Poike Landfill Limited v Waitakere Organic Centre Limited HC Tau CIV 2007-470-370
[2008] NZHC 2372
•11 June 2008
IN THE HIGH COURT OF NEW ZEALAND TAURANGA REGISTRY
CIV 2007-470-370
BETWEEN POIKE LANDFILL LIMITED Plaintiff
ANDWAITAKERE ORGANIC CENTRE LIMITED FORMERLY KNOWN AS PERRY ENVIRONMENT LIMITED Defendant
Hearing: 5-6 May 2008 (Heard at Rotorua)
Appearances: R Kettelwell for Plaintiff
M Branch and K Bond for Defendant
Judgment: 11 June 2008 at 11:00 a.m.
JUDGMENT OF WOODHOUSE J
This judgment was delivered by me on 11 June 2008 at 11:00 a.m. pursuant to r540(4) of the High Court Rules 1985.
Registrar/Deputy Registrar
……………………………………
Solicitors:
Mr R Kettelwell, Sharp Tudhope, Solicitors, Tauranga
Mr M Branch, Harkness Henry, Solicitors, Hamilton
POIKE LANDFILL LIMITED V WAITAKERE ORGANIC CENTRE LIMITED FORMERLY KNOWN AS PERRY ENVIRONMENT LIMITED HC TAU CIV 2007-470-370 11 June 2008
[1] The plaintiff, (“Poike”), operates a landfill business in Tauranga. The defendant, (“Waitakere”), operates waste management and resource recovery businesses at sites throughout the North Island, including Tauranga.
[2] Between April 2003 and June 2006 Waitakere disposed of construction rubbish at Poike’s landfill. Over this period Waitakere paid on the invoices issued by Poike. Three months after Waitakere stopped using Poike’s landfill, Poike claimed that it had been underpaid. Poike said that this had occurred because information provided by or on behalf of Waitakere to Poike as to the volume of rubbish was inaccurate. This proceeding followed.
The broad issues
[3] The principal matter for determination is the terms of the contract between Poike and Waitakere for rubbish disposal. Poike contended that, when the contract commenced in April 2003, it was agreed that Waitakere would pay $10 per cubic metre of rubbish, with the rate increasing to $11.50 from January 2005. Waitakere contended that, when the contract commenced, it was agreed that Waitakere would pay a flat rate of $180 for each load of rubbish in Waitakere’s standard 32 m³ bin, with that rate increased by agreement in 2005. In December 2005 Waitakere started using a 40 m³ bin, in addition to the 32 m³ bin. Waitakere says a flat rate of $200 was agreed for the larger bin, later increased to $250. Poike claims that $11.50 per cubic metre of rubbish should also have applied, from January 2005, to rubbish transported in the 40 m³ bins.
[4] If Poike’s pricing contention is correct, it will be necessary to decide whether
Waitakere is bound to pay Poike more than it has paid already.
[5] The principal claim is for breach of contract. There is an alternative claim under the Fair Trading Act 1986 that Poike suffered loss because of misleading and deceptive representations made in trade by Waitakere.
Summary of judgment
[6] This case turns on the evidence. There were only two witnesses. The sole director of Poike, Mr Lance Waaka, gave evidence for Poike. For Waitakere there was evidence from Mr Jeffrey McLaughlin, a manager for Waitakere in Tauranga.
[7] In my judgment, Poike has failed to establish on the balance of probabilities that the contractual terms were as it contended. I am also satisfied that the relevant contractual terms were as contended for by Waitakere. In the circumstances of this case, Poike’s failure to establish its claim in contract means that the Fair Trading Act claim also fails.
[8] I will explain my reasons in two parts. The first part records the facts on which there was no material dispute – broadly, the sequence of events. In this narrative I also note material points of difference. These points of difference are considered in the second part.
[9] The second part of the judgment records my findings on the central issue as to contractual terms. My conclusion in favour of Waitakere is based on seven broad considerations:
a) Although the case is framed as a claim for breach of contract, in substantial part it involves allegations of fraudulent misrepresentation. The evidence falls short of the proof required to establish allegations of that nature.
b)Mr Waaka’s evidence was not consistent on the central issue of contractual terms, in some respects was vague, and in other respects did not adequately explain relevant matters..
c) Poike’s contentions changed from the original statement of claim to an amended statement of claim and then again in the evidence presented.
d)The terms contended for by Waitakere are commercially more realistic than those advanced by Poike.
e) Poike, on instructions from Mr Waaka, gave credits to Waitakere for three loads recorded over 18 m³. This is consistent with Waitakere’s case and cannot be reconciled with Poike’s case.
f) Poike’s charges to Waitakere from January 2005 support Waitakere’s case.
g) Mr Waaka must have known the 40 m³ bin was substantially larger than 20 m³, but Poike’s charges were based on 20 m³ loads.
The evidence : facts agreed and relevant areas of dispute
[10] Mr McLaughlin has worked for Waitakere for approximately 19 years. About 15 years ago he became the manager of a landfill in Tauranga operated by Waitakere. At a later date Waitakere was awarded a contract by Tauranga District Council to operate two rubbish transfer stations. Rubbish from these transfer stations was initially transported to a landfill near Hamilton. After the first year Mr McLaughlin, on behalf of Waitakere, investigated cheaper alternatives for the disposal of construction rubbish. Mr McLaughlin then negotiated a contract for Waitakere to dispose of construction rubbish at a landfill owned by Jack Shaw Limited (“Jack Shaw”).
[11] The Jack Shaw gate rate was $11.50 per cubic metre of rubbish, but the agreed rate for Waitakere was $10 per cubic metre of rubbish. Waitakere transported the rubbish in 32 m³ bins, but the total charge for each 32 m³ bin was agreed at $180. Mr McLaughlin’s unchallenged evidence was that this rate with Jack Shaw recognised the fact that the actual volume of rubbish in a bin varied depending on the extent to which it could be or was compacted. A calculation of 18 m³ of rubbish was, in Mr McLaughlin’s words, “a rough assessment of the actual quantity of waste”. At $10 per cubic metre of rubbish, this converted to the charge of $180. The invoices from Jack Shaw recorded each load of rubbish as “18m”.
[12] In about April 2003 Jack Shaw increased the cubic metre rate to $12.50 and the assessment of the volume of rubbish in a 32 m³ bin from 18 m³ to 22 m³; that is to say, an increase for each load from $180 to $275. Mr McLaughlin decided this was too much. He approached Mr Waaka of Poike, a competitor of Jack Shaw.
[13] It is not in dispute that Mr Waaka and Mr McLaughlin met at Poike’s site in
April 2003 and agreed terms. But they do not agree as to what the terms were.
[14] Mr McLaughlin said:
[I] explained to him what had happened with our previous landfill contract and asked him if he would be prepared to accept construction rubbish for
$180 per bin, the rate we had, until then, been getting from Jack Shaw. In the course of our discussions, [I] told Lance that we had had both a price increase and a metre increase.
Mr McLaughlin said that Mr Waaka wanted to see how much rubbish Waitakere was fitting into its 32 m³ bins. A 32 m³ bin, loaded with rubbish, was brought to the site and the contents tipped on the ground. Mr McLaughlin said:
Lance was there with his wife and his son and we emptied it out in front of him so that he could decide whether he was happy with the amount of waste. He took note of the amount of waste actually held by the bin and agreed to do it at a rate of $180 per bin. We haggled for a while over the rate given the size of the bin and Lance said something to the effect of, “oh hey, they’re a bit big, aren’t they?”. Lance would always banter with us saying things like, “oh, you Pakehas, always trying to rip us off”. However at the end of the day we reached agreement at $180 per bin.
This, said Mr McLaughlin, was a charge of $180 per 32 m³ bin, irrespective of the volume of rubbish in the bin. I will refer to a charge fixed in this way as an “agreed volume charge”.
[15] The agreement which Mr McLaughlin says they reached was subject to removing green waste from the rubbish, a requirement that did not apply for disposal at the Jack Shaw landfill. Mr McLaughlin said this added to the cost of $180 per bin, but the total cost remained better than the new charge of $275 at the Jack Shaw landfill.
[16] Mr Waaka did not challenge any of Mr McLaughlin’s evidence as to what Mr McLaughlin said he said to Mr Waaka, or as to what he said as to the terms he was trying to achieve for Waitakere. In respect of Mr McLaughlin’s evidence about the emptying of the rubbish from the bin there was the following evidence in cross- examination:
Let’s just confirm something, do you accept that Mr McLaughlin tipped out a load of rubbish in front of you from one of these bins that he said was 18 metres. Yes or no… yeah are you asking whether he tipped out a bin in front of us.
Yes… yes he probably did.
And when he did this were your wife and son present… no not really. What does not really mean… no.
You are aware aren’t you of that in his evidence… yes. So do you say he is not correct in that recollection… yes.
Why if it was to be priced on the size of the bin would it be necessary for Mr McLaughlin to discuss the load that he had tipped out… I don't know, you’d have to ask him.
[17] Mr Waaka was clear in his evidence that Mr McLaughlin was unsuccessful in his effort to persuade Mr Waaka to accept an agreed volume charge of $180. But Mr Waaka’s evidence as to what was agreed was not so clear. I consider Mr Waaka’s evidence, and its relationship to Poike’s pleadings, in more detail when considering the central issue of contractual terms. It is sufficient to record at this point that the thrust of Mr Waaka’s evidence as to what was agreed with Mr McLaughlin in April
2003 was different from Poike’s amended statement of claim. The amended statement of claim alleged that until January 2005 the rates were $10 “per cubic metre of rubbish deposited” and then $11.50. I will refer to a charge fixed in this way as a “rubbish volume charge”. The thrust of Mr Waaka’s evidence was: Waitakere would pay $10 per cubic metre related to bin size, rather than the actual volume of rubbish deposited; Mr McLaughlin told him, and he accepted, that Waitakere’s bins were 18 m³; the rate was therefore fixed at $180. I will refer to a charge fixed in this way as a “bin volume charge”.
[18] A material part of the contention for Poike was that Mr McLaughlin had deceived Mr Waaka by telling him that bins Mr McLaughlin knew were 32 m³ were
18 m³. The result of the agreement on these terms was, said Mr Waaka, acceptance by Mr McLaughlin of Poike’s gate rate of $10 per cubic metre. This was the rate applying to anyone depositing rubbish, irrespective of the amount of continuing business. This was the rate, said Mr Waaka, recorded on Poike’s sign at the site.
[19] Between April 2003 and December 2004 all deliveries by Waitakere to Poike were made in 32 m³ bins. The construction rubbish was loaded into the bins at two transfer stations operated by Waitakere and transported to Poike’s landfill on trucks operated by trucking firms contracted to Waitakere.
[20] At the landfill a schedule was completed for each load. The driver of the truck bringing each load was required to fill this in. The schedule had seven columns with headings, two of which were “LOAD SIZE: Cubic metres” and “SIGNED BY”. A large number of schedules were filled in in respect of an even larger number of loads delivered by Waitakere between April 2003 and June 2006.
[21] The column of most significance in this case is one headed “LOAD SIZE Cubic metre”. In respect of the loads delivered in Waitakere’s 32 m³ bins, the entry was always “18 m³” or “18” or “18 cum”, apart from two occasions involving different figures, one of which I will discuss later. In terms of Poike’s pleaded case this entry, on every occasion, recorded 14 m³ less than the true volume of rubbish; the true volume being, it was contended, 32 m³, the same as the bin size. In terms of Mr Waaka’s evidence, as noted at [17], there was a misrepresentation of bin size on very occasion.
[22] In November 2004 Poike sent a standard form letter to its customers, including Waitakere, advising that rates were being increased for “rubbish fill” to
$11.50 (plus GST) from 1 January 2005. Mr McLaughlin says that he discussed this with Mr Waaka’s son who advised that this increase would not apply to Waitakere. Mr Waaka says that his son had no authority to make this statement. Whether Mr Waaka’s son had authority to make this statement is not determinative of any central issue. The undisputed evidence is that a rate of $11.50 per cubic metre was never
applied to Waitakere, either by reference to an actual or assumed bin size or by reference to an actual or assumed volume of rubbish in a bin. The rate relating to Waitakere’s 32 m³ bin was increased to $220 for each load. This equates to $12.22 per cubic metre if the load is assessed at 18 m³. Moreover, this rate was applied from April 2005, rather than 1 January 2005 when the general increase to $11.50 per cubic metre was implemented.
[23] Towards the end of December 2004 Waitakere started using 40 m³ bins in addition to the 32 m³ bins. The agreement on charges for these bins needs to be determined. What occurred with charges for the 40 m³ bins is also relevant to determination of the terms of the original contract in April 2003. I consider this evidence in more detail in the next section. It is sufficient to record here that the difference between the parties was, in its nature, similar to the differences relating to the 32 m³ bin. Mr McLaughlin said a charge of $200 was initially agreed for the 40 m³ bins as an agreed volume charge. He said the sum of $200 was agreed on the basis that the volume of rubbish, approximately assessed, was 20 m³ and the rate of
$10 per cubic metre applied when the 40 m³ bins were introduced. The essence of Mr Waaka’s evidence was that he was led to believe that the 40 m³ bins were 20 m³ and that is why $200 was charged; that is to say, as a bin volume charge.
[24] The invoiced charge for the 40 m³ bins was increased to $250 from 1 March
2005. The charge of $250 converts to a rate of $12.50 per cubic metre if the charge applied to rubbish volume or bin size of 20 m³. As with the 32 m³ bin, both the date of the increase and the amount of the increase do not coincide with Poike’s increase of the gate rate from $10 to $11.50 per cubic metre.
[25] In about April 2006 Poike obtained the services of a new accountant or business adviser. In June 2006 Mr Waaka measured two Waitakere bins and calculated that one was 32 m³ and the other 34 m³. Shortly after this he got one of the drivers to dump two Waitakere loads on the ground and measurements were taken. One load on the ground was said to measure 38 m³ and the other load 32.8 m³.
[26] Mr McLaughlin said Mr Waaka contacted him and said that Poike was increasing its rates to $14 per cubic metre and that the rate would be applied to the bin size. Mr McLaughlin indicated that this was unacceptable and the business relationship was terminated. However, it appears that five loads were delivered on 3 and 4 July 2006 which were invoiced at $14 per cubic metre. Those invoices record “quantity” as “32” and “34”. This was presumably based on Mr Waaka’s calculations of bin sizes at 32 m³ and 34 m³. Mr McLaughlin’s evidence was that Waitakere did not use a 34 m³ bin.
[27] In September 2006 Poike, through its solicitors, notified Waitakere of a claimed short payment from April 2003 and demanded payment. Poike issued these proceedings in April 2007.
Terms of contract : analysis
[28] My reasons for my conclusion in favour of Waitakere are set out in this part. This includes further relevant findings of fact. My conclusions are dealt with under sub-headings based on the summary at para [9].
Fraudulent misrepresentation
[29] Poike’s case is framed as one giving rise to an argument as to the terms of the contract, and a contention of breach of those terms by Waitakere. But in substanial part it involves allegations of fraudulent misrepresentation by Mr McLaughlin and by numbers of drivers who filled in Poike’s schedules between April 2003 and June
2006. The first sentence of the written opening submission for Poike was as follows:
This case arises out of the Plaintiff’s belief that the Defendant has breached its contract with the Plaintiff by abusing the honesty system in place at the Plaintiff’s landfill, by under recording the volume of rubbish the Defendant deposited there.
[30] This was reflected in the original statement of claim. It pleaded that the defendant recorded in the schedule that the loads were 18 m³ or 20 m³ when they “were actually 32 or 34 cubic metres”. The amended statement of claim referred to
an obligation on “the depositing party” to record the load size in the schedule “on an honesty basis” and again made allegations of under recording. Further, as already recorded, Mr Waaka said that Mr McLaughlin told him, at different times, that what were in fact 32 m³ and 40 m³ bins were 18 m³ and 20 m³ bins. The nature of these allegations would require persuasive evidence for me to conclude on the balance of probabilities that they are correct. The evidence I heard has not persuaded me to that extent. Moreover, the contentions lack inherent probability.
[31] If Mr Waaka’s evidence was correct, Mr McLaughlin would have set out to deceive Mr Waaka into accepting that a 32 m³ bin being inspected by Mr Waaka was an 18 m³. This would have required Mr McLaughlin to have expected that he would be able to deceive a man involved in the rubbish disposal business as to the bin size. Moreover, Mr McLaughlin would have to have obtained the agreement of the drivers to falsely record in the schedules that 32 m³ bins were 18 m³ bins and that 40 m³ bins were 20 m³ bins. On the evidence I heard I am unable to accept this.
[32] All of the schedules filled in by the drivers over the period from March 2003 to June 2006 were produced in evidence. There are, in round figures, 160 schedules with upwards of 3,000 individual entries for loads recorded as either 18 m³ or 20 m³. Looking at the different signatures or initials for drivers, and again as a rough calculation, probably over 50 different drivers were involved over this period. Whether or not the drivers had been employees of Waitakere, I would have required convincing evidence to find that each of these drivers, on every occasion the driver was involved, had made an entry that the driver must have known was false if it was an entry of bin size. In this case the unlikelihood of false entry by all of these drivers is emphasised by the fact that none of them was an employee of Waitakere.
[33] The alternative basis on which Poike’s claim was put, was that the drivers were required to record the actual volume of rubbish, not the size of the bin. This was the way the claim was put in the amended statement of claim and expressly in submissions by Mr Kettelwell on behalf of Poike. On this basis there is still an allegation of what amounts to false misrepresentation by a large number of drivers. This is because there is clear evidence that the volume of rubbish transported in both the 32 m³ and the 40 m³ bins varied to a reasonable extent. The drivers would have
colluded in an arrangement invariably to record the volume of rubbish in a 32 m³ bin as 18 m³ and the volume in a 40 m³ bin as 20 m³, notwithstanding the reasonable likelihood that they knew at least two things: actual volumes of rubbish varied to a considerable extent, and in many cases the actual volume of rubbish would have been well over 18 m³ or 20 m³. There were, in fact, three occasions when two drivers recorded volumes of 21 m³, 27 m³, and 30 m³. The facts relating that are against Poike. This is dealt with later.
[34] The entries in the schedules recording the load size at 18 m³ and 20 m³ for loads carried in 32 m³ and 40 m³ bins respectively are consistent with Mr McLaughlin’s contention that there were agreed volume charges. The only alternative explanation for these entries is fraudulent misrepresentation which I reject. The innocent explanation for the drivers’ entries supports Waitakere’s case as to the terms of contract.
Mr Waaka’s evidence
[35] Mr Waaka said that Mr McLaughlin told him that the bins were 18 m³ and 20 m³. I am satisfied that Mr Waaka is mistaken in his recollection. This may have arisen from Mr McLaughlin’s statements about average volumes of rubbish being 18 m³ and 20 m³, with the vagaries of memory converting this in Mr Waaka’s mind to a measure of rubbish volumes rather than bin volumes.
[36] My assessment that Mr Waaka is mistaken in his recollection is based on the matters I have just considered. It is further based on my assessment, with due respect to Mr Waaka, that his evidence was vague or confused on some important matters. A significant example of this was in cross-examination on the central question as to the terms of the contract. At para [17] above I have summarised the essence of Mr Waaka’s evidence to the essential effect that the agreement was based on 18 m³ bins at a rate of $10 per cubic metre for the bin – a “ bin volume charge”.
[37] This evidence was given in a concise way in Mr Waaka’s evidence-in-chief, reading from a written brief. Mr Waaka said it was agreed that Waitakere “would deposit rubbish at the standard rate of $10 per cubic metre load”. The word “load”
left some ambiguity as to whether it referred to rubbish volume or bin volume. The ambiguity was removed at the commencement of Mr Waaka’s cross-examination when he made clear that the agreement was that Waitakere would pay $180 for each bin. However, later in cross-examination Mr Waaka was asked about some charges to Waitakere in respect of loads recorded in the schedule as 5 m³ and 1 m³, and invoiced by Poike for those specific rubbish volumes. These were small loads of sawdust. There was then the following exchange:
So if they had only 18 metres in the 32 metre bins do you accept they should have only been charged $180… if they had 18 metres in. If they had 18 metres. He told me they were 18 metres.
On the basis of what you have said do you accept that if the Judge accepted that even though they used 32 metre bins was in all likelihood only 18 metres of waste do you accept they should have only then been charged
$180… if there was only 18 metres of rubbish.
Yes… yeah, if is a big question.
Well, but if the answer to that question is yes, do you accept they should have only been charged $180… if it was 18 metres.
Yes… yes.
This evidence was inconsistent with Mr Waaka’s earlier evidence.
[38] Another area of uncertainty in Mr Waaka’s evidence concerned Poike’s sign at the site giving public notice of its standard charges. Mr Waaka was cross- examined at some length about the sign. A central part of Poike’s pleaded case, in the amended statement of claim, was that Waitakere was bound by the rates recorded on the sign. But Mr Waaka’s evidence about the sign was vague. And documentary evidence produced for Poike (a photograph) was unsatisfactory.
[39] In his evidence-in-chief, Mr Waaka said that the relevant sign was shown in a photograph produced in the agreed bundle of documents. The photograph shows a full sign headed “Waimapu Land Development” and the top only of another sign headed “Poike Landfill Limited”. For Waitakere it was accepted that the site, at an earlier date, had been operated under the name Waimapu Land Development, but Poike Landfill Limited was incorporated in 2002. In spite of the fact that the Poike
Landfill Limited sign was acknowledged by Mr Waaka to be on his site, he was vague as to its content and did not produce a photograph of it.
[40] What was recorded on this sign was a matter of debate. Waitakere said there was a sign which supported its position because it recorded that dumping by companies was to be “by prior arrangement”. This was not shown in any photograph. The point here is not the actual content of the sign, which in the result I consider immaterial, but Mr Waaka’s uncertainty or vagueness on the matter and the absence of an accurate photograph. The unsatisfactory nature of this evidence is given emphasis by the fact that it was Poike, not Waitakere, that first attached significance to the sign in the amended statement of claim. This occurred after Waitakere sought particulars of the original Poike statement of claim. The original statement of claim made no reference to the sign.
[41] Uncertainty was also conveyed by Mr Waaka’s evidence relating to a diary entry he said he made recording a conversation with Mr McLaughlin on 29
September 2006. This was after Poike’s solicitors had issued the letter of demand. The uncertainty in relation to this is whether this is a diary entry made at the time, as Mr Waaka said it was, and whether Mr Waaka’s evidence-in-chief in respect of this entry accurately reflects what was actually said, whenever the entry may have been made.
[42] Mr Waaka said that he had a conversation with Mr McLaughlin on Mr Waaka’s driveway. Mr McLaughlin came to inquire whether Mr Waaka was willing to sell his business. Mr Waaka said that after a while they got to talking about the loads brought by Waitakere to the landfill. Mr Waaka’s evidence-in-chief was as follows. This was read from the written brief, and the italicised portions of direct speech are as recorded in the brief.
I said to Jeff “You said the bins were 20 cubic metres and 18 cubic metres”. He said to me “I never said they were 20 cubic metres and 18 cubic metres bins, why would I say they were 20 cubic metres when I know that they hold
34 cubic metres?” I said to him “This is the first time you have told me that they were 34 cubic metres, if you had of told me that they were 34 cubic
metres at the start I would not have let you pay the 20 cubic metres rate for
34 cubic metres bins.” The difference was too great. Jeff said to me “I can see where you’re coming from” and left it at that. I don’t really understand
why Jeff would tell his drivers to record the bins as 18 and 20 cubic metres
bins if he knew they were 32 and 34 cubic metres, unless he was trying to take advantage of Poike’s honesty basis practice.
[43] It was implicit in the evidence that the quoted sentences came from the diary entry. The hearing in this case commenced on Monday 5 May 2008. On Thursday,
1 May 2008, the plaintiff’s solicitors sent the defendant’s solicitors, for inclusion in the common bundle of documents, a photocopy of pages from Mr Waaka’s diary for
29 and 30 September 2006. The original diary had not earlier been discovered or otherwise produced for inspection. The original diary was produced as an exhibit through cross-examination of Mr Waaka.
[44] Mr McLaughlin did not deny having a conversation with Mr Waaka after the contract ended and which arose from an inquiry on behalf of Waitakere as to whether Poike would sell its landfill. What Mr Waaka said was said about the bins was disputed. And it was submitted for Waitakere in closing that the entry may have been put into the diary at a later date. This proposition was not expressly put to Mr Waaka. Nor was it put to Mr Waaka that Mr McLaughlin had never said to him “I can see where you’re coming from”, although Mr McLaughlin denied making such a statement. Nevertheless, Mr Waaka was challenged on other aspects of the authenticity of the entry and there are unsatisfactory aspects of the evidence relating to it.
[45] The full diary entry is set out below. Capital letters are used, as in the original. The diary entry has over-written words and a substantial interlineation. In the reproduction below the over-written words have a line through them with the new word shown in italics. The substantial interlineation is shown in italics in bold:
JEFF CAME DOWN ASKED ME IF I STILL WANTED TO SELL MY BUSINESS. I TOLD HIM NO. WE GOT AROUND TALKING ABOUT THE LOADS HE WAS BRINGING IN I SAID TO HIM YOU SAID THE BINS WERE 20 METER. HE SAID I NEVER SAID THEY WERE 20
METER BIN I KNOW THEY HOLD
A LOT MOREMORE THAN THAT34 METERS. I SAID THIS IS THE FIRST TIME YOU TOLD ME THEY ARE 34 METERS IF YOU HAD OF SAID THEY WERE 34 METERS AT
THE START I WOULDN’T OF
AGREEDLETTOTHEYOU PAYING
FOR20 METERS FOR 34 METERSTHATS. NO WAY ITS TO BIGGER DIFFERENCE. HE SAID I CAN SEE WHERE YOURE COMING FROM. OKAY I CAN SEE WHERE YOUR COMING FROM.
[46] For the following reasons I am not satisfied that this is an accurate contemporaneous record and I am left in doubt as to the reliability of Mr Waaka’s evidence:
a) In cross-examination of Mr Waaka there was the following:
When did you record that in your diary… that same day when I
went home, the 29th.
29th of September… yes.
There were further questions as to whether he was sure about the date. He said he was sure because the conversation with Mr McLaughlin had been interrupted by the arrival of a truck delivering furniture for Mr Waaka’s niece and he had checked with his niece as to the date on which the furniture was delivered. He did not explain why he needed to check the date with his niece if the entry had been made on that date on the correct page in the diary.
b) The diary entry and Mr Waaka’s evidence cannot both be accurate.
The diary entry refers only to 20 metre bins, but the evidence refers to both sizes in the reported speech.
c) Parts of the entry are more consistent with a retrospective entry rather than a contemporaneous one, such as the phrase “we got around talking about the loads”, and the nature and extent of the amendments.
d)The word “let” was written over the word “agreed”. Mr Waaka was cross-examined on this. The significance of the word “let” compared with “agreed” may not be particularly material. But the word “let” has been carefully and heavily written over the word “agreed”. Just as importantly, Mr Waaka refused to acknowledged that the word “let” had been written over the word “agreed”. It is clear enough that it had been.
e) In the diary, the second to last and last sentences say the same thing – “I can see where youre coming from”. For Poike, this was presented as some form of admission by Mr McLaughlin. Mr McLaughlin denied making the statement, or any statement along those lines. Mr Waaka said that Mr McLaughlin did in fact make this statement twice. Even if he did, it is unusually elaborate record made in a diary of a repetition of a single statement. There is another aspect to this. The first sentence is written in blue, which is the colour used for the preceding sentences. The last sentence, however, is written in black. Mr Waaka was asked if the last sentence had been added at some other time and he replied “No, same day just different pen”. As earlier noted, the diary was not discovered and it was not provided until the trial.
f) The brief of evidence, and in a different way, the diary entry, has Mr McLaughlin saying that he knew the bins held 34 m³. That is implausible. The only source for a measurement of 34 m³ was the measurement of a Waitakere bin by Mr Waaka and a truck driver on
29 June 2006, at the very end of the business relationship. Mr Waaka did not say that he was ever told by Mr McLaughlin that any of the bins were 34 m³. The evidence from Mr Waaka, aside from the diary entry, was that Mr McLaughlin had said that the larger bin was 20 m³ and Mr McLaughlin’s evidence, of course, was that the larger bin was in fact 40 m³.
[47] Mr Waaka did not produce any other diary entry relating to a conversation with Mr McLaughlin on any significant transaction between them between April
2003 and June 2006. And this entry, recorded in the diary for 29 September 2006, was nine days after the first letter of demand from Poike’s solicitors to Waitakere. Mr McLaughlin accepted that there was a conversation at some point about possible sale of the business, but denied making the statement that he knew where Mr Waaka was coming from. I am not finding that Mr Waaka’s evidence that there was a conversation was fabricated. But his evidence as to the relevant content of the conversation, and further evidence seeking to support that with the note in the diary,
leaves me unconvinced as to reliability. Mr Waaka’s evidence in respect of the conversation is unreliable, the diary entry is not reliable as a record, and I am not persuaded that the diary entry is a contemporaneous record.
Poike’s shifting contentions
[48] I have referred to shifting allegations between the original statement of claim and the amended statement of claim, the difference between the amended statement of claim and Mr Waaka’s evidence, and the inconsistency in Mr Waaka’s evidence. This adds doubt as to the reliability of Poike’s contentions as to the terms of contract.
[49] The original statement of claim alleged an oral agreement including the following terms:
b.The rates at the time of entering into the contract were: (i) $180 per 18 cubic metre load;
(ii) $200 per 20 cubic metre load; and
(iii) 32 to 34 cubic metre loads @ $10 per cubic metre. c. The rates were increased as from May 2004 to:
(i) $220 per 18 cubic metre load;
(ii) $250 per 20 cubic metre load; and
(iii) 32 to 34 cubic metre loads @ $11.50 per cubic metre.
[50] The amended statement of claim was filed following the notice for particulars. The contentions were different. It was alleged:
4.At all material times the defendant and/or its subcontractors were on notice of the plaintiff’s terms and conditions and charges in respect of the dumping of rubbish at the landfill. Such notice was provided by means of a sign prominently displayed at the entrance to the landfill. A subsequent increase in charges was notified by way of letter.
5. Particulars of terms:
(a)From April 2003 until December 2004 the charge per cubic metre of rubbish deposited was $10.
(b)From 1 January 2005 until June 2006 the charge per cubic metre was $11.50.
…
[51] Mr Waaka’s evidence-in-chief as to what was agreed in April 2003 was the same as alleged in paragraph b.(i) and (ii) of the original claim. But his evidence as to the means by which the agreement was reached reflected the amended statement of claim – Waitakere was bound by the terms recorded on Poike’s sign. There was some ambiguity in the allegations in the original claim as to whether “load” referred to the cubic measurement of the rubbish or of the bin. The amended claim made clear that the allegation was that the charge related to the cubic measurement of the rubbish. The ambiguity in the original claim remained in Mr Waaka’s evidence-in- chief, but Waitakere was entitled to rely on the amended claim. However, the essence of Mr Waaka’s evidence early in cross-examination was that it was agreed that Waitakere would pay a bin volume charge – $10 per cubic metre applied to the cubic capacity of the bin. The uncertainty from Mr Waaka’s evidence was compounded by the inconsistency, at a later stage of cross-examination, referred to at para [37] above where he said that the agreement was that Waitakere would be charged for each cubic metre of rubbish.
[52] Notwithstanding Mr Waaka’s evidence, Mr Kettelwell for Poike expressly confirmed in his closing submissions that Poike’s case was that Waitakere was to be charged the cubic metre rate applied to the actual volume of rubbish, not the size of the bin.
Commercial reality
[53] Mr McLaughlin said in evidence that he would not have agreed to the various terms contended for in pleadings and in Mr Waaka’s evidence. This is because, in essence, none of the various terms alleged would have been commercially realistic having regard to what was involved and having regard to Waitakere’s options. I accept the evidence for Waitakere.
[54] The main contention as to terms on behalf of Poike would have required Mr McLaughlin to have agreed to pay $320 for each load delivered in a 32 m³ bin. That was $45 (16%) more than the increased price sought by Jack Shaw and which, amongst other things, led Waitakere to look for a cheaper alternative.
[55] The terms alleged by Poike would have made no allowance for the fact that Waitakere, if it agreed terms, would become Poike’s largest customer, as Mr Waaka acknowledged. And the income for Poike was high. By 2006, Poike was being paid approximately $20,000 per month by Waitakere. This was more than the total amount being paid for a landfill at Taupo operated by Mr McLaughlin which took three to four times the amount of rubbish being deposited at Poike’s landfill. It is improbable that Waitakere, as a large commercial operator, would have entered into a contract at these volumes, with a small landfill operator, without securing a reasonable discount against what the general public was required to pay by Poike for small loads.
[56] The Poike argument based on Mr Waaka’s evidence, as opposed to the amended statement of claim, would have required a fixed fee based on bin size irrespective of the actual volume of rubbish. I heard a good deal of evidence as to the extent to which Waitakere may have compacted rubbish in its bins before delivery to Poike. I find that Waitakere would have sought to put as much rubbish as it reasonably could into its bins. But I also find that volumes of rubbish would have varied and to a reasonable extent. This would be so for at least three reasons. One is that the volume of certain types of construction rubbish, such as large concrete blocks, would be less than the volume of other types, such as small pieces of easily breakable construction material. The second reason is that there were weight limits for road transport so that easily compressible but heavy material could only be loaded into a 32 m³ bin up to the point that the weight limit was reached. A third reason is that there were in fact significant weight variations. Print outs of Waitakere’s weight records were put into evidence. These disclosed variations in the weight of loads from between around 2.4 tonnes up to 13.68 tonnes. This indicates reasonably significant variations in rubbish volume.
[57] Bearing in mind the fact that the rubbish was to be compressed into Poike’s landfill, Mr McLaughlin’s evidence that he and Mr Waaka made a rough assessment related to actual compressible rubbish volume is plausible. This is a logical explanation for the demonstration of volume Mr Waaka asked for in April 2003, when a load was dumped on the ground. An alternative explanation for that demonstration would be, from Poike’s point of view, that it was part of Mr McLaughlin’s effort to persuade Mr Waaka, albeit unsuccessfully, to accept Mr McLaughlin’s proposed terms. I consider it more likely that the demonstration in April 2003 was part of the negotiation which led to the terms as alleged by Waitakere. A preference for that explanation is confirmed by the demonstration that occurred with the 40 m³ bin. If Mr Waaka had in April 2003 rejected an agreed volume charge, there was no point in going through the same exercise in December
2004 with the larger bin.
Poike gave credits for charges on load sizes recorded over 18 m³
[58] On 2 and 3 August 2004 there were three entries in Poike’s schedule for Waitakere deliveries recording the load sizes as “21 cum”, “27 cum”, and “30 cum”. The invoice from Poike for the month ended 31 August 2004 recorded a substantial number of loads of 18 m³ charged at $180 and the three loads in the schedule of 21 m³, 27 m³ and 30 m³ charged at $210, $270 and $300. Mr McLaughlin said that he phoned Mr Waaka on receipt of this invoice and said that they had been overcharged for those three bins, because they should have been charged at the agreed figure of
$180. The result was a credit note issued by Poike for the three loads in question, reducing the charge in each case to $180.
[59] There is a fairly compelling inference from the credit note alone that there was an agreed volume charge of $180 for every load. Mr Waaka did not give any evidence-in-chief on the point. His evidence in cross-examination on this included the following, referring to Poike’s schedule for 2 and 3 August 2004:
Just have a look down the load size it says 21 27 and 30 cubic meters… yes. So if every load that was coming in was being represented as being in an 18
cubic meter bin can you explain how they delivered 21, 27 and 30 cubic
meters… probably because new drivers come on and they drove down there and they wrote down those metres.
So what you are suggesting is that must have been a new driver who wasn't aware that they had to write down 18, is that what you are saying… yes. Yes.
A little later in cross-examination, following reference to Poike’s credit note:
So the effect of that credit note is to take those charges back to $180, do you accept that… yes. That’s without looking at those numbers back there.
What Mr McLaughlin says is that when he saw those invoices for 210 270 and $300 they were too high cause he had a bin rate of $180 so he rang you and asked you to put through a credit and that’s what happened... yes yes, okay yeah.
The only other material evidence from Mr Waaka on this was the following:
The person who does my accounts would have probably charged those out at
21 27 30, I’m not sure.
[60] I find as a fact that Mr Waaka expressly agreed to give this credit because he accepted what Mr McLaughlin said: that is, that three loads of rubbish measuring 21 m³, 27 m³, and 30 m³ should not be charged at a rate applied to the cubic measurement of rubbish but at an agreed volume charge of $180. This is further and clear evidence that the terms were as alleged by Waitakere.
[61] What this evidence also indicates is that, at least by August 2004, Mr Waaka knew that the bins used by Waitakere, and which he says he thought were 18 m³, were plainly a lot bigger than that. There was no evidence of any sort that these three loads in August 2004 came in bigger bins.
The charges from January 2005 for the 32 m³ and 40 m³ bins support Poike’s case
[62] Poike’s amended statement of claim alleged that “from 1 January 2005 until June 2006 the charge per cubic metre was $11.50”. The evidence from Mr Waaka was, in effect, that this followed from the general increase for all users as recorded in Poike’s letter of November 2004. More or less coinciding with this was Waitakere’s introduction of the 40 m³ bin in December 2004. What occurred both in relation to
the proposed rate increase to $11.50 and in respect of the 40 m³ bin, supports
Waitakere’s case.
[63] Poike never charged Waitakere at a rate that can be related in any sensible way to $11.50 per cubic metre, whether applied to the cubic measurement of a bin or the cubic measurement of rubbish. Moreover, Poike’s assessment of charges for the
40 m³ bin cannot be construed over the full period of charging as a cubic metre rate fixed in the belief that the bin size was 20 m³. The method of charging was consistent with what Mr McLaughlin said in evidence: that is, an agreed volume charge, followed by agreed increases for both the 18 m³ and 20 m³ bins. This is conveniently set out in a table as follows:
32 m³ bins 40 m³ bins
Poike invoice
Rate per m³ for 18 m³
Poike invoice
Rate per m³ for 20 m³
4/03 to 20/12/04 $180 $10.00 N/A N/A
21/12/04 to 31/12/04 $180 $10.00 $200 $10.00
1/1/05 Poike general rate increase from $10/ m³ to $11.50/ m³
1/1/05 to 28/2/05 $180 $10.00 $200 $10.00 1/3/05 to 31/3/05 $180 $10.00 $250 $12.50 1/4/05 to 30/6/06 $220 $12.22 $250 $12.50
[64] Mr Waaka did not provide any explanation in his evidence to reconcile the actual charges to Waitakere from January 2005 with Poike’s allegations in its statement of claim or with Mr Waaka’s evidence as to what was agreed. All he said in his evidence-in-chief was as follows:
I can’t explain why Perrys [the former name of Waitakere] were invoiced at the higher rates because a consultant prepared Poike’s accounts, but I note that it was still much less than they should have been paying for the 32 and
34 cubic meter bins, which would have been $368 and $391 respectively. So even with the apparent accounting error, Perrys were still been [sic] undercharged due to the false declarations on the schedules.
[65] Mr McLaughlin said, following reference to an initial agreement on $200 for the 40 m³ bins:
However, Lance came back to us shortly after we started using the bigger bins and negotiated a new price for the 40 cubic metre bin of $250. This rate continued from 1 March 2005 to the end of the relationship in June 2006.
[66] Other aspects of Poike’s own records from January 2005 confirm the contractual arrangements as alleged by Waitakere. As recorded in the table, Poike’s charge for the 40 m³ bin was increased to $250 in March 2005. There were five site schedules for March 2005. The original entry in respect of the 40 m³ bin on all of these schedules records “20” under the load size. On three of the five schedules “25” has been written in a different hand beside “20”. The original entry was presumably made by the driver. From the difference in handwriting the only explanation for the new entry of “25” is that it was made by an employee or agent of Poike. The new entry, therefore, is inconsistent with Mr Waaka’s evidence that he understood that the bins were 20 m³. Poike’s own entry in the schedule is consistent with Mr McLaughlin’s evidence about an agreed volume charge. And this, although relating here to the 40 m³ bin, is confirmation of Mr McLaughlin’s evidence about the smaller bin.
Mr Waaka’s knowledge of bin size
[67] For Waitakere it was submitted that it was unlikely that Mr Waaka could have been persuaded that a 32 m³ bin was an 18 m³ bin and that a 40 m³ bin was in fact a 20 m³ bin. Mr Waaka was cross-examined on the proposition that he must have known the difference based on his own experience, including a bin operation. And there was some evidence from Mr McLaughlin seeking to support the proposition.
[68] Mr Waaka’s evidence in cross-examination in respect of the 32 metre bin was that he could not tell whether a bin was 32 m³ or 18 m³ just looking at a bin by itself. From Mr Waaka’s evidence I accept that it is possible that Mr Waaka could not make that assessment simply looking at a bin or that, if he was told that a 32 m³ bin was an 18 m³ bin, he may not have known that that was wrong. But his evidence in respect of the larger bin was different. He said, amongst other things:
When they started bringing the big huge bins in we complained a lot to Jeff when they tipped them off. We said those bins are a lot bigger because of the
quantity that is on the ground. Like other trucks bring in 20 metres and in comparison to that we could definitely see that they were a lot bigger loads and we complained and Jeff would just say oh they are only 20 metre bins and then he would change the subject. So we went onto something else and we complained a lot about the big bins. He was actually bringing in those bins and it wasn't till we really complained in the end that he started to talk to us about bigger bins.
So if you thought the rubbish being dumped was more than 20 cubic meters and as you suggest you were being fobbed off, why didn't you just measure the bin… because it all hinges on honesty basis and when he said they were
18 and 20 metre I believed him and it’s really on honesty and for him to bring in bigger bins and not tell me they were bigger when I actually
measured a big huge bin they actually come to 46 metres. Then I see in his
evidence he’s saying they are 40 metres, so shouldn't he have told me before he actually brought them in.
[69] Mr Waaka’s own evidence, from his own observations (and others in his company – “we complained”). is that they knew the new bins were a lot bigger than the bins he says he thought were 18 m³. That is an assessment that the new bins were a good deal bigger than 20 m³. And he could tell that they were a lot bigger than bins of other customers that he knew were 20 m³ bins. Whether or not Mr McLaughlin expressly told Mr Waaka that the new bins were 40 m³ is beside the point. Mr Waaka knew they were substantially bigger than 20 m³, but he agreed to a charge based on 20 m³. That is the only reasonable explanation I can find for the charges that Poike then made when those charges are related to all the other evidence I have discussed.
Conclusion
[70] For these reasons I am unable to accept that the terms of the contract were as contended for by Poike. I find that the terms were as contended for by Waitakere. The payments made by Waitakere to Poike were in accordance with the terms I find applied to the contract. In consequence there is no issue of quantum to be determined.
[71] It is a necessary consequence of my findings that the claim under the Fair
Trading Act 1986 cannot succeed.
[72] There will be judgment for the defendant.
[73] The defendant is entitled to costs. In the absence of submissions on costs I would award costs on a 2B basis, together with all reasonable disbursements. However, if there is any issue on costs, a memorandum for the defendant should be filed within the next three weeks with a response for the plaintiff within two weeks
after that.
Peter Woodhouse J
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