Eltek Australia Pty Ltd v Firth - [2017] NZHC 480

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

CIV-2017-404-000241 [2017] NZHC 480

UNDER
The Judicature Amendment Act 1972 and

Part 30 of the High Court Rules 2009

IN THE MATTER OF

A decision made under the Construction
Contracts Act 2002

BETWEEN

ELTEK AUSTRALIA PTY LTD Applicant

AND

DEREK FIRTH First Respondent

HAWKINS CONSTRUCTION NI LIMITED

Second Respondent

Hearing: 15 March 2017

Appearances:

B D Gray QC and K Harkess for Applicant
First Respondent abiding the decision of the Court
G J Christie and D A Rowe for Second Respondent

Judgment:

16 March 2017

RESERVED JUDGMENT OF WYLIE J

This judgment was delivered by Justice Wylie
On 16 March 2017 at 4.30pm Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

Solicitors/counsel:
B Gray QC/McElroys, Auckland
Simpson Grierson, Auckland

ELTEK AUSTRALIA PTY LTD v FIRTH [2017] NZHC 480 [16 March 2017]

Introduction

[1] The applicant, Eltek Australia Pty Ltd (“Eltek”), seeks judicial review of a decision made by the first respondent, Mr Derek Firth, on 14 February 2017. Mr Firth gave his decision as an adjudicator pursuant to the Construction Contracts Act
2002 (“the Act”). He is abiding the decision of the Court.

[2] Eltek is an Australian company. In September 2013, it entered into a subcontract with the second respondent – Hawkins Construction NI Limited (“Hawkins”). There is a dispute between the parties arising out of the subcontract. It contained an arbitration clause and it is common ground that any arbitration between the parties would be an international arbitration as defined in art 1(3) of the First Schedule to the Arbitration Act 1996. Accordingly, the dispute between the parties could only be referred to adjudication under the Act if both parties
consented.1 Clause 13.2.1 of the subcontract between the parties provided as

follows:

Disputes may be dealt with by adjudication as provided for in the
Constructions Contract Act 2002.

Mr Firth held that this clause permitted either Eltek or Hawkins to invoke the adjudication procedure set out in the Act, and that both parties had consented to adjudication when they entered into the subcontract.

Background

[3] Eltek manufactures and supplies an electrical system known as the Eltek Power Train. The Eltek Power Train provides emergency power when normal input power sources fail. It is typically used to protect hardware such as computers, data centre equipment, telecommunications equipment and other electrical components from unexpected power disruption.

[4] In 2013, Hawkins and its electrical engineers approached Eltek. They enquired about using the Eltek Power Train in a proposed data centre in Takanini that
Hawkins had contracted to deliver to a third party under a design and build contract.

1 Construction Contracts Act 2002, s 25(3).

[5] Following a tender process, on 6 September 2013, Eltek entered into the subcontract with Hawkins. Eltek agreed to design, manufacture, factory test, supply and install the Eltek Power Train system into the data centre.

[6] The data centre was completed and the Eltek Power Train system was installed. However, in late 2014,…

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: [2017] NZHC 480
Decision Date: 16 March 2017

CaseChat Overview and Summary

Eltek Australia Pty Ltd is an Australian company, and Hawkins Construction NI Limited is a New Zealand company. The two companies entered into a subcontract in September 2013, and there is a dispute between them. Eltek has sought judicial review of a decision made by Derek Firth, who was acting as an adjudicator under the Construction Contracts Act 2002. Firth decided that the subcontract permitted either Eltek or Hawkins to invoke the adjudication procedure set out in the Act, and that both parties had consented to adjudication when they entered into the subcontract. Eltek disputes Firth’s jurisdiction to determine the dispute between the parties. It has brought an application for judicial review, seeking a declaration that Firth does not have jurisdiction under the Act, and an order quashing or setting aside Firth’s decision. Hawkins denies that there was any error by Firth, and says that he exercised his powers in accordance with the relevant provisions in the Act. The court held that Firth did not err in his decision. Firth had set out the relevant contractual and statutory provisions, and had considered the submissions of both parties. The plain and ordinary meaning of the language used in clause 13, and in particular in clause 13.2.1, and the commercial and statutory context, led to the conclusion that the word “may” in clause 13.2 is both permissive, in the sense of allowing either party to invoke the adjudication process provided for by the Act, and consensual, in that it records in advance the parties consent to the use of that process, as required by s 25(3) of the Act. The application for review was declined.

Orders