Recreation Management Services (Wanganui) Limited v Rangitikei District Council HC Palmerston North CIV 2009-454-548
[2010] NZHC 1146
•9 July 2010
IN THE HIGH COURT OF NEW ZEALAND PALMERSTON NORTH REGISTRY
CIV 2009-454-548
BETWEEN RECREATION MANAGEMENT SERVICES (WANGANUI) LIMITED Applicant
ANDRANGITIKEI DISTRICT COUNCIL AND MARTON AQUATIC AND LEISURE TRUST
Respondent
Hearing: 1 July 2010
Counsel: G J Thwaite for Appellant
P J Reardon for Respondent
Judgment: 9 July 2010
JUDGMENT OF RONALD YOUNG J
(Application to recall judgment and application for leave to appeal)
Introduction
[1] In these proceedings Recreation Management Services (Wanganui) Limited (“RMS”) appealed against a decision of the District Court that its contract for the servicing of swimming pools in the respondent’s region with the respondent did not give it a unilateral right to renew the contract. I dismissed the appeal in a judgment
given on 23 February 2010.
[2] The applicant now seeks that I recall my judgment or if refused give leave to appeal to the Court of Appeal. The grounds of the application for recall are:
a) that counsel failed to draw to my attention, in the applicants words, to an “authoritative decision of plain relevance, namely Vector Gas Limited v Bay of Plenty Energy Limited [2010] NZSC 5”;
b) that there are special reasons for a recall in this case being:
i) apparent bias in the conduct of the hearing;
ii) mis-statements in my judgment;
iii)“the inclusion of an important argument that was not argued by counsel”;
iv) “the vague if not incorrect statement as to the effect of the
Local Government Act 1974 in paragraph [63]”;
v)“the assertion of matters not covered by the evidence in paragraph [63]”;
vi)“the lack of proper consideration of the evidence and/or the law”.
[3] Ground (b)(i) was abandoned at the hearing.
Background
[4] The background of the case is set out in my judgment of 23 February in this way:
[1] In 1997 the Rangitikei District Council decided to “outsource” the management of three swimming pools in their district. They invited tenders to manage and maintain the three pools at Martin, Taihape and Huntervile. A request for tenders was issued. In August 1997 the Council met
prospective tenderers and discussed the contract and responded to questions from the tenderers.
[2] The plaintiff was the successful tenderer. The parties proceeded on the basis that the initial period of the contract was for three years. However as the end of the three years approached it seems the parties had different views as to what would happen at the end of that period. The Council said the contractual documents provided for an extension of the contract for up to two periods each of 12 months if both parties agreed. The appellant said it had a unilateral right to renew the contract for the two periods of 12 months.
[3] Prior to the end of the three years the appellant says it exercised its renewal rights. The Council refused to accept the renewal and being unable to resolve the matter the parties came to the District Court.
[4] The appellant sued the Council in the District Court. It claimed:
a)rectification, alleging that whatever the words were in the contractual documents the parties had mutually agreed that the appellant had unilateral rights of renewal and that the contract should be rectified to reflect that fact;
b) in any event the contract itself provided for unilateral renewal;
c) if the contract did not provide for unilateral renewal then the Council induced the appellant to enter into the contract by misrepresenting that the appellant had a unilateral right to renew the contract for the two periods of 12 months.
[5] The trial was heard in the District Court in April 2009 and judgment delivered in June 2009. The Judge concluded there was no mutual agreement by the parties different than the provision asserted by the Council and therefore rectification could not be successfully sought. The Judge said there was no misrepresentation by the Council as to past or current facts. Finally the Judge concluded that although there was an inconsistency between the two alleged terms of the contract it was clear that the right of renewal could only be exercised mutually, that is, if both parties agreed. The appellant’s action therefore failed.
[5] At the appeal hearing the appellant raised a number of alleged errors in the
District Court. They were:
a) an allegation of factual errors by the District Court Judge which I
rejected;
b)that the contract gave RMS a unilateral right of renewal after the initial period of three years, for two periods of 12 months. I concluded that the contract between the parties did permit renewal of
the contract for two further periods of 12 months but only if the
Council and the appellant agreed to such a renewal;
c) I rejected what I considered to be the appellant’s claim that there was an implied right of renewal in the contract;
d)Rectification of contract. This was sought so that the contract provided for a unilateral right of renewal. I concluded that there was no such agreement between the parties and no error in the contractual terms;
e) finally, I rejected a claim of misrepresentation.
Recall of Judgment
[6] The circumstances under which a judgment may be recalled are narrow. Generally they fall into one or more of three categories identified by Wild CJ in Horowhenua County v Nash (No. 2) [1968] NZLR 632 at [633]:
... There are I think, three categories of cases in which a judgment not perfected may be recalled – first, where since the hearing there has been an amendment to a relevant statute or regulation or a new judicial decision of relevance and high authority; secondly, where counsel have failed to direct the Court’s attention to a legislative provision or authoritative decision of plain relevance; and thirdly, where for some other very special reason justice requires that the judgment be recalled.
[7] In this case the applicant says its application comes within the first/second category (the Vector decision) and the third category (special reasons) ([2](b)). The category of special reasons is likely to be a narrow category (see Unison Networks Limited v CC 7 March 2007 CA284/05)).
[8] McGechan on Procedure (Brookers) at HCR 19.01 identifies a range of situations where this third “special reasons” category has been invoked. They include; a failure to determine an issue properly put by counsel; overlooking a matter, for example, an application to amend orders; the orders made by the Judge at
the end of a judgment not reflecting the judgment findings; changes subsequent to the judgment affecting outcome.
Vector judgment
[9] Firstly, as to the Vector judgment. The decision was released by the Supreme Court on 10 February 2010, some eight days prior to the hearing. Neither counsel referred to it in the course of their submissions. Counsel for the respondent did refer the case to me on the day of release of my judgment (or at least I received the memorandum on that day) but it was brought to my attention after I considered I had released my judgment.
[10] The Supreme Court in Vector dealt with issues of contract interpretation. The issues discussed include the plain and ordinary meaning of the relevant clause, the context of the clause together with relevant background material, pre-contractual evidence of negotiations and how those factors might assist the interpretation of a contractual term.
[11] While Vector does contain significant discussions of legal principle regarding contractual interpretation I venture to suggest it is not law changing. Each of the judgments stressed the relevance and importance of a contextual interpretation of a contract. Each place slightly different limits on when and to what extent contextual interpretation can be used where there is a plain and ordinary meaning available of a contractual term.
[12] The applicant suggested the Vector case called for a reassessment of my judgment in this way:
a) as to the meaning of the original clause 3.1 in the light of the subsequent term right of renewal used twice by the respondent, in the business of the arrangement;
b) the business common sense of the renewal provision;
c) the irrelevance of the mis-spoke analysis;
d)the importance of estoppel against Respondent, in respect to the phrase “right of renewal” and the absence of the obligation to plead estoppel in such circumstances;
e) the power of the Court to displace the plain meaning of clause 3.1, when the progressive negotiation of terms move to right of renewal.
[13] I undertook a contextual interpretation in my February 2010 judgment. The appellant’s arguments failed because neither the words of the contract looked at by themselves nor the evidence of the background and context supported the interpretation the appellant argued for. The contract itself, viewed objectively and in its full context, did not provide a unilateral right of renewal.
[14] This approach was entirely consistent with Vector. In those circumstances I consider there is no basis on which to recall my judgment as a result of the Vector judgment now being drawn to my attention by the parties.
Other reasons for recall
[15] I turn then to the other factors said to justify recall of the judgment. The grounds set out in [2](b)(iii) to (vi) are in my view attempts to review my judgment by expressing dissatisfaction with my analysis and conclusions. These grounds are essentially appeals from my conclusions factual and legal. I reject these grounds as incapable of constituting special reasons to recall the judgment.
[16] As to [2](b)(iii), (iv) and (v) they can be considered together. The appellant submitted that with respect to my observations at paragraph [63] of my 23 February judgment that I had included “an important argument that was not argued by counsel”.
[17] I said at paragraph [63] as follows:
[63] However there was one significant feature of cl 9.3.1 as the Council’s evidence identified. Clause 9.3.1 entitled the parties to enter into a further contract, for the pool management, for up to a further two years outside of another public tender process. The first respondent had obligations under the Local Government Act 1974 regarding public tendering for such contracts. Clause 9.3.1 therefore potentially advantaged both the Council and the appellant by avoiding a time consuming and expensive public tender process for the two additional one year periods if the parties could agree on renewal.
[18] As counsel for the respondent pointed out the issue of a public tender was raised by Mr Geerkins in his brief of evidence in the District Court when he said:
In my experience with roading contracts over many years contractors and engineers used the term “right of renewal” loosely, in the sense of not having to go back to public tender (having to go to public tender is an expensive process for tenderers).
[19] While the specific context may have been roading contracts given Mr Geerkins expertise in this area I am satisfied he intended his comments to also relate to this contract.
[20] And further going to public tender was the subject of an exchange between counsel for the applicant and myself at the appeal hearing when I pointed out that if there was a mutual right of renewal for a further two years then “that means that you won’t have to go through the tender process of course”.
[21] Finally the respondent’s submissions at the appeal hearing (7.4 and 7.5) also identify the advantage to both parties of avoiding a further public tender round.
[22] The unchallenged evidence was that any re-tender would be an expensive process. It would inevitably take more time than an agreed extension of the contract. I am satisfied the issue was before the Court at the appeal hearing and therefore available to be argued by counsel. Whether my observation regarding the Local Government Act was vague and/or incorrect is not a ground for recall. These are not reasons to recall the judgment.
[23] As to the claimed “mis-statements” ([2](b)(ii)) I consider each in turn. To understand this issue it is necessary to refer to my judgment of 23 February 2010.
[24] In my judgment at [11] I said Ms Bishop, who had been a committee secretary for the respondent, gave evidence in the District Court. The applicant says she did not give evidence in the District Court. I accept that she did not give evidence and that my statement was an error. However, nothing arises as a result of this error. Ms Bishop’s notes of the relevant August meeting were before the Court and accepted by the parties as accurate. Whether she did or did not give evidence was not relevant.
[25] The second claimed mis-statement relates to a letter from Recreation Management Services of 24 December 1999 to the respondent purporting to exercise a unilateral renewal of the contract. As to this I said the Council had said it had not received that letter. Counsel for the appellant says the correct position is that the Council had no record of receiving the letter.
[26] In the context of this case it is difficult to understand the significance of the difference if there is any. Presumably from the Council’s perspective if they had no record of receiving the letter then they did not receive it. No doubt they would also accept that sometimes in a large institution such as a local authority letters received can be lost. Whether the letter was received and lost or never received cannot be known. The relevant Council officers simply had no record or recollection of ever seeing the letter.
[27] However, whether they did or did not receive the letter makes no difference in this case. The case proceeded on the basis that the appellant had purported to renew the contract by sending the letter to the Council on 24 December 1999. The Council could not effectively dispute that the appellant had sent the letter. If the contract had been interpreted as the appellant said it should be, and it had a unilateral right to renew the contract, then the appellant had exercised that renewal right.
[28] However given my conclusion as to the meaning of the contract, that the appellant could not unilaterally renew the contract then the letter of 24 December
was of no importance. It was therefore of no importance whether the Council did not receive the letter or had no record of the receiving a letter.
[29] At paragraph [43] and [44] of my judgment I said:
[43] There are four letters which employees of the Council wrote after the contract was signed (between 1997 and 2000) where they refer to the extension of the contract. The first respondent submitted that given these documents were not part of the case in the District Court they should not be available to this Court on appeal. The appellant said the first respondent had agreed to the documents coming in as part of the appeal case.
[44] I doubt the availability of these documents on appeal. However, I do not consider in any event they assist the appellant. Two of the four letters said to be relevant in this context are from Ms Taylor who was involved in the 1997 contractual arrangements. In one letter (25 May 1998) she talks of a “right of renewal” consistent, the appellant says, with its preferred interpretation of cl 9.3.1.
[30] Counsel for the appellant maintains that the disputed documents were not the ones I had identified. I did not attempt at the hearing of the appeal to resolve the differences between counsel. However, I did consider the content of the letters in my judgment and concluded that the letters did not assist the appellant. Whatever the accurate position regarding the documents and which documents were in issue between the parties these were of no importance in resolving the case.
[31] As to the absence of Mr Maxwell as a witness at the District Court I said:
[27] Mr Maxwell provided his evidence to the court in an affidavit. He was not available for cross-examination because of illness. In his affidavit he said:
8. In the course of that meeting a representative of First
Defendant stated that:
(a) occupancy would commence as from
1 October 1997;
(b)the initial term of the tender contract would end at the end of September 2000;
(c) after the expiry of the initial term, the contractor would have a right of renewal in 12 month increments, to take the total term of the contract to five years.
[28] I note at (c) Mr Maxwell said that the representatives of the Council had said the “contractor” would have a right of renewal at the
22 August 1997 meeting. It seems that neither counsel nor the Judge identified the reference to “contractor” at trial. Mr Maxwell was unwell and
could not be cross-examined at trial. Counsel for the first respondent maintained that the trial in the District Court had proceeded on the basis that Mr Maxwell’s recollection of what had been said at the August meeting was
based solely on the notes of the meeting produced by Ms C Bishop. Mr Thwaite for the appellant accepted that was the position and accordinglythis appeal proceeded on the basis that both parties accepted the notes of the meeting were an accurate summary of what had been said. Mr Maxwell’s reference to “contractor” was to be put to one side.
[32] Counsel for the applicant’s complaint is that while I said Mr Maxwell could not be cross-examined because he was ill there was no evidence that Mr Maxwell’s absence from Court as a witness was because of illness. Counsel for Recreation Management accepts that Mr Maxwell was not present at the hearing nor was he cross-examined. Why he was unable to be present for cross-examination hardly seems relevant therefore.
[33] The final error alleged relates to the appellant’s submissions on the issue of implied renewal. As to this I said:
[48] The next ground of appeal relating to cl 9.3.1 or more generally with respect to the contract was that the Court should imply a unilateral right of renewal in the appellant’s favour into the contract.
[49] No such cause of action inviting the Court to imply such a term has been pleaded by the appellant. The appellant’s second amended statement of claim has three causes of action; rectification of contract; damages for breach of failing to recognise the appellant’s continuing rights under the contract; and misrepresentation. It is now simply too late for the appellant to raise an implied term. In any event if there had been such a pleading on the facts of this case it had no prospect of success. I reject this ground of appeal.
[34] The appellant’s submission to me at the appeal is summarised in the first sentence of its submissions on this topic. It said:
The mechanism for renewal is implicit or can be implied by the Court.
[35] The main authority relied upon by the applicant/appellant was Devonport Borough Council v Robbus [1979] 1 NZLR 1. This appears to be an implied term contracts case.
[36] Certainly counsel for the first and second respondents understood the appellant’s submissions did relate to an implied term. Their submissions were framed on that basis.
[37] If the appellant’s point was that if I accepted that there was a unilateral right of renewal of the contract but no mechanism for exercising this right of renewal then such a mechanism could be implied then that issue simply did not arise in this case. I found there was no unilateral right of renewal. Thus no issue as to the mechanism for renewal ever arose. Therefore whether in fact I misunderstood the applicant’s argument is of no relevance.
[38] I conclude therefore that if there were errors in my judgment none were of relevance to the case. I advised counsel for the appellant that I was prepared to recall the judgment to correct those errors where there I accepted were errors but the recall would have no effect on my conclusions. In those circumstances the appellant did not seek a recall.
[39] For the reasons given I refuse to recall my judgment.
Leave to appeal
[40] The test for leave to appeal enunciated in Snee v Snee 13 PRNZ 609:
a) the appeal must raise some question of law or fact capable of bona fide and serious argument;
b)it must involve some interest, public or private of sufficient importance to outweigh the cost to the parties, the Court system and the delay involved; and
c) the second appeal to the Court of Appeal does not involve general error correction but clarification of the law.
[41] The appellant identified the grounds of appeal for which leave is sought as matters of law being:
(i) the meaning of right of renewal;
(ii) the interpretation of inconsistent contractual documents; (iii) the effect of an extension upon the (re-) tendering process; (iv) the obligations of a local body in a tendering process;
(v) the existence of an actionable representation in the contracting context.
[42] This case involved the interpretation of a contract. The potential damages if the appellant had been successful and was able to fully establish the damages claim was a loss of profit on the contract the applicant expected to make for the two years of approximately $130,000. While the applicant has a continuing interest in the outcome this is a case the value of the damages claimed is now probably exceeded by the cost to the parties and the Court system. This modest case has already had two thorough considerations of fact and law in the District Court and in this Court.
[43] Secondly, the case does not raise any point of legal importance. It involves an analysis of the particular facts and the application of settled contract interpretation principles. Thus any appeal to the Court of Appeal would essentially be a further attempt by the appellant to correct what the appellant sees as a wrong decision, thus error correction rather than any point of principle.
[44] In particular the meaning of “right of renewal” will inevitably depend upon context and so the meaning will be driven by the particular relevant facts. The interpretation of inconsistent contractual documents (really inconsistent contractual terms) is as a matter of principle already the subject of appellate authority. In this case the interpretation was undertaken by the application of settled legal principles to the particular facts. As to the tender process this is also a factual matter. No important point of law arises as to a local body tendering process. Finally as to representations in contracts I concluded no actionable misrepresentation had been identified. It is therefore difficult to see how an issue of law arises as to this point.
[45] I refuse leave to appeal for the reasons given.
Costs
[46] The respondent should have costs on a 2B basis.
Ronald Young J
Solicitors:
G J Thwaite, Barrister, PO Box 6239, Auckland, email: [email protected]
P J Reardon, Barrister, PO Box 1945, Palmerston North, email: [email protected]
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