R Kumar Holdings Limited v TDL Group Limited
[2025] NZHC 976
•29 April 2025
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CIV-2024-404-002647
[2025] NZHC 976
BETWEEN R KUMAR HOLDINGS LIMITED
Appellant
AND
TDL GROUP LIMITED
Respondent
Hearing: 1 April 2025 Appearances:
M Orange for Appellant
P Hall and A Christie for Respondent
Judgment:
29 April 2025
JUDGMENT OF VENNING J
This judgment was delivered by me on 29 April 2025 at 11.30 am, pursuant to Rule 11.5 of the High Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: Fortune Manning Lawyers, Auckland
Simpson Western, Auckland
R KUMAR HOLDINGS LTD v TDL GROUP LTD [2025] NZHC 976 [29 April 2025]
[1] R Kumar Holdings Limited (Kumar) sues TDL Group Limited (TDL) in the District Court at North Shore. In a reserved judgment delivered on 26 September 2024, Judge K G Davenport KC struck out the first and third causes of action in Kumar’s amended statement of claim dated 13 December 2023 on the basis they were barred by the Limitation Act 2010.1 Kumar appeals.
General background
[2] On or about 1 January 2011, Kumar and TDL entered a Contractor’s Licence Agreement pursuant to which TDL granted Kumar a licence to the plaintiff to operate and carry on freight cartage services contracted to TDL. Under the Agreement TDL was entitled to deduct from each monthly payment 25 per cent of the revenue by way of commission prior to paying the net amount to Kumar after further deductions for expenses and commission.
[3] Kumar carried out freight cartage services under the Agreement from 1 January 2011 up to and including February 2013 when it terminated the Agreement.
Procedural background
[4] Over four years later, on 13 July 2017, Kumar issued proceedings against TDL alleging that TDL had failed to pay the February 2013 payment when it fell due and generally, that in breach of the Agreement: “[TDL] failed to provide correct payment to [Kumar] for all other months”. Kumar alleged that TDL had failed to provide comprehensive earnings summaries, including the rates at which TDL invoiced their customers each month. Kumar alleged that as TDL had refused to disclose the rates at which it charged its customers, although it had provided an earnings summary for February 2023, Kumar was unable to determine what payment it was entitled to. Kumar sought judgment for $80,000 and exemplary damages of $30,000 or such sum as the Court thought fit.2
1 R Kumar Holdings Ltd v TDL Group Ltd [2024] NZDC 23357.
2 Mr Orange accepted the $80,000 was arbitrary. The District Court Registry would not accept the claim without a dollar amount.
[5] TDL filed a statement of defence and counterclaim in November 2017 alleging that in breach of the Agreement Kumar negotiated directly with a client, Halls Intermodal Limited and that in further breach of the Agreement Kumar continued to use the defendant’s identifying marks on its vehicles after terminating the Agreement. Kumar filed a reply in December 2017.
[6] As Judge Davenport described it, the proceedings then “limped along”. There were issues in relation to discovery.
[7] Ultimately, Kumar filed an amended statement of claim on 13 December 2023. That led to an amended defence and counterclaim. TDL raised the issue of limitation. Kumar filed a reply. In the amended claim Kumar had pleaded three causes of action. First it pleaded that TDL was obligated to use its best endeavours to provide the plaintiff with cartage work at fair market rates and, in breach of that obligation, TDL had provided the plaintiff with cartage work for which it had charged rates that were below market rate resulting in a generated revenue of only approximately $31,000 per month as opposed to the $42,000 per month.
[8] In the second cause of action, Kumar sought payment for the payment due to it for the month of February. TDL did not seek to strike that out. It accepts Kumar sought payment for the February period in the original claim.
[9] In the third and alternative cause of action, Kumar alleged that a revenue summary provided to Kumar in October 2010 by Mr Herrick, a director of TDL, induced Kumar to enter the Agreement and that it was false in that it did not accurately reflect the revenue Kumar could earn. The revenue summary provided to Kumar disclosed a tractor trailer unit generating an average of $42,000 per month.
[10] On both the first and third causes of action Kumar claims the difference between the average monthly revenue of $42,000 it says it ought to have generated less the 25 per cent commission and expenses which it calculates to amount to a total of $211,350 over the period the Agreement operated.
[11]On 16 May 2024, TDL applied to strike out the first and third causes of action.
District Court judgment
[12] The Judge noted that, given the contract was entered into in 2011 and the information said to be a misrepresentation was provided in [October] 2010, it was apparent that if the first and third causes of action were new causes of action then they were prima facie out of time.
[13] In support of the opposition to the strike out Mr Kumar had filed an affidavit in which he detailed the difficulty the plaintiff had in obtaining discovery. He said Kumar could not obtain discovery as to how he was shortchanged and precisely “what my loss is. All I knew is I wasn’t paid very much”. The Judge noted the difficulties in relation to discovery but concluded that she did not need to consider the issue. She focused on whether the two causes of action were new and out of time.
[14] After noting the amended claims in the first and third causes of action were prima facie out of time, the Judge then considered the late knowledge provision in s 14 of the Limitation Act. She referred to and considered the Court of Appeal authority in Rea v Auckland City Council on that issue.3
[15] Judge Davenport noted that Kumar submitted it could not reasonably have known it was not paid correctly because it did not have sufficient records of the payments or invoices charged to the third parties and it only had a suspicion it was underpaid.
However, she concluded:4
[34] From the facts it is apparent that as at the date of the termination of the contract (28 February 2013) the plaintiff was aware that he had not got the monies he believed he/it bargained for under the contract (s 14(1)(a) and that the claim involved the defendant -(s 14(1)(b)). Finally, when was the plaintiff aware that it/he had suffered loss or damage? (s.14(1)(c))– I find that this was also the date of termination of the contract – Thus all the factors which would constitute a later knowledge date under s 14 were in fact all satisfied by 28 February 2013.
[16] Next, after referring to Ophthalmological Society of New Zealand Inc v Commerce Commission,5 the Judge concluded that the first cause of action was a new
3 Rea v Auckland City Council [2024] NZCA 313.
4 (Footnote omitted).
5 Ophthalmological Society of New Zealand Inc v Commerce Commission CA168/01, 26 September 2001.
claim. It was substantially different from the 2017 claim because it changed the nature of what had been claimed by the plaintiff both factually and, potentially, legally. The first claim had simply sought an accounting whereas the first cause of action in the amended claim asserted that TDL had breached the contract by entering contractual arrangements with third party contractors other than at fair market rates.
[17] The Judge also considered that the allegation of misrepresentation was raised for the first time in the amended claim.
[18] For those reasons she struck out the first and third causes of action in the amended claim.
Approach to the appeal
[19] The principles applicable to a general appeal were settled by the Supreme Court in Austin, Nichols & Co Inc v Stichting Lodestar.6 However TDL submits that a decision to strike out involves the exercise of a discretion, relying on the case of Haden v Wells.7 While I accept that a decision to make a strike out order as opposed to a stay might involve the exercise of a discretion, the decision to strike out a proceeding because it is time barred is, in my judgment, quintessentially an evaluative decision. As such I consider the principles established by Austin, Nichols & Co Inc v Stichting Lodestar apply to this appeal. In considering whether the District Court Judge was wrong this Court must exercise the general power of appeal and must arrive at its own assessment of the merits of the case. However, Kumar bears the onus of satisfying this Court it should differ from the decision under appeal. This Court will only interfere with the District Court judgment if it considers the decision is wrong.
Appellant’s arguments
[20] Mr Orange submitted the leading authority for the approach to striking out a cause of action on the basis of a time bar is Trustees Executors Ltd v Murray.8 He
6 Austin, Nichols & Co Inc v Stichting Lodestar [2007] NZSC 103, [2008] 2 NZLR 141.
7 Haden v Wells [2013] NZHC 2753.
8 Trustees Executors Ltd v Murray [2007] 3 NZLR 721 (SC).
noted that the District Court Judge had not referred either to that case or to Commerce Commission v Carter Holt Harvey Ltd.9
[21] In the Trustees Executors Ltd v Murray case the Supreme Court confirmed that to succeed with a strike out based on limitation a defendant must satisfy the Court that the plaintiff’s cause of action is so clearly statute barred the claim can properly be regarded as frivolous, vexatious or an abuse of process.10
[22] Mr Orange submitted there was a difference between the Court concluding that Kumar’s claims would likely fail at trial and finding the claims to be frivolous, vexatious or an abuse of process such that they should not proceed to trial at all. He argued that the Judge erred by conflating the two standards.
[23] In addition to the decision of Trustees Executors Ltd v Murray Mr Orange also referred to the comments of the former Chief Justice in Commerce Commission v Carter Holt Harvey Ltd:11
[39] The foregoing discussion means that CHH must show that the Commission knew or ought reasonably to have known, on or before 26 October 2003, that some person or persons were likely to have suffered loss or damage as a result of a probable contravention by CHH. As this is a strike- out application CHH must demonstrate that the Commission's application is so clearly statute barred that it can properly be regarded as frivolous, vexatious or an abuse of process. There must be no reasonable possibility that the Commission's application was brought within time. If there is, the matter must go to trial, with the limitation point being a defence to be assessed on the basis of all the evidence led at trial.
[24] Mr Orange submitted TDL could not satisfy the Court there was no reasonable possibility the claims were brought within time. Kumar’s arguments that the first and third causes of action were not statute barred ought to be left to the trial Judge to determine.
[25] Mr Orange submitted that Judge Davenport also erred in her reliance on Rea v Auckland Council and by failing to distinguish it from Kumar’s dispute with TDL.12
9 Commerce Commission v Carter Holt Harvey Ltd [2009] NZSC 120
10 Trustees Executors Ltd v Murray, above n 8.
11 Commerce Commission v Carter Holt Harvey Ltd, above n 9, (footnote omitted).
12 Rea v Auckland City Council, above n 3.
In Rea v Auckland Council, the building defects and their connection to the Code Compliance Certificate (CCC) were clear, however, TDL had left Kumar with only a suspicion it had not been paid in accordance with the contract. The nuances present in Kumar’s case were not present in the Rea case. That was not considered by the Judge.
[26] Mr Orange argued that Kumar had not closed its eyes to the obvious, nor postponed taking action. Kumar had sought records from TDL as soon as the contract was terminated and had continued with informal requests until it had issued proceedings in 2017, primarily to seek discovery. Kumar needed the records from TDL to ascertain whether it had been paid correctly. Mr Orange argued that TDL effectively thwarted its efforts to obtain that information. It only became aware in 2021 that the records had not been retained and it was only at that point that it could reasonably have known it would need to use the revenue summary as an analogy for its claims.
[27] Mr Orange also relied on the case of Baxter v Building Inspection Company Ltd,13 and submitted that the reasoning in that case applied to Kumar’s claim. Like the Baxters, Kumar was relying on incomplete information to determine whether it had been paid correctly. Kumar did not have actual constructive knowledge of the breach, i.e. the incorrect payments, until 2023, when it was able to review all the records that were available and conclude that correct payment had not been made to it. Mr Orange submitted that TDL had a duty under the contract to properly disclose information relating to how its payments were made but had breached that obligation. For those reasons, Mr Orange submitted TDL’s claims could not be described as frivolous, vexatious or an abuse of process. They should be ventilated before a trial judge.
Preliminary issue
[28] In written submissions for Kumar, Mr Orange also sought to rely on a fresh ground, and referred to s 48 of the Limitation Act. He also referred to the case of
13 Baxter v Building Inspection Company Ltd [2024] NZHC 2652.
Whangarei District Council v Daisley.14 However, during oral submission, Mr Orange accepted that s 48 did not apply and confirmed Kumar did not seek to rely on it. Instead, Kumar relies on s 14(3) of the Limitation Act and intends to argue that TDL resisted providing the information necessary for Kumar to ascertain whether TDL had paid it correctly in circumstances that are unconscionable. He argued that TDL breached its obligation to retain relevant records once litigation was anticipated. Its actions amounted to fraud as defined in s 2 of the Limitation Act, namely dishonest or fraudulent concealment.
[29] TDL says this Court should not hear argument on this new point which relies on s 14(3) of the Limitation Act. The allegation of fraudulent concealment which Kumar seeks to raise for the first time on this appeal had not been raised before, despite Kumar, on its own account, having been aware of the conduct it now relies on as amounting to fraudulent concealment since 2021. It was not raised before the District Court. Nor was it raised in the notice of appeal. The suggestion of fraud was only raised for the first time in written submissions (and then by reference to s 48 which is no longer pursued).
[30] TDL submits that this Court would be ill equipped to decide the point given the absence of pleadings and factual findings and it would be procedurally unfair to raise a point that Kumar has known about for four years but failed to raise before.
[31] Alternatively, even if the Court were to accept it, TDL submitted that it was nothing more than a general allegation without foundation. Further, the absence of documents had apparently been immaterial to Kumar. Kumar had been prepared to go to trial in the absence of the documents it now says were concealed or withheld from it.
[32] Finally, the case of Whangarei District Council v Daisley,15 does not assist as it involves the interpretation of the Limitation Act 1950, not the provisions of the Limitation Act 2010.
14 Whangarei District Council v Daisley [2024] NZSC 123.
15 Whangarei District Council v Daisley, above n 14.
[33] In McCollum v Thompson the Court of Appeal considered the issue of when a fresh point could be introduced on appeal.16 The Court referred to Savill v Chase Holdings (Wellington) Ltd where the appellant had sought to raise an argument on appeal different to the position taken in the High Court.17 In that case, McMullin J stated:18
The fact that the point was not raised is not fatal to it being taken on appeal if the pleadings and the evidence leave it open to be taken. Mr Camp, whose client Chase Holdings was directly affected by the argument, contended that further evidence would have been called and different questions asked of existing witnesses had the point been raised in the High Court. And, he said, issues of estoppels and rectification would also have been raised.
… It is difficult to see how Chase Corporation would have dealt with the point now raised by Mr Young had it been pleaded or otherwise signalled as an issue at the trial. But the real possibility that the Chase Group would have shaped its case to deal with the specific point cannot be ignored. For that reason it would be wrong to allow the appellants to introduce it into the case at this stage.
[34] On a different point, but in the context of considering the principle of finality in litigation with reference to allegations of fraud the Supreme Court confirmed in Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd that claims based on suspicion are not allowed and that the fraud alleged must go to the heart of the judgment.19 The Court went on to note that pre-trial scrutiny of such claims was required to protect against abuse of process.
[35] I propose to approach this point on the basis that the issue is whether the pleadings and evidence have left it open for Kumar to rely on s 14(3) on this appeal. I deal with the issue in more detail in the discussion that follows.
Discussion – fresh or new cause of action
[36] I consider the first issue to determine is whether it is arguable that the first cause of action in the amended claim is simply an amendment of the original claim, which was within time, as opposed to being ‘fresh’ or new .20 If the first cause of
16 McCollum v Thompson [2017] NZCA 269.
17 Savill v Chase Holdings (Wellington) Ltd [1989] 1 NZLR 257 (PC)
18 McCollum v Thompson, above n 16 , at [52].
19 Commissioner of Inland Revenue v Redcliffe Forestry Venture Ltd [2012] NZSC 94.
20 Kumar concedes the third cause of action alleging misrepresentation is a new cause of action.
action is arguably an amendment, then the issue of limitation does not arise. District Court Rule 7.69(2) confirms that an amended pleading may introduce as an alternative, or otherwise, relief in respect of a fresh cause of action that is not statute barred.
[37] The leading authority for when a cause of action is fresh is Ophthalmological Society of New Zealand Inc v Commerce Commission, in which case the Court said:21
[22] The Court cannot grant leave under r187(3) if to do so would allow the pleading of a new cause of action which is statute barred. A cause of action is a factual situation the existence of which entitles one person to obtain from the court a remedy against another person (Letang v Cooper [1965] 1 QB 232, 242-3 per Diplock LJ). Only those facts which are material to be proved are taken into account and the selection of those material facts is made at the highest level of abstraction (Paragon Finance plc v DB Thakerar & Co (a firm) [1999] 1 All ER 400, 405 per Millett LJ).
[23] In Chilcott v Goss [1995] 1 NZLR 263, 273, this Court said that the test of whether an amended pleading raises a “fresh” cause of action for the purposes of the rules relating to amendment is well settled. It approved the test applied by McCarthy J in Smith v Wilkins and Davies Construction Co Ltd [1958] NZLR 958, 961 of whether the new pleading was something essentially different from that which was pleaded earlier. The change in the character of the pleading could be brought about by alterations in matters of law, or of fact, or both. In each case, McCarthy J had said, it must be a question of degree.
[24] The Court in Chilcott noted that McCarthy J’s test had been adopted in Gabites v Australasian T & G Mutual Life Assurance Society Ltd [1968] NZLR 1145 where this Court approved the following passage from Sholl J in Harris v Raggatt [1965] VR 779, 785:
If we say that the law is that the plaintiff cannot be allowed, after the period of limitations has run, to set up a new cause of action, we use the term in a special sense as meaning a ‘new case’ varying so substantially from what has previously been set up that it would involve investigation of matters of fact or questions of law, or both, different from what have already been raised and of which no fair warning has been given, so that it would be unfair and unjust to the defendant to put him in peril of a judgment founded on the new matter. Certainly, if there is set up a ‘new case’ on the facts, upon which is based a new claim upon a new and different legal basis – a new cause of action in that sense – leave will ordinarily be refused.
[38] Mr Orange submitted that the first cause of action was not essentially a fresh or different cause of action. He argued that the first cause of action does not vary substantially from matters already raised. The claim in the first proceedings was for
21 Ophthalmological Society of New Zealand Inc v Commerce Commission CA168/01, 26 September 2001 (CA).
breach of contract, as is the first cause of action in the amended claim. The only difference is Kumar’s method of proving that it was not paid correctly in calculating its loss.
[39] Kumar’s claim in the original statement of claim is a claim for an accounting on the basis that TDL had failed to provide “correct payment” to it. It claimed payment for February and sought the correct payment for all the preceding months. That claim engaged or relied on clause 3.3(f) of the Agreement where TDL agreed:
In the case of contracts entered into by TDL it agrees to pay and account to the Contractor on the last day of the month by direct credit for all work done by the contractor during the immediately preceding month, provided always that TDL shall be entitled to deduct from each some monthly payment, twenty five (25) percent of any revenue by way of commission to TDL for providing the managerial and accounting and office facilities as foresaid. TDL shall also be entitled to deduct from the said monthly payment such monthly instalments as may be due to TDL under any instrument by way of security or other agreement under which there is an amount owing by [the] contractor to TDL together with any monies due to [TDL] for goods and or services purchased by the contractor from or through TDL or otherwise and provided further that the company shall be entitled to amend the rate of commission after due consultation with the contractor. TDL agrees to keep the Contractor informed of its invoicing of contracts performed by the Contractor and to invoice promptly each month.
[40] However, the first cause of action in the amended statement of claim is a claim of a quite different nature. For the first time Kumar pleads reliance upon a different clause, cl 3.1[(b)] of the Agreement, namely that TDL agreed to use its best endeavours to provide Kumar with cartage work at fair market rates. It pleads at para 19, that TDL was obligated to use best endeavours to provide the plaintiff with cartage work at fair market rates. Kumar then pleads that fair market rates would have generated revenue of approximately $42,000 per month.
[41]Clause 3.1(b) of the Agreement provides that TDL would:
Use its best endeavours to provide the Contractor with consistent levels of cartage contract work at fair market charge-out rates, provided that TDL shall be entitled to refuse to provide cartage contract work to the Contractor if the Contractor is in breach of this Agreement or the Operational Manual.
[42] TDL’s obligation under cl 3.3(f) which underpins the original claim is a fundamentally different one to its obligation under cl 3.1(b) of the Agreement. The
determination of whether TDL was in breach of the contract by failing to comply with cl 3.3(f) effectively involves an accounting exercise. However, the determination of whether TDL was in breach of the contract by failure to comply with its obligations under cl 3.1(b) will involve an inquiry into what the fair market charge-out rates were for the particular jobs at the particular time and whether TDL made its best endeavours to charge fair market rates for those jobs.
[43] The first cause of action in the amended claim proceeds on the speculative premise that, as Kumar only generated revenue of approximately $31,000 per month then TDL must have been in breach of its obligation to provide cartage work at fair market rates. Mr Orange accepted that, despite the information that Kumar has obtained through discovery, at present there was no information to support that bare proposition. It was not raised in the initial cause of action, which, as noted, was based on a failure of TDL to “correctly” account to Kumar for what it was owed.
[44] While both allege breaches of contract, the causes of action are of a quite different nature. In the words of the test in Ophthalmological Society of New Zealand Inc v Commerce Commission, the first cause of action in the amended claim sets up a new or fresh case which would require TDL and the Court to investigate matters of fact quite different from what had been raised in the initial claim. It would require TDL to discover and call evidence on the considerations it took into account when setting the charge-out rate for each of the numerous customers during the relevant period, the negotiations it engaged in with those customers, and the rates charged by competitors. Expert evidence as to fair market rates at the time would be required. The Court would then be required to determine whether, in light of all that evidence, the rates were fair or unfair and whether TDL had used its best endeavours.
[45] Mr Orange sought to argue that TDL could not say it had not received fair warning of the claim as Kumar had sued it and sought discovery. However, the fair warning must relate to the nature of the breach alleged. TDL cannot be said to have been on notice and to have had fair warning of what is, in the amended claim, a claim for a breach of a different term of the contract.
[46] For the above reasons I consider the Judge was correct to find that the first cause of action in the amended claim is essentially different. It introduces a new cause of action. As noted, Kumar accepts that the third cause of action is new.
[47] Prima facie then the first and third causes of action in the amended statement of claim are statute barred by the Limitation Act.
Discussion – late knowledge
[48] Section 11(1) of the Limitation Act provides a defence to a money claim if a defendant, such as TDL in this case, proves the date the claim was filed was at least six years after the act on which the claim is based (the primary period). In this case the primary period ended 28 February 2019. The amended claim was not filed until 13 December 2023 and the fresh causes of action in it are prima facie barred. However, s 14 of the Limitation Act extends the period when a claimant has late knowledge of the claim. In that case, s 11(3)(a) of the Limitation Act provides a defence to a money claim such as this if the date on which Kumar’s claim was filed is at least three years after the claim’s late knowledge date.
[49]As noted, s 14 provides for the late knowledge date:
14 Late knowledge date (when claimant has late knowledge) defined
(1)A claim’s late knowledge date is the date (after the close of the start date of the claim’s primary period) on which the claimant gained knowledge (or, if earlier, the date on which the claimant ought reasonably to have gained knowledge) of all of the following facts:
(a)the fact that the act or omission on which the claim is based had occurred:
(b)the fact that the act or omission on which the claim is based was attributable (wholly or in part) to, or involved, the defendant:
(c)if the defendant’s liability or alleged liability is dependent on the claimant suffering damage or loss, the fact that the claimant had suffered damage or loss:
(d)if the defendant’s liability or alleged liability is dependent on the claimant not having consented to the act or omission on which the claim is based, the fact that the claimant did not consent to that act or omission:
(e)if the defendant’s liability or alleged liability is dependent on the act or omission on which the claim is based having been induced by fraud or, as the case may be, by a mistaken belief, the fact that the act or omission on which the claim is based is one that was induced by fraud or, as the case may be, by a mistaken belief.
(2)A claimant does not have late knowledge of a claim unless the claimant proves that, at the close of the start date of the claim’s primary period, the claimant neither knew, nor ought reasonably to have known, all of the facts specified in subsection (1)(a) to (e).
(3)The fact that a claimant did not know (or had not gained knowledge), nor ought reasonably to have known (or to have gained knowledge), of a particular fact may be attributable to causes that are or include fraud or a mistake of fact or law (other than a mistake of law as to the effect of this Act).
[50] Where the primary period has passed, and a plaintiff seeks to rely on the late knowledge date, the onus is on the plaintiff to prove that at the close of the primary period they neither knew nor ought reasonably to have known of the facts in s 14(1).
In Rea v Auckland City Council, the Court of Appeal held:22
[21] Under s 14(1), a claimant does not have late knowledge of a claim unless they prove that, at the close of the start date of the primary period (in this case 18 October 2013), they neither knew, nor ought reasonably to have known of the facts specified in s 14(1). Those facts, relevantly, include:
“(a)the fact that the act or omission on which the claim is based had occurred;
(b)the fact that the act or omission on which the claim is based was attributable (wholly or in part) to, or involved, the defendant; and
(c)if the defendant's liability or alleged liability is dependent on the claimant suffering damage or loss, the fact that the claimant had suffered damage or loss.”
...
[56] We consider that, for the purposes of s 14(1)(a), the words “act or omission on which the claim is based” have their plain and ordinary meaning. There is no reason to add any gloss to include the circumstances in which the act was done. We therefore reject Mr Rainey's submission that a claimant needs to know all the facts necessary to show that the Council had breached the duty to exercise reasonable skill and care in the performance of its building-control functions under the Building Act. All that was required under s 14(1)(a) in this case was knowledge that the CCC had been issued.
22 Rea v Auckland City Council, above n 3.
[57]Likewise, in relation to s 14(1)(b), Mr Rainey argued that the words “act or omission on which the claim is based was attributable (wholly or in part) to … the defendant” mean that Mr and Mrs Rea needed to know that the defects identified in the Maynard Marks report or the ACH report were attributable (wholly or in part) to the Council. This interpretation would put a gloss on the otherwise plain meaning of s 14(1)(b) that is not justified. We have concluded that in s 14(1)(a), the words “act or omission on which the claim is based” refer only to the issuing of the CCC. There is no basis on which to interpret the same words in s 14(1)(b) differently. It is not knowledge that the defects are attributable to the issuing of the CCC that is required but, rather, knowledge that the issuing of the CCC is attributable to the Council.
For the purposes of s 14(1)(c), do the appellants require knowledge of a causal connection between the act or omission on which the claim is based and their loss or damage?
[58]It will be recalled that “if the defendant's liability or alleged liability is dependent on the claimant suffering damage or loss”, s 14(1)(c) requires knowledge of “the fact that the claimant had suffered damage or loss”.
And later:
[62] The text of s 14(1)(c) makes it plain that the only fact of which knowledge is required under this limb is “the fact that the claimant had suffered damage or loss”. Those words do not convey, even implicitly, any requirement for knowledge of a causal link between the defendant's act or omission, and the loss or damage. Indeed, the opening words, “if the defendant's liability or alleged liability is the claimant suffering damage or loss”, are to the contrary. They expressly provide the prerequisite for s 14(1)(c) to be engaged but cannot be read naturally as adding to the specified fact.
[51] In Rea, the Rea’s sued the Council and alleged negligence in issuing a CCC in 2013. The proceedings were not issued until September 2021, but the Reas argued the late knowledge provisions applied and that they only gained knowledge of the s 14 matters after receiving a building report in March 2019. However, the Court of Appeal confirmed that it was the knowledge of the date that the Council had issued the CCC which was relevant and that, on receipt of a copy of an earlier report issued for a master builders claim in 2016, the Reas had information that would lead a reasonable person to begin investigating whether the Council was potentially liable. The Supreme Court declined leave to appeal noting that by May 2016 the Reas had received two reports pointing out a number of defects including structural defects and also knew that the
Council had issued a CCC. It was untenable to suggest that it had taken them a further two years, three months to figure out the Council was potentially liable.23
[52] The onus is on Kumar to satisfy the Court that it gained late knowledge and therefore did not have actual or constructive knowledge of all the facts in s 14(1)(a) – (c), before 13 December 2020, being three years before the amended claim was filed.
[53] Mr Orange accepted the relevance of the Rea decision,24 but argued that the underlying rationale in Rea was to deter litigants from unjustified delay. He submitted the District Court Judge erred by failing to distinguish it. He argued that Kumar did not close its eyes to the obvious nor postpone taking action. Kumar effectively needed records to ascertain whether it had been paid correctly and its attempts to obtain those documents were thwarted by TDL. As a result of TDL’s actions, Kumar was only left with a suspicion it had not been paid in accordance with the contract.
[54] However, subject to the point arising from Kumar’s now reliance on s 14(3), I agree with the Judge’s finding that Kumar had the necessary knowledge of all the elements in s 14(1)(a) to (c) in February 2013 when the Agreement was terminated. The surrounding facts which the supposition (as it is nothing more) that underlies the new and different first cause of action in the amended statement of claim were known to Kumar in 2013. Kumar expected to receive an average return of $42,000 approximately a month. Instead, it only received an average of $31,000. It knew that when it terminated the Agreement. Kumar is seeking to apply ex post facto reasoning to conclude that the loss it claims arose because TDL must have failed to use its best endeavours to obtain fair market rates. Without commenting on the validity of that reasoning, it was available to Kumar in February 2013, as the facts underlying it, namely that it expected to earn an average $42,000 per month but had only earned
$31,000 were known to Kumar by February 2013. Indeed that was the reason Kumar terminated the Agreement.
[55] Despite Mr Orange’s submissions for Kumar, there is no evidence before the Court that TDL did not use best endeavours to charge fair market rates for the work.
23 Rea v Auckland Council [2024] NZSC 148.
24 Rea v Auckland City Council, above n 3.
The basis of Kumar’s claim remains speculative. Nothing of substance has changed since the proceedings were issued on that point.
[56] Further, it seems Kumar had actual constructive knowledge of this alleged failure sufficient to put it on inquiry by 28 February 2013 when the Agreement terminated. Mr Kumar in his affidavit says:
4.During the two years that I worked for TDL, I strongly suspected that I was not being paid fairly or correctly. …
…
27.For the two years that I worked for TDL I suspected that I was not being paid fairly or in accordance with the [Agreement].
[57] Kumar had knowledge that TDL was the other party: s 14(1)(b), and by February 2013 Kumar knew it had sustained loss s 14(1)(c).
[58] The third cause of action is based on the alleged misrepresentation and the difference set out in the revenue summary. Again, the revenue summary was provided in October 2010. By the time Kumar had made the decision to terminate the contract by giving three months’ notice to terminate end of February 2013 it knew that there was a discrepancy between the revenue summary and the actual monthly returns, indeed that was the reason for the termination.
[59] As noted, Kumar also relies on the case of Baxter v Building Inspection Company Ltd.25 In that case the issue was whether the purchaser should have been put on notice or led to make inquiries whether a building consent had been obtained by a pre-purchase information pack (which advised of work that had been carried out on the property). The Judge noted the purpose of the pre-purchase pack was to reassure purchasers about the work done on the property and it did not sit well to argue the same material should have put the purchaser on inquiry. In the present case, Kumar knew by February 2013 that it had received about a quarter less (on average) a month than it expected to receive under the Agreement. A reasonable person in Kumar’s shoes would have been put on inquiry to review the terms of its Agreement with TDL and to determine whether TDL could be said to be in breach of any of its obligations
25 Baxter v Building Inspection Company Ltd, above n 13.
under the Agreement, including the obligation to charge fair market rates for the cartage contracts.
Application of s 14(3)
[60] The remaining issue is whether the late knowledge date can be extended in this case in relation to the first cause of action by application of s 14(3) even though that was not raised before the District Court. That requires Kumar to establish that the reason it did not know, nor ought reasonably to have known, that TDL had not used its best endeavours to charge fair market rates was due to the dishonest concealment of that fact by TDL.
[61] To state it in that way highlights the difficulties for Kumar with such an argument. It requires Kumar to establish dishonest concealment by TDL of its relevant market rates. That is the fact (or allegation in this case) that the first cause of action is based on. The first issue is that as noted, this argument presupposes that TDL did not charge fair market rates, but there is no evidence of that before the Court. The basis of such a claim is entirely speculative on Kumar’s part. In Rea and Baxter26 by contrast, there was no doubt that the CCC had issued (in Rea’s case) or that no consent had been obtained (in Baxter’s).
[62] Next, this argument does not assist Kumar with the third cause of action. The fact it is based on is the alleged misrepresentation which was set out in the revenue summary provided by TDL in October 2010. There can be no suggestion of the fact of that alleged misrepresentation was dishonestly concealed.
[63] Kumar relies on the difficulties with discovery to support its argument for dishonest concealment in relation to the first cause of action. It is necessary to review the discovery exercise in this case in a little more detail.
[64] Prior to the issue of proceedings solicitors for Kumar sought payment records for February 2013 in a letter to TDL dated 25 June 2013. TDL responded to that on the 2 July 2013 providing the information sought for February 2013.
26 Rea v Auckland City Council, above n 3; and Baxter v Building Inspection Company Ltd, above n 13.
[65] After the proceedings were issued, Kumar’s solicitors sent an email to TDL’s solicitors on 8 February 2018 advising that Kumar was seeking:
[all] documentation relating to the work that was carried out by [Kumar], the amount that was charged to the customer for this work, and the percentage share that was then paid to [Kumar]. This information is necessary to determine whether our client was paid correctly pursuant to the Agreement.
[66] Following the provision of the required confidentiality undertakings in April 2018, TDL’s lawyers disclosed 26 spreadsheets setting out the details for each job that Kumar completed for TDL under the Agreement (the revenue spreadsheets) and a further spreadsheet containing TDL’s container rates for the jobs performed by Kumar (the rates spreadsheet).
[67] Then in March 2019, Kumar’s solicitors sought copies of the invoices that TDL had rendered its customers to show the actual revenue received by TDL for the jobs. It was said that was necessary to enable Kumar to determine whether it had been paid 75 per cent of the revenue pursuant to the Agreement. In response, TDL offered for an independent accountant to inspect TDL’s management system to determine that the correct amounts had been paid to Kumar.
[68] On 6 May 2019 Kumar applied for discovery of all invoices. The application was supported by an affidavit from Mr Kumar and a memorandum of counsel dated 10 June in which it was said:
[Kumar’s] claim effectively has two parts. It claims that it was not paid for the services it performed in February 2013…
The second part of the claim relates to all other months from January 2011 to January 2013. [Kumar] claims that it has not received 75% of the revenue invoiced by TDL for the work it carried out, as it is entitled to under the contract.”
[69] In November 2019, following an invitation by TDL, counsel for Kumar attended TDL solicitor’s offices and carried out an inspection of the electronic records held by TDL.
[70] On 24 January 2020, Judge Harrison made an order that TDL was to make available for inspection invoices relating to 200 jobs selected at random performed by
Kumar during the currency of the Agreement and was to make available for inspection the percentage splits of the revenue between the drivers that completed each leg of the relevant jobs by granting Mr Kumar supervised access to TDL’s electronic system. As a condition of the disclosure, Mr Kumar was to file a confidentiality undertaking. That was not provided until 18 June 2021. Inspection was then delayed following the Covid lockdown in August 2021. Kumar’s solicitors did not request a new date for inspection until June 2022.
[71] In July 2022 Kumar attended TDL’s solicitors’ office and inspected a limited number of invoices and container records from TDL’s electronic systems. TDL also agreed to provide further 50 container numbers in corresponding invoices and screenshots.
[72] On 20 October 2022 TDL provided customer invoices and screenshots in its possession but advised Kumar that it was unable to provide Kumar with screenshots from the electronic transport management system and customer invoices relating to deliveries Kumar had performed between 28 January 2011 and 24 November 2011 because TDL had, from the middle of 2010 to 24 November 2011, processed job bookings and customer invoicing through a joint software system belonging to another container transport services provider and used that software. TDL never held the documents processed through those documents. It had made inquiries of that transport system and of Datacom but was advised the documents had not been retained and could not be retrieved.
[73] However, in December 2022, Kumar elected to proceed and sought a fixture, before amending its claim in December 2023.
[74] The parties continued to exchange correspondence regarding discovery. TDL agreed to a request from Kumar’s solicitors to disclose the rates spreadsheet and revenue spreadsheet to Mr Kumar in April 2023. Kumar's solicitors then sought approval to pass copies of customer invoices to Kumar's accountant. TDL’s solicitors agreed to search for and disclose customer invoices subject to the accountant providing a confidentiality undertaking. In August 2023 TDL disclosed customer invoices to Kumar. In the meantime, Kumar had failed to comply with directions of the Court and
TDL sought an unless order. Then, on the 13 December 2023 the amended statement of claim was filed.
[75] The starting point is that discovery is limited to what is relevant on the pleadings. As the case was initially pleaded, evidence concerning the setting of the market rates charged was not directly relevant. There was no obligation to disclose it.
[76] The evidence of the discovery process does not support Kumar’s argument that TDL deliberately concealed facts which would (or should) have put Kumar on inquiry as to whether TDL had charged fair market rates.
[77] Mr Orange also referred to the pleadings in Kumar’s reply to the amended statement of defence and counterclaim. However, those pleadings do not assist. For example, at para 6.17 Kumar pleaded that the records that had been disclosed apparently showed that TDL had actually paid Kumar more than it had charged its customers in one month, and on other occasions had not charged anything. That is simply illogical. TDL had no reason to pay Kumar for monies it was not due (which would not be a loss to Kumar in any event) and as TDL was to receive a 25 per cent commission, obviously if it did not charge the customers anything, it would receive nothing. Further, although at para 6.25 Kumar pleads that on 4 December 2023 Mr Chandra, Kumar’s accountant concluded that while the exact nature of its loss could not be determined, the likely cause was TDL’s failure to charge fair market rates, the letter of Mr Chandra of that date to Kumar annexed to Mr Kumar’s affidavit makes no mention of fair market rates and rather calculates the loss on the difference between monies earned by Kumar and the revenue summary provided in October 2010.
[78] On the evidence before the Court as noted above, there is no basis to suggest that TDL intentionally (or even recklessly) concealed relevant discoverable material. Further, as the Court of Appeal confirmed in Daisley,27 even careless concealment, without more, has never been sufficient to amount to fraud in this context.
[79] In conclusion, even accepting it was open to Kumar to raise the argument on appeal that s 14(3) applied, the evidence does not support even an arguable conclusion
27 Whangarei District Council v Daisley, above n 14.
that Kumar did not know of the basis of the claim it now raises in the first cause of action because of TDL’s dishonest or fraudulent concealment that it had not charged fair market rates.
Result
[80]For the above reasons the appeal is dismissed.
Costs
[81] Costs are reserved. They are to be dealt with by an exchange of memoranda if counsel cannot agree.
Venning J
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