITED

Third Party

Hearing:

Determined on the Papers

Counsel:

J V Ormsby and S S R Mears for Plaintiff

R W Raymond QC and P G Rogers for Defendant R A Kay for Third Party

Judgment:

31 May 2019

INTERIM JUDGMENT OF ASSOCIATE JUDGE LESTER

(in respect of further and better discovery)

Context

[1]    The plaintiff purchased a property from the defendant in an industrial subdivision in Rolleston. The plaintiff then constructed a cold storage operation, including the use of blast freezers.

COOLPAK COOLSTORES LIMITED v SELWYN DISTRICT COUNCIL [2019] NZHC 1224 [31 May 2019].

[2]    Following a noise complaint from a nearby property owner, the defendant, the Selwyn District Council (“the Council”) visited the property to assess noise levels which were found to be in breach of the noise limits under the relevant part of the District Plan.

[3]    The plaintiff has brought proceedings against the Council relating to misrepresentations allegedly made by the agent engaged by the defendant, the third party, to sell the property. The alleged misrepresentations relate to noise limits at the site and the suitability of the property for the plaintiff’s cold storage operation.

Discovery

[4]    As recorded in my Minute of 1 April 2019, there is an issue in relation to discovery being whether the defendant must discover details of:

(a)historical noise complaints in the relevant area in the three years immediately prior to when the industrial zone was established; and

(b)copies of submissions made to the Council regarding establishment of noise requirements for the industrial area.

The call  for disclosure  of the second category of documents was abandoned by    Mr Ormsby during the hearing.

Relevant principles

[5]There was a direction that the parties give standard discovery.

[6]    Under HCR 8.7, the defendant was therefore obliged to disclose all documents that are:

(a)documents on which it relies;

(b)documents that adversely affect the defendant’s own case;

(c)documents that adversely affect another party’s case; or

(d)documents that support another party’s case.

[7]    At the end of the day, the issue is whether the documents in [4] above are relevant which is assessed having regard to the pleadings.

Grounds for discovery

[8]The allegation is that misrepresentations were made by the Council’s agent.

[9]    Mr Ormsby for the plaintiff submits that the history of noise complaints goes to:

(a)the false and misleading nature of the representations; and

(b)the Council’s or agent’s knowledge as to the suitability of the property for the plaintiff’s intended use.

[10]   The plaintiff says that if there had been a history of noise complaints associated with the area, the Council and its agents should have known that the representations were false and misleading.

[11]   I do not accept that whether the Council or its agents would or should have known that the representations made were false  and  misleading is  material  and  Mr Ormsby accepted that his submission on this issue may have been imperfectly expressed. Rather he said documents showing a history of noise complaints were relevant to whether the representations were in fact false.

[12]   Mr Raymond QC in a practical sense cut the ground out from under his submission by accepting that if the representations pleaded were made then it is accepted they were false. Thus, the falsity of the alleged (denied) statements is not in issue. Discovery is not required for a matter that is not in issue.

Contribution

[13]   The defendant pleads contributory negligence by the plaintiff in failing to carry out due diligence in relation to the suitability of the land. The pleading is that the

plaintiff failed to obtain any independent advice on the suitability of the site for the proposed development. The plaintiff says it did not undertake significant due diligence because it relied on the representations.

[14]   The plaintiff says if the defendant wants to found a contribution argument on what independent advice may have disclosed then the defendant is obliged to discover whether there had been a history of noise complaints.

[15]   If the defendant wants to be able to argue that enquiries by the plaintiff or its consultants would have led to information being sought from the Council which would have disclosed the complaints or other information relevant to the contribution argument, then what such enquiries would have disclosed will have to be discovered by the defendant.

[16]   I asked Mr Raymond (perhaps unfairly putting him on the spot) if the defendant  would concede that it would not assert that the further enquiries it says  the plaintiff should have made would not have resulted in the complaints coming to light. If that was accepted, then the history of complaints would not be relevant. If the concession  was  made  then  whatever  steps  the  plaintiff  did  or  did  not  take,  the complaints would not have come to light and thus cannot be relevant.

[17]   Mr Raymond did not make that concession. With the defendant wanting to retain the ability to argue that due diligence may have involved enquiries of the Council that would have resulted in the defendant disclosing noise complaints the defendant must discover what such enquiries would have disclosed.

[18]   What the fact of prior complaints (assuming they exist) adds to the existence of noise standards in the District Plan Rules may be debatable, but with the defendant wanting to preserve the opportunity of saying that a reasonable due diligence process may have brought the complaints to light, then they will need to be disclosed. If upon reflection the defendant considers that the existence of such complaints would add nothing to its other particulars in respect of its contribution argument then it remains free to make the concession I have referred to above.

[19]   The final argument raised by the plaintiff is that what the Council may have known may be relevant to the exercise of any discretionary remedy under the Fair Trading Act 1986.

[20]   Under both the Contract and Commercial Law Act 2017 cause of action and the Fair Trading Act cause of action, damages are sought. Whether the representation was knowingly false or made with carelessness is irrelevant to the quantification of loss. Plaintiff’s counsel could not refer to any authority where the fact that there may have been carelessness in the representation resulted in an increase in damage over actual damages. As to whether contribution may come into play, that is the same issue as dealt with above.

Result

[21]   The time period for the complaints sought covered by category (a) in [4] was accepted by Mr Ormsby as being too wide. He suggested the time period be from the date of the first sale of land in the industrial zone to the date of the plaintiff’s contract. What objectively a due diligence process in these circumstances would have involved by  way  of  enquiries  to  the  Council,  the  breadth  of  those  enquiries  and  what  a reasonable Council responding to those enquiries would have disclosed, is unknown. Inherent in the Council’s present position of wanting to keep this part of the contribution issue alive, is that it considers that reasonable due diligence would have involved further enquiries of the Council by the plaintiff and that those enquiries may have resulted in the Council producing the prior complaints.

[22]   My conclusion that the noise complaint documents may be relevant assumes the correctness of the Council’s position just stated. Counsel will need to consider whether they accept this conclusion. In short, whether the noise complaints are relevant will turn on whether a reasonable due diligence process would have brought the complaints to light. This was not addressed in the telephone conference. At the end of the day if the Council wants to maintain the opportunity to argue that the complaints would have come to light, then the complaints are relevant and will need to be disclosed subject to the issue of the timeframe to be covered by the disclosure.

[23]   Mr Raymond did not have a chance to consider the time frame suggested by Mr Ormsby as it only arose at the conference. If counsel cannot now agree the further discovery to be given, they may request another telephone conference.

Associate Judge Lester

Solicitors:

Wynn Williams, Christchurch

Copy to counsel: J V Ormsby, Barrister, Christchurch

Adderley Head
Copy to counsel: R W Raymond QC, Barrister, Christchurch