Murphys Park Development LP v Green City Developments LP
[2022] NZHC 2727
•20 October 2022
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2021-404-002056
[2022] NZHC 2727
BETWEEN MURPHYS PARK DEVELOPMENT LP
Plaintiff
AND
GREEN CITY DEVELOPMENTS LP
Defendant
Hearing: 25 August 2022 Appearances:
S Maloney for Applicant
R Woods and E Gambrill for Respondent
Judgment:
20 October 2022
JUDGMENT OF ASSOCIATE JUDGE GARDINER
This judgment was delivered by me on 20 October 2022 at 3.30 p.m. pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar Date.......................................
Solicitors:
Heritage Law, Auckland Loo & Koo, Auckland
E St John, Auckland
J D McBride, Auckland
MURPHYS PARK DEVELOPMENT LP v GREEN CITY DEVELOPMENTS LP [2022] NZHC 2727
[20 October 2022]
Introduction
[1] Murphys Park Development LP (Murphys Park) applies for an order that Green City Developments Ltd (Green City) respond to its notice requiring further particulars of its statement of defence and counterclaim, or alternatively that Green City file and serve a more explicit statement of defence and counterclaim.
[2] Murphys Park sought and was granted leave to rely on affidavits and pleadings in the related caveat proceeding CIV-2019-404-2694 for the disposal of this application.
Murphys Park initially sought particulars of five matters:1
(a)Particulars supporting the assertion that the plaintiff was required to provide the defendant with “monthly updates” (at paragraph 30(a) of the statement of defence and counterclaim dated 23 December 2021).
(b)Particulars of the plaintiff’s alleged failure to use “all reasonable commercial endeavours” to complete the enabling works by 20 August 2018 (at 30(a)).
(c)Particulars of the alleged “additional consulting fees and legal costs, caused by the delay” (at 31(a)).
(d)Particulars of the alleged “holding costs” (at 31(b)).
(e)Particulars of the alleged “loss of income” (at 31(c)).
[4] In a letter dated 26 January 2022, Green City particularised the first allegation (at (a) above) that Murphys Park failed to provide monthly updates.
[5] Furthermore, at the hearing Green City agreed to provide the particulars sought at (c) – (e) by 31 October 2022. It did so explicitly without accepting Murphys Park’s
1 Notice requiring defendant to give further particulars of statement of defence and counterclaim dated 19 January 2022.
allegation that the arrangement ordered by Associate Judge Bell in the caveat judgment2 imposed an obligation on Green City to quantify its claim to losses caused by the delay as soon as possible to allow any excess money to be released.
[6] Therefore, the sole issue I must determine is whether Green City should be required to provide particulars of its allegation that Murphys Park failed to use “all reasonable commercial endeavours” to complete the enabling works by the anticipated completion date of 20 August 2018.
Facts
[7] Murphys Park and Green City are developers with adjoining properties on Murphys Park Road, Flat Bush, Auckland.
[8] In May 2016, they entered into a boundary adjustment agreement under which Murphys Park transferred 2.5669 hectares of its land to Green City for payment of
$2,316,900 (the Agreement).
[9] As part of the Agreement, Murphys Park agreed to carry out “enabling works” to service Green City’s development, being the construction of roads, water mains, stormwater, sewer, power, gas, telephone lines and internet lines (the Enabling Works). The Agreement included the following clauses:
1.1MPD will use all reasonable commercial endeavours to complete the enabling works to the Property by the anticipated completion date provided for in the schedule marked “Appendix 1” to this agreement. MPD will keep GCD informed on progress by way of monthly updates and will advise GCD of any changes to the anticipated completion date.
…
1.2If MPD is not able to complete the enabling works (other than the sewage works under cl 1.4) by 30 April 2019 or any extended date permitted under the clause (Enabling Works Sunset Date) then GCD is entitled to instruct and engage a third party contractor to complete the enabling works at market competitive prices, at the cost of MPD provided that GCD must act reasonably, in good faith and work collaboratively with MPD before engaging the third party contractor and have regard to the nature and extent of the remaining and
2 Murphys Park Development LP v Green City Developments Ltd [2020] NZHC 813.
complete works, the reasons for the delay, whether or not MPD has the right to terminate its works contract with its contractor and the need to practically transition works between MPD’s contractor and the third party contractor. GCD may pay for such costs on behalf of MPD under this clause and any payments made shall be a debt from MPD to GCD and shall be paid by MPD to GCD within 10 working days of GCD issuing a tax invoice to MPD.
Where there is any delay in completing the enabling works as a result of any force majeure which is beyond the control of MPD … then in that case the Enabling Works Sunset Date will be extended by a reasonable period of time which takes into consideration the cause of the delay.
[10] The Enabling Works were delayed. Murphys Park says that they were delayed due to circumstances beyond its control. Green City says otherwise and claims it has suffered loss due to the delay.
[11] A variation to the Agreement granted Green City the right to lodge a caveat over Murphys Park’s land “to better secure MPD’s obligation to complete the enabling works and to pay any monies owed to GCD”.3 The caveat was required to be withdrawn once the Enabling Works were complete and Green City was repaid.
[12] On 24 May 2019, Green City lodged a caveat against the parent title to Murphys Park’s land. In October 2019 and again in December 2019, Green City consented to the issue of titles for stages 5 and 6 of Murphys Park’s development.
[13] In early December 2019, Murphys Park requested that Green City release the caveat to allow a sale of $7 million to settle in February 2020. Green City refused.
[14] On 6 December 2019, Murphys Park filed an application to remove the caveat. Green City opposed. At a hearing on 25 March 2020, Associate Judge Bell held that Green City had a contractual right to lodge the caveat to secure the obligation to complete the Enabling Works and pay any money owing to Green City.4
[15] However, Associate Judge Bell agreed that the caveat should be removed because Green City was using the caveat to advance its claims against Murphys Park,
3 Variation dated 7 December 2017.
4 Murphys Park Development LP v Green City Developments Ltd [2020] NZHC 813; (2020) 21 NZCPR 104.
which went beyond the purpose of its equitable charge.5 His Honour ordered the removal of the caveat in exchange for Murphys Park paying $1.5 million to a stakeholder as a form of alternative security. Since 29 April 2020, $1.5 million of Murphys Park’s money has been held by Glaister Ennor as independent stakeholder.
[16] The Enabling Works were completed in October 2021. Murphys Park notified Green City that the Enabling Works were complete and asked that Green City release the fund, or the excess of the fund beyond Green City’s claim for damages caused by the delay.
[17] On 27 October 2021, Murphys Park filed a statement of claim seeking a declaration that as it had completed the Enabling Works, Green City must agree to release the funds. Alternatively, it sought a declaration that Murphys Park is entitled to release of such proportion of the fund as the Court deems just, with directions that Green City must bring proceedings for the balance without delay.
[18] On 23 December 2021, Green City filed and served a statement of defence and counterclaim. Green City opposes release of the fund on the grounds that the fund is held as security for loss suffered due to delays in completing the Enabling Works. Green City’s counterclaim is that Murphys Park:
(a)failed to keep it informed of progress with the Enabling Works by way of monthly updates;
(b)failed to use all reasonable commercial endeavours to complete the Enabling Works by the anticipated completion date of 20 August 2018 provided for in the “Outline Master Programme” dated 4 December 2017 at Appendix 1 to the Agreement; and
(c)failed to complete the Enabling Works by the Enabling Works Sunset Date of 30 April 2019.
5 At [53].
[19] Green City claims to have suffered loss, including additional consulting fees and legal costs, holding costs and loss of income. As noted, Murphys Park’s request for particulars of this loss has been resolved by consent with Green City agreeing to provide the particulars.
[20] Murphys Park denies that it breached its contractual obligations and says that “any failure to complete the Enabling Works was due to circumstances outside [its] reasonable control”.
Legal principles
[21] Under r 5.21 of the High Court Rules 2016, a party may request another party to give such further particulars of its pleading that may be necessary “to give fair notice” of its cause of action, grounds of defence, or the particulars required by the rules.
[22] In Price Waterhouse v Fortex Group Ltd, the Court of Appeal said that the purpose of a pleading is to:6
… supply an outline of the case advanced, sufficient to enable a reasonable degree of pre-trial briefing and preparation. Discovery and interrogatories are only an adjunct, not a substitute for pleading[s].
[23] In terms of the importance of particulars, this Court stated in ResMed Ltd v Fisher & Paykel Healthcare Ltd:7
Particulars illuminate a pleading and ensure that the opposite party is fairly informed of the case to be met at trial. In that respect, particulars serve to isolate the issues in dispute, and assist in determining the scope of the evidence required to be called at trial.8
6 Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 19.
7 ResMed Ltd v Fisher & Paykel Healthcare Ltd [2017] NZHC 2954, (2017) 131 IPR 169 at [12]. See also Platt v Porirua City Council [2012] NZHC 2445 at [19].
8 Ayers v LexisNexis NZ Ltd [2012] NZHC 3055, (2012) 21 PRNZ 313 at 49; Platt v Porirua City Council [2012] NZHC 2445 at [19].
[24] Whether a pleading is adequate depends on several factors, including the nature of the case, the scope of the pleadings, the issues in dispute and the stage of the proceeding.9 The ultimate question is: in the circumstances of the claim, is the statement sufficiently detailed to state a clear issue and inform the opposite party of the case to be met?10
[25] In deciding whether to exercise its discretion to require a party to provide further particulars, the Court should keep in mind the objective of the High Court Rules, which is to secure the just, speedy and inexpensive determination of proceedings.11
Allegation that Murphys Park failed to use all reasonable commercial endeavours
[26] Murphys Park says that it is entitled to have Green City specify how it says it failed to use all reasonable commercial endeavours. It says that otherwise, it will be required to prepare evidence, including expert evidence, on all the steps it took to complete the work. It submits that this could result in significant wasted time and cost if Green City accepts that there were certain issues or events that were outside Murphys Park’s control.
[27] Murphys Park says that Green City has the information it needs to particularise its allegation through the meetings between experts that took place during the works and the discovery given by Murphys Park in the substantive proceeding, completed over three months ago. For example, in an affidavit filed by Green City for the caveat hearing, Green City’s expert engineer makes two criticisms of Murphys Park; namely that it could have been progressing stage 5 works at the same time as the contamination remediation earthworks, and that it should have ensured that the resource consents it sought covered the required Enabling Works.
9 Body Corporate 355492 v Queenstown Lakes District Council [2020] NZHC 2590 at [29].
10 Price Waterhouse v Fortex Group Ltd CA179/98, 30 November 1998 at 19.
11 Dewaki v Kato [2021] NZHC 1869 at [21]; High Court Rules 2016, r 1.2.
[28] Murphys Park argues that it is unclear whether Green City relies on these criticisms in terms of its allegation that Murphys Park failed to use reasonable commercial endeavours, or if it has different allegations to make. Essentially, Murphys Park claims that it should not find out just prior to trial what exactly Green City says it should have done.
[29] Green City submits that it is not required to provide particulars of a negative allegation, namely its assertion of a failure on Murphys Park’s part. Green City refers to the decision of Associate Judge Bell in Ash v Singh, in which his Honour said that “if someone denies an allegation that something did not happen, it means that it did occur and accordingly they must state what it was and give details of it”.12
[30] Green City says that without particulars from Murphys Park explaining what it did to try to meet the completion date, it cannot specify why Murphys Park was late completing the Enabling Works in breach of the Agreement. Furthermore, it would be unreasonably burdensome for Green City to specify all the potential reasonable commercial endeavours Murphys Park failed to make over a period of over three years.
[31] Green City submits that the burden of proof is a matter of evidence, not pleadings. Even if Green City bears the burden of proving a negative allegation (which it does not accept), this does not translate to a requirement to particularise a negative allegation. It refers to the decision ResMed Ltd v Fisher & Paykel Healthcare Ltd,13 where Edwards J rejected a request for particulars of a negative allegation.
[32] In my view, the allegation that Murphys Park failed to use reasonable commercial endeavours is analogous to a negligence claim where a plaintiff alleges that the defendant has failed to exercise the required standard of care. In that case, a plaintiff is required to plead particular aspects of the defendant’s conduct that it says fell below the standard, even though the conduct is, naturally, a matter of the plaintiff’s knowledge. The defendant is not required to set out all its conduct which it says complied with the standard of care so the plaintiff may then identify aspects of that conduct which it says fell below it.
12 Ash v Singh [2019] NZHC 2790 at [20].
13 ResMed Ltd v Fisher & Paykel Healthcare Ltd [2017] NZHC 2954, (2017) 131 IPR 169.
[33] It is Green City’s case that Murphys Park did not exercise reasonable commercial endeavours, in breach of the Agreement. Green City is required to give Murphys Park fair notice of the ways in which it says Murphys Park failed to meet that standard. I do not see the fact that the allegation is a negative allegation, namely an allegation of a failure to do something, as changing that fundamental position.
[34] The conclusion of Edwards J in ResMed Ltd v Fisher & Paykel was specific to the negative allegation in that case, which was “the absence of feature” rather than a failure to meet a standard required. The passages relied on in Ash v Singh are more relevant to Murphys Park’s blank denial of Green City’s counterclaim that it breached the Agreement by failing to complete the Enabling Works by the Enabling Works Sunset Date, rather than Murphys Park’s request for particulars from Green City. Green City’s request for particulars from Murphys Park is not before me today. In any case, during the hearing counsel for Murphys Park agreed to amend its defence to the counterclaim to particularise all the reasons for the delay.
[35] I am not satisfied that it will be unduly burdensome on Green City to plead particulars of the ways in which it says Murphys Park failed to carry out its contractual obligation. It will not be required to hypothesise on every potential endeavour that could have been taken at various points within the course of the works as Ms Woods submits. Rather, it must plead the positive ways in which it says Murphys Park failed to use reasonable commercial endeavours. I am satisfied it should be able to do that based on its knowledge of the works, the discovery provided from Murphys Park, and the further particularisation of the causes of the delay which Murphys Park has agreed to provide.
Result
[36] By consent, I order Green City to provide the particulars sought at paragraph 2(c) – (e) of the notice requiring further particulars by 31 October 2022.
[37] I record Murphy Park’s agreement to particularise the causes of the delay in its statement of defence to the counterclaim by 31 October 2022.
[38] Further, I order Green City to provide the particulars sought at paragraph 2(b) by 21 November 2022.
[39] I invite the parties to agree a position on costs reflecting the concessions made before and during the hearing. Failing agreement, Murphys Park may file a memorandum of not more than three pages within 20 working days and Green City may file a response of not more than three pages within a further 10 working days.
Associate Judge Gardiner
6
0