Eco Maintenance Ltd v Leighton Contractors Pty Ltd - [2014] NZHC 2340

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2014-404-001273 [2014] NZHC 2340

BETWEEN
ECO MAINTENANCE LIMITED

Plaintiff

AND

LEIGHTON CONTRACTORS PTY LIMITED

Defendant

Hearing: 15 September 2014

Counsel:

A R Baker and A Steel for Plaintiff
A M Callinan and G K Holm-Hansen for Defendant

Judgment:

25 September 2014

JUDGMENT OF KATZ J

This judgment was delivered by me on 25 September 2014 at 11:00 am
Pursuant to Rule 11.5 High Court Rules
Registrar/Deputy Registrar

Solicitors: Wackrow Williams & Davies, Auckland
Simpson Grierson, Auckland

Counsel: A R Baker, Shortland Chambers, Auckland

ECO MAINTENANCE LIMITED v LEIGHTON CONTRACTORS PTY LIMITED [2014] NZHC 2340 [25 September 2014]

Introduction

[1] Leighton Contractors Pty Limited (“Leighton”) has a contract to provide road maintenance services to the Wellington City Council (“Council”). The term of the contract (“Council Contract”) is three years, from 1 July 2013 to 1 July 2016, with rights of renewal.

[2] ECO Maintenance Limited (“Eco Maintenance”) provides services to Leighton as a sub-contractor. It carries out part of the road maintenance services that Leighton is contracted to provide to Council. Eco Maintenance has been providing these services to Leighton since the Council Contract commenced on 1 July 2013. On 20 May 2014 Leighton advised Eco Maintenance that it was terminating its services with effect from 31 May 2014. The termination appears to have been price driven. Leighton had obtained a quote from an alternative contractor for provision of the same services. Based on that quote, Leighton believed that it would make significant savings if it switched sub-contractors.

[3] Eco Maintenance says that Leighton was not entitled to unilaterally terminate its services. It says that it has a sub-contract with Leighton that runs for the same term as the Council Contract, namely three years. Leighton, on the other hand, says that its sub-contract with Eco Maintenance was on a month to month basis. It was therefore entitled to terminate Eco Maintenance’s services as at the end of the month in which notice was given.

[4] Eco Maintenance applied for interim orders, initially on a “without notice” basis, to prevent Leighton from taking any further steps to terminate its sub-contract, pending the trial of these proceedings. A without notice injunction was granted in late May, in order to protect the status quo until the full hearing of the injunction application could take place. I must now decide whether the existing interim orders continue until trial, or whether Eco Maintenance’s “on notice” injunction application should be dismissed and the current interim orders lifted.

[5] In order to determine this issue I must consider:1

(a) whether Eco Maintenance can show there is a serious question to be tried;

(b) where the balance of convenience between the parties lies; and

(c) whether the overall justice of the case favours the granting of an interim injunction or not.

[6] I will consider each issue in turn.

Is there a serious question to be tried?

Relevant legal principles

[7] The first question I must determine is whether Eco…

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.

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Details

Case: [2014] NZHC 2340
Decision Date: 25 September 2014

CaseChat Overview and Summary

The High Court of New Zealand was asked to decide whether Eco Maintenance Ltd could prevent Leighton Contractors Pty Ltd from terminating their sub-contract relationship. Eco Maintenance argued that the sub-contract was for a fixed term of three years and that Leighton could not terminate it before the term expired. Leighton, on the other hand, claimed that the sub-contract was terminable on a month-to-month basis and that it was within its rights to terminate the agreement. The court had to decide if Eco Maintenance had established a serious question to be tried and where the balance of convenience lay between the parties. The court found that there was a serious question to be tried on both causes of action, but damages would be an adequate remedy for Eco Maintenance if it were to succeed at trial. The court also found that damages would be an adequate remedy for Leighton if it were to succeed at trial. The overall justice of the case did not favour the continuation of the existing interim injunction. The court dismissed Eco Maintenance's application for an interim injunction, and the existing interim injunction made on a without notice basis on 28 May 2014 expired with immediate effect.

The court ordered that costs be reserved to be determined following the substantive determination of the proceedings.

Orders