Skycity Entertainment Group Limited v MPF Parking NZ Limited

[2023] NZHC 1818

IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE

CIV-2023-404-624

[2023] NZHC 1818

UNDER

the Declaratory Judgments Act 1908 and Part 18 of the High Court Rules

IN THE MATTER OF

the interpretation of a Concession Agreement

BETWEEN

SKYCITY ENTERTAINMENT GROUP LIMITED

First Plaintiff

SKYCITY AUCKLAND LIMITED
Second Plaintiff

AND

MPF PARKING NZ LIMITED

Defendant

Hearing:	12 July 2023
Appearances:	D J Cooper KC, H McQueen and D Scholes for Plaintiffs J Cooper KC, T J Lindsay and S McNae for Defendant
Judgment:	12 July 2023
Reissued:	17 July 2023

JUDGMENT OF LANG J

[on interlocutory issues]

This judgment was delivered by Justice Lang On 12 July 2023 at 3.30 pm

Pursuant to r 11.5 of the High Court Rules Registrar/Deputy Registrar

Date:…………………………

SKYCITY ENTERTAINMENT GROUP LTD v MPF PARKING NZ LTD [2023] NZHC 1818 [12 July 2023]

[1]                  In this proceeding the plaintiffs (together, SkyCity), seek a declaratory order under the Declaratory Judgments Act 1908 (the Act) as to the interpretation of a clause in a complex commercial contract. In this judgment I determine the following interlocutory applications:

(a)an application by the defendant, MPF Parking NZ Ltd (MPF), seeking variation of the default procedures that apply to proceedings filed under Part 18 of the High Court Rules 2016;

(b)an application by MPF for orders for tailored discovery; and

(c)an application by SkyCity seeking pre-trial and trial directions.

Background

[2]                  The parties entered into a contract known as a Concession Agreement. In consideration for a payment in the sum of $220 million, SkyCity granted MPF a long- term concession to operate carparks situated in both the SkyCity Casino site in central Auckland and the New Zealand International Convention Centre, which was to be built a short distance away.

[3]                  Fire subsequently damaged the Convention Centre before it had been completed and SkyCity elected to reinstate carparks in an area that had been damaged in the fire. SkyCity failed to complete the remediation works within the timeframe stipulated in the Concession Agreement. MPF then exercised its right to terminate the Concession Agreement. SkyCity accepts that the termination of the agreement was valid.

[4]                  Upon termination, SkyCity was required to pay MPF a sum by way of compensation. This was defined in the agreement as being “the market value of the concession calculated as at the date immediately prior to the destruction or damage” to the premises. The question of contractual interpretation on which SkyCity seeks a declaration is whether the agreement required the market value to be determined as at the day before the fire, being 21 October 2019, or the day before the termination date, being 24 November 2022.

[5]                  Although the question is narrow, the amount at stake is significant. Under its argument, SkyCity would be required to pay MPF the sum of approximately $188 million. MPF advances an argument under which is entitled to a payment in the sum of $240 million.

[6]                  Sky City says there is an urgent need to have the dispute resolved. The agreement technically remains on foot until such time as Sky City has paid the compensation sum. This means that, in addition to the compensation sum, Sky City is also required to pay MPF daily compensation amounting to approximately $44,000 plus GST per day.

The application for modification of the default procedure under Part 18 of the High Court Rules 2016

Affidavit or oral evidence?

[7]                  The High Court Rules require applications under s 3 of the Act to be brought using the procedure prescribed by Part 18 of the High Court Rules.1 It was SkyCity’s choice as plaintiff to file the proceeding under Part 18. As SkyCity points out, MPF has itself counterclaimed seeking a declaration under s 3 of the Act.

[8]                  Rule 18.5 requires evidence in Part 18 proceedings to be given by affidavit or agreed statement of facts, unless a Judge directs otherwise. SkyCity contends that the evidence in the present case ought to be adduced by affidavit in the usual way, and that there should be no or limited cross-examination.

[9]                  MPF contends that it is entitled to adduce evidence relating to the commercial context in which the parties entered into the agreement. It submits that the interpretation of a contract will generally be a question of mixed fact and law. It says that evidence relating to pre-contractual negotiations may be necessary to provide the factual matrix against which the parties entered into a contract. This may assist the Court in interpreting provisions of the contract in dispute.

1      High Court Rules 2016, r 18.1(b)(v).

[10]              MPF intends to call at least two witnesses of fact and two or three expert witnesses. It therefore says the default procedure should be varied to enable the witnesses to provide briefs of evidence and give oral evidence at the hearing. They would also be subject to cross-examination in the usual way.

[11]              SkyCity takes a different view. It contends the interpretation of a contract is essentially a question of law, although extrinsic or background facts may in some cases be admissible to assist the Court to interpret the contract. In such cases the factual matters must meet the threshold requirement of relevance.

[12]              At this stage I obviously cannot say whether the evidence that MPF wishes to adduce is relevant or not. The interests of justice also require me to give MPF a reasonable opportunity to prepare and file its evidence. However, there is at present nothing before the Court to suggest that the Part 18 procedure is unsuited to the determination of the interpretation issue that lies at the heart of the proceeding. I therefore direct that evidence is to be given by affidavit in the usual way.

[13]              A further difficulty in the present case is that, as Mr Cooper points out on SkyCity’s behalf, MPF’s pleadings do not identify any extrinsic factual issues that are said to be relevant to the Court’s interpretation of the agreement. Rather, they refer to broad concepts such as “the field in which the parties are operating”, “the nature and purpose of transactions similar to the Concession”, “background knowledge which would have been reasonably available”, “evidence of common intention” and “business common sense”. MPF accepts that it will need to amend its pleadings to remedy this issue. It proposes to file and serve an amended statement of defence and counterclaim when it files and serves its evidence.

Reply evidence

[14]              SkyCity has already filed the only affidavit on which, at this stage, it proposes to rely. This exhibits the Concession Agreement and provides a general outline of the circumstances that led to the termination of the agreement. It also traverses the steps the parties (unsuccessfully) took following termination of the agreement to have the compensation sum determined by two valuers and an umpire. The affidavit does not traverse the negotiations that preceded the agreement.

[15]              To guard against the prospect that it may be caught by surprise, SkyCity seeks leave to file reply evidence. It wishes to have this opportunity in case MPF adduces evidence to which SkyCity is required to respond.

[16]              I am satisfied it is appropriate to make the directions SkyCity seeks. I therefore direct that SkyCity will have the ability to file reply affidavits responding to matters raised in MPF’s evidence should it wish to do so.

[17]              It is premature to determine whether cross-examination should be permitted at trial. That issue can only be determined once the evidence is in final form.

[18]              I therefore dismiss the application seeking orders departing from the procedure prescribed under Part 18 of the High Court Rules.

Application for discovery

[19]              Discovery is not usual in proceedings under the Act, although tailored discovery may be appropriate in some cases. MPF contends that SkyCity may hold file notes or other internal memoranda that record oral discussions between its representatives and MPF’s representatives before the parties entered into the agreement.

[20]              This may be so, but MPF is under an obligation to identify the issues that it wishes to explore through discovery. These must be based on the pleadings. However, MPF’s pleadings are currently silent as to the manner in which issues discussed during pre-contractual negotiations are relevant to the interpretation of the agreement. This provides a complete answer to all aspects of the application for discovery.

[21]              On a subsidiary matter, MPF presumably knows which oral discussions are relevant to the issues it wishes to raise because its representatives were party to those discussions. It should therefore be able to identify with precision the discussions for which it seeks discovery of documents from SkyCity. It has failed to do this.

[22]              I record also that during the hearing Mr Cooper advised me on SkyCity’s behalf that his client has in fact undertaken a search for any documents that would have been

captured by the discovery orders that MPF sought. He says SkyCity has unearthed less than 50 documents that fall within this description.

[23]The application for discovery is dismissed.

Pre-trial directions

[24]              Ms Cooper sought a direction that MPF be given until 6 September 2023 to file and serve its evidence. I consider this would create unacceptable delay given the relatively narrow scope of evidence appropriate in the present context. However, the directions that I make mean that the trial tentatively scheduled to commence on 14 August 2023 will no longer be viable.

[25]              I therefore make the following pre-trial directions to bring the proceeding to a state of readiness for a trial of two days duration commencing on a date to be advised by the Registry during the week of 18 September 2023:

(a)MPF is to file and serve its affidavits by 18 August 2023;

(b)MPF is to advise SkyCity of its common bundle nominations by 18 August 2023;

(c)The close of pleading date will be 18 August 2023;

(d)SkyCity is to file and serve any reply affidavits by 1 September 2023;

(e)SkyCity is to file and serve its submissions together with the common bundle no later than 4 September 2023;

(f)MPF is to file and serve its submissions no later than 13 September 2023.

[26]              The trial tentatively scheduled to commence before me on 14 August 2023 is vacated.

Lang J