Rintoul Group Limited v Far North District Council
[2017] NZHC 98
•8 February 2017
IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
COMMERCIAL LIST
CIV-2016-404-001732 [2017] NZHC 98
BETWEEN THE RINTOUL GROUP LIMITED
Plaintiff
AND
FAR NORTH DISTRICT COUNCIL Defendant
Hearing: 3 February 2017 Appearances:
S Grant and S Laing for Plaintiff/Respondent
G J Christie for Defendant/ApplicantJudgment:
8 February 2017
JUDGMENT OF VENNING J APPLICATION FOR FURTHER DISCOVERY
This judgment was delivered by me on 8 February 2017 at 3.30 pm, pursuant to Rule 11.5 of the High
Court Rules.
Registrar/Deputy Registrar
Date……………
Solicitors: R Mark, Kerikeri
Simpson Grierson, Auckland
Copy to: S Grant and S Laing, Auckland
THE RINTOUL GROUP LTD v FAR NORTH DISTRICT COUNCIL [2017] NZHC 98 [8 February 2017]
Application for particular discovery
[1] The Far North District Council (the Council) seeks an order for particular discovery against the plaintiff The Rintoul Group Limited (Rintoul).
Background
[2] Rintoul is a civil construction company operating in the Far North. It has undertaken a number of cycleway contracts for the Council. In March 2016 Rintoul tendered for another four cycleway contracts with the Council.
[3] To support its tender Rintoul said that under an earlier contract 5/16/008 it had completed a cycleway for the Council in January 2016 (the planned end completion date was February 2016) at an actual cost of $171,000 (the budgeted value for the project was $191,000). Rintoul went on to state that there were no variations to the contract other than minor works agreed to by the engineer, which were mostly in relation to work with adjacent landowners.
[4] Rintoul says that, while the Council’s initial response to its tender was favourable, on 6 July 2016 the Council notified Rintoul that its tender had been excluded from consideration for all four projects on the grounds that Rintoul had breached rules 41(1)(b) and 41(1)(f) of the New Zealand Government Procurement – Government Rules of Sourcing. The rules relate to false declarations and acts or omissions which adversely reflect on the commercial integrity of the supplier.1
[5] The Council said that Rintoul had claimed payments for significantly more than $171,000 for 5/16/008 and that it had received “a request from the plaintiff for practical completion of the contract which was excessively longer than the allocated contractual construction period and should attract (unquantified) liquidated damages”.
[6] Rintoul commenced proceedings against the Council in the Commercial List. An order for tailored discovery was made on 18 August 2016.
1 Rules 41(1)(b) and 41(1)(f) New Zealand Government Procurement – Government Rules of
Sourcing.
The further discovery sought
[7] The Council considers that the discovery provided by Rintoul has been inadequate and seeks further discovery. The parties have exchanged correspondence on the issue. While some issues were resolved, the Council still seeks further discovery of:
Category 1 – Records of the work done in relation to the 5/16/008 contract, specifically:
(a) daily and weekly reports in relation to it; and
(b)timesheets for all personnel, and for equipment such as excavators, graders, rollers, trucks, trucks and trailer, or work undertaken under the contract;
Category 2 – Details of the metal supplied to the contract, specifically:
(a) invoices for supplied metal, and for sub-contractors (truck and trailers) for the contract;
(b) documents showing the measurements of river metal used and when;
and
(c) documents showing how quantities were determined, e.g. by weighbridge or measured volume/truck and when;
Category 3 – documents relating to the variations, specifically:
(a) any documents or notes showing how the alleged variations were priced.
Category 4 – documents relating to the provisional sum, specifically:
(a) any notes confirming the request for utilising the provisional sum and discussion around this;
(b)any documentation of how operations claimed under the provisional sum were priced and forwarded to an engineer for approval; and
(c) any documentation of instruction to proceed with operations under the provisional sum prior to the work being undertaken.
The Council’s case for further discovery
[8] The Council says that the documentation is necessary to determine what work was done prior to the end of January 2016. That is relevant as it goes to the heart of whether Rintoul’s statement that it completed the contract works by the end of January for $171,000 was correct.
Principles
[9] The application is made under r 8.19:
8.19Order for particular discovery against party after proceeding commenced
If at any stage of the proceeding it appears to a Judge, from evidence or from the nature or circumstances of the case or from any document filed in the proceeding, that there are grounds for believing that a party has not discovered 1 or more documents or a group of documents that should have been discovered, the Judge may order that party—
(a) to file an affidavit stating—
(i) whether the documents are or have been in the
party’s control; and
(ii) if they have been but are no longer in the party’s control, the party’s best knowledge and belief as to when the documents ceased to be in the party’s control and who now has control of them; and
(b) to serve the affidavit on the other party or parties; and
(c) if the documents are in the person’s control, to make those
documents available for inspection, in accordance with rule
8.27, to the other party or parties.
[10] The issues in the present case are whether the documents should have been discovered and whether the Court should exercise its discretion to order discovery.
[11] Save for limited categories the documents exist.
[12] In Chatfield & Co Ltd v Commissioner of Inland Revenue the Court of Appeal discussed the approach to discovery following the amendment to the discovery rules:2
Since 1 February 2012, the High Court Rules have provided for two kinds of discovery, namely “standard discovery” and “tailored discovery”. Standard discovery requires each party to disclose documents that are or have been in that party’s control and are documents on which the party relies, or adversely affect that party’s or another party’s case, or support another party’s case. The intention was to replace the previous rule with one that was narrower in scope. Formerly, under what was commonly known as the Peruvian Guano test, the obligation was to disclose documents that were or might be relevant to issues in the proceeding, or may lead to a train of inquiry. But the references in the new rule to the cases of the parties means that relevance will still be a hallmark of what has to be discovered. As with evidence, the relevance of a document for discovery purposes must be assessed having regard to the pleaded claim.
(footnotes omitted)
[13] The Court of Appeal reaffirmed that relevance is to be assessed according to the pleadings: New Zealand Rail Limited v Port Marlborough New Zealand Ltd.3
Analysis
[14] The principal issues in the case are relatively straightforward. Was Rintoul’s work under 5/16/008 completed by the end of January 2016 at a price of no more than $171,000, or was substantive work (as opposed to work which properly could be regarded as variations) still required after the end of January 2016 and was the ultimate true cost of the contract more than $171,000?
[15] The focus is not, as Mr Christie for the Council framed it, on what work was done prior to end of January but rather, what, if any, work was done after the end of January? It is only documents that would bear on the issue of what work was done
after the end of January that can be relevant. The Council’s case is that contract
2 Chatfield & Co Ltd v Commissioner of Inland Revenue [2016] NZCA 614.
3 New Zealand Rail Limited v Port Marlborough New Zealand Ltd [1993] 2 NZLR 641 (CA) at
644.
5/16/008 was not completed by the end of January 2016 and further, that additional costs (over and above $171,000) were claimed under the contract after that date.
Category 1
[16] In determining the application the Court is entitled to take into account the evidence before it and the surrounding circumstances. Mr Schollum, the contracts administrator for Rintoul, has deposed that daily and weekly reports, timesheets or invoices in relation to the contract beyond 28 January 2016 do not exist.
[17] That answers the first category of documents sought by the Council. The documents do not exist. There are no daily and weekly reports, timesheets or invoices of the plaintiff in relation to the contract relating to contract works beyond
28 January 2016.
Category 2
[18] Ms Grant provided the Court with copies of the diary entries for Rintoul’s project manager for the period from 6 January through to 24 March 2016. They are consistent with Rintoul’s position that work under 5/16/008 was completed by the end of January 2016. I accept Mr Christie’s point that they will be subject to cross- examination, but his suggestion that records of the metal supplied might show deliveries of metal after January 2016 is speculative.
[19] Ms Grant also provided the Court with copies of the claims which disclose the total value of the works and materials claimed by Rintoul. The first claim is for works and materials to 25 January, but certified on 31 December 2015 at
$126,023.88 together with variations of $9,510.00, in total $135,533.88. The second is a further payment claim submitted on 3 June 2016, which records the original contract price claimed was $161,567.50 (which is actually under the $171,000 figure stated by Rintoul in its tender) and that the variations claimed totalled $26,547.50.
[20] The second payment claim confirms that the metal claimed for in the June claim was the same quantity claimed in the first claim for works to 25 January. In
fact it was the same figure as the provisional sum. There is no evidentiary basis to suggest metal was supplied after the end of January.
Category 3
[21] The payment claim submitted 3 June 2016 details 15 variations to the contract. Each claim is described in sufficient terms to identify the work in issue, for example the first six claimed are:
01 Supply and install rock spalls at Treatment Station
02 Cleaning Drains
03 Supply and install 2 culverts
04 Harry Crossing
05 Helping Crossings
06 Farmers Crossings – install brown rock.
[22] They were also claimed as variations in the first payment claim.
[23] Ms Grant submitted that the variations were sufficiently identified for the parties (and the Court ultimately) to determine as a matter of law whether the variations came within the ambit of the contract. The documents detailing the work claimed for or material used in the variations were, in her submission, not relevant. I agree with Ms Grant’s submission. The contractual documents will identify the scope of the work to be included under the contract. If work claimed as variations should have been carried out under the original contract then that will support the Council’s substantive claim. But if the work claimed as variations was not included as part of the scope of the contract, the Council will not be able to rely on the amount claimed for them as establishing an increase in the substantive contract price. It is not necessary to have discovery of the amount of material or work sheets for the claimed variations to resolve that issue. The variations claimed for are identified as is the price claimed for each item.
Category 4
[24] A provisional sum is referred to twice in the documentation. The final payment claim records a provisional sum for imported river gravel fill (truck measure provisional) at $14,250 based on a quantity of 1,500 cubic metres at $9.50. The value of the work completed claims $14,250 for that provisional sum. That figure is included within the total figure claimed of $161,567.50. There is no basis upon which it can be claimed that the provisional claim sum could have escalated the contract price beyond the $171,000.
[25] The second reference to a provisional sum is for contingencies. A provisional sum for contingencies of $20,000 was provided for in the original estimated contract value of $179,379. That contingency was not claimed for at all in the final payment claim submitted on 3 June 2016.
[26] The provisional sums can have no significance or relevance to the principal issue. Further discovery of the documents relating to them is not required.
Result
[27] For those reasons I am not satisfied that it can be said the documents should be discovered. The application is dismissed with costs to Rintoul on a 2B basis together with disbursements as fixed by the Registrar.
Counterclaim
[28] The Council also initially pursued a counterclaim. However, the Council has filed a discontinuance of the counterclaim dated 1 February which records the parties have agreed that the defendant discontinues the counterclaim and that costs on the discontinuance are to be reserved for determination after trial of Rintoul’s claim.
Further directions
[29] This case has a fixture for four days commencing 1 May 2017. Counsel are to file a joint memorandum by 24 February 2017 setting out a revised timetable to
ready it for that hearing.
Venning J
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