H & H Contractors Limited v Leighton Contractors Pty Limited
[2014] NZHC 764
•14 April 2014
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
CIV-2010-404-4637 [2014] NZHC 764
BETWEEN H & H CONTRACTORS LIMITED
Plaintiff
AND
LEIGHTON CONTRACTORS PTY LIMITED and DOWNER EDI WORKS LIMITED (together as an unincorporated joint venture called LEIGHTON WORKS) Defendants
Hearing: 6 March 2014 Appearances:
J A Farmer QC and T C Wu for Plaintiff
S C Price and R W Harris for DefendantJudgment:
14 April 2014
RESERVED JUDGMENT OF ELLIS J
This judgment was delivered by me on14 April 2014 at 12.30 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date:………………………….
Counsel/Solicitors:
J A Farmer QC, Barrister, Auckland
T Wu, Barrister, Auckland
DJG Cox, Rennie Cox, AucklandS C Price, Minter Ellison Rudd Watts, Auckland
R W Harris, Minter Ellison Rudd Watts, Auckland
H & H CONTRACTORS LIMITED v LEIGHTON CONTRACTORS PTY LIMITED [2014] NZHC 764 [14
April 2014]
[1] The plaintiff seeks leave to appeal my decision dated 29 August 2013 in which I upheld an earlier decision of Associate Judge Doogue striking out two of the three causes of action contained in the plaintiff’s statement of claim.1 In my judgment, however, I went further than the learned Associate Judge and also struck out the third, Fair Trading Act 1986 (FTA), cause of action.
[2] The basis upon which the claims were struck out was that they were each precluded by the terms of the contract between the parties, which contained an “exclusion” clause which placed procedural and temporal limits on the parties’ ability to make a claim in relation to disputes arising out of or in connection with the contract.
[3] I do not propose to set out the background to the proceeding or to repeat my earlier analysis in this judgment. It therefore needs to be read in tandem with my earlier decision.
[4] A draft notice of appeal was filed together with the application for leave. It identified many alleged errors of analysis and approach in my judgment. At the hearing of the application before me, however, Mr Farmer QC (who had only recently been instructed) eschewed any reliance on the grounds of appeal foreshadowed in the draft notice. Rather, he sought leave to appeal on the following questions, articulated during the course of the hearing:
Contract
Was the contract terminated by the email of 28 January 2009 or was it not terminated until the letter of 18 August 2009?
Fair Trading Act
Can conduct that is not contemplated or permitted by the contract and that is misleading or deceptive be the subject of a legal claim if the requirement of giving a prescribed notice of the claim within 15 working days has not been observed in a timely way?
If yes, are the general words of clause 45.1(b)(iv) sufficient to exclude a claim under the Fair Trading Act?
1 H & H Contractors Ltd v Leighton Contractors Pty Ltd [2013] NZHC 2225.
[5] As well, a draft amended statement of claim was also put forward by Mr Farmer, who submitted (on the basis of the Supreme Court’s decision in Couch v Attorney-General)2 that leave to appeal should be granted if the claim was capable of amendment in a way that resolved or removed the defects in the earlier version of the claim that led to the striking out. The proposed amendments related principally to the FTA cause of action and it is necessary briefly to explain the differences in the two pleadings.
[6] Associate Judge Doogue summarised the original FTA claim in the following way:3
[80] Essentially what the plaintiff is saying is that it was lulled into a false sense of security about the security it enjoyed in its position as a contracted party to the State Highway 20 Project. Had it known otherwise, it would have promptly issued a prescribed notice of claim when the defendant made its position explicit which it did by sending the email dated 28 January
2009. … There is no doubt that even if the statement of claim is presently
deficient because it fails to set out an explicit statement of the link which the plaintiff will seek to draw between the deceptive conduct and the loss that that could be done in an amended pleading...
[7] The original FTA claim was based solely on a letter dated 8 April 2008 in which Leighton Works (LW) advised H & H Contractors Limited (H & H) that work under the contract would cease during the winter and the services of H & H would not therefore be required during that period. As noted by Judge Doogue, the only damage or loss that was pleaded to flow from this letter was H & H’s failure to recognise that it had a potential claim against LW and the company’s consequent delay in initiating the disputes process under the contract, by issuing a prescribed notice.
[8] In the draft amended claim, two further instances of misleading and deceptive conduct have been added, namely:
(a) the alleged adoption by LW of a “strategy designed to find grounds
for terminating the Works Contract” including the making of
2 Couch v Attorney-General [2008] NZSC 45, [2008] 3 NZLR 725. I do not need to resolve in this judgment whether or not the Supreme Court decision goes quite as far as Mr Farmer suggested.
3 H & H Contractors Ltd v Leighton Contractors Pty Ltd [2012] NZHC 2502 at [80].
allegations of safety and performance breaches by H & H in early
2008; and
(b)the letter dated 28 January 2009 in which LW advised H & H that because of ongoing breaches it was left with no alternative but to engage another contractor.
[9] In addition, the previously pleaded loss has been omitted entirely. Instead, the amended claim alleges that the losses caused by the alleged misleading and deceptive conduct are the same as the losses caused by LW’s alleged breach and repudiation of the works contract. The specific losses pleaded are as follows:
The retentions held by LW in respect of payment claims by H&H to the end of June 2008 in the sum of $102,178.00
The revenue H&H would have received for carrying out work under the Works contract to 18 August 2009 less avoidable costs that had been incurred in doing so which H&H estimates at $2,132,510 and details of which have been previously provide to the first and second defendants; and/or
An account of profits made by LW by engaging other contractors to undertake work within the scope of the Works Contract to 18 August 2009; and
H&H are unable to give further particulars of their losses until discovery has been completed.
[10] In my view the proposed amendments do not assist H & H’s position. They suffer from the same difficulty as did the original FTA pleading; if the former claim was barred by the exclusion clause, so are these claims.
[11] In addition, however, it seems to me that H & H are confusing (alleged) dishonest conduct by LW with a cause of action under the FTA. That is matter to which I shall return later in this judgment.
[12] In short, I consider that the proposed amendments to the statement of claim would make no difference to the outcome of the present application for leave to appeal. It is to that application that I now turn.
Leave to appeal
[13] The cases make it clear that in order to grant leave to the Court it must be satisfied that the proposed appeal:
(a) raises some question of law or fact capable of bona fide and serious argument; and
(b)involves some interest, public or private, of sufficient importance to outweigh the cost and delay of a further appeal.
[14] Other relevant considerations include the desirability of finality of litigation and the overall interests of justice.
[15] I record at the outset that, in my view, it is only the FTA claim that has any hope of giving rise to a question that meets the leave threshold, for the reasons I shall briefly set out.
[16] First, the question formulated by Mr Farmer in relation to the contractual claim is, in my respectful view, a non-starter. The date on which the contract was terminated is merely a red herring and was not the focus of my judgment (although H & H’s submissions in that regard are addressed at [23] – [29] of my decision). It is quite clear that the date of formal termination made no difference to what the “matter in issue” between the parties was (namely LW’s refusal to use H & H’s services) or
to the date upon which H & H could “reasonably have been aware” of that matter.4
As my earlier judgment makes clear, I agreed with Associate Judge Doogue that that date was 28 January 2009. Neither he nor I said that the contract was terminated on that date and nor would it have made a difference had we done so.
[17] By contrast, I am prepared to accept that the fact that Associate Judge
Doogue apparently reached different conclusions on the tenability of the FTA claim suggests, perhaps, that there is a serious argument to be had as to whether or not it is
4 Clause 45.1 of the works Contract stipulated that H & H was unable to make a claim in respect of a matter arising under or in connection with the contract unless “within 15 working days after the first day upon which [H & H] could reasonably have been aware of the matter at issue [H & H] has submitted to LW a prescribed notice.”
excluded by the terms of the contract. I also accept that the wider questions of public policy – namely whether or not it is possible to contract out of the FTA – are of some general or public importance, as well as being of undoubted significance to H & H.
[18] But I have nonetheless formed the view that leave to appeal should not be granted even in relation to the FTA claim (whether as originally pleaded or as in the draft amended form). As I noted in my earlier judgment, clause 45 is not, in my view, an exclusion clause properly so-called and it does not wholly preclude a claim under the FTA. The filing of such a claim may well be a permitted outcome, provided the contractual disputes process is followed first.
[19] In addition, there are the further problems to which I have briefly adverted above. In my view they are fundamental.
[20] I necessarily accept for present purposes that H & H may well have been lulled into a false sense of security by communications it received from LW during
2008. Similarly I am prepared to accept (for present purposes) that LW’s complaints of contractual and safety breaches by H & H were manufactured by LW for its own undisclosed ends.
[21] As regards the first matter, however, it was not H & H’s mistaken sense of security that caused its losses. Those losses were caused not by the alleged deception, but by the reality of the matter, namely that LW did not intend to, and did not in fact, give the company any work. Similarly H & H’s fatal delay in initiating the disputes process (which was the loss originally pleaded) was not the result of LW’s alleged dissembling. It was, rather, the result of a failure to act quickly enough once it recognised that there was a “matter in issue” that triggered the disputes resolution clause.
[22] As regards the second matter, LW’s allegations of breach by H & H can also not found a tenable FTA cause of action, however false and unfair those allegations may have been. The simple point is that while (as is pleaded in the drafted amended claim) LW may have communicated its (assumed to be false) allegations of breach to
H & H, H & H was not misled or deceived by those allegations. Understandably, then, there is also no pleading of reliance on those allegations by H & H and nor could there be, given that H & H vigorously disputes their accuracy. In the absence of such reliance there can, by definition, be no material, detrimental, downstream effect on H & H. Again the problem becomes one of causation. Critical elements of the FTA cause of action are therefore missing; there is no prospect of remedial pleading.
[23] For these reasons I consider that even the amended pleading of the FTA claim does not raise any question of law or fact that is capable of bona fide and serious
argument. I decline to grant H & H leave to appeal accordingly.
Rebecca Ellis J
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