The Rintoul Group Limited v Far North District Council
[2019] NZHC 2577
•10 October 2019
IN THE HIGH COURT OF NEW ZEALAND WHANGAREI REGISTRY
I TE KŌTI MATUA O AOTEAROA WHANGĀREI-TERENGA-PARĀOA ROHE
CIV-2019-488-000036
[2019] NZHC 2577
BETWEEN THE RINTOUL GROUP LIMITED
Appellant
AND
FAR NORTH DISTRICT COUNCIL
Respondent
Hearing: 26 September 2019 Appearances:
R C Mark for the Appellant
G J Christie for the Respondent
Judgment:
10 October 2019
JUDGMENT OF MOORE J
This judgment was delivered by me on 10 October 2019 at 3:00 pm pursuant to Rule 11.5 of the High Court Rules.
Registrar/ Deputy Registrar Date:
THE RINTOUL GROUP LIMITED v FAR NORTH DISTRICT COUNCIL [2019] NZHC 2577 [10 October 2019]
Introduction
[1] In 2014 The Rintoul Group Limited (“Rintoul”) contracted with the Far North District Council (“the Council”) to undertake various road works. Relevant to the present proceedings are three particular works; a culvert replacement on West Coast Road, slip repairs on Awaroa Road and Broadwood Road and slip repairs on Mangakahia Road. The five contracts which lie at the centre of these proceedings all arise from these works.
[2] In circumstances more fully set out below differences emerged between the parties. These led to Rintoul commencing proceedings in June 2018 against the Council in the Kaikohe District Court. The claim totalled $61,202.49 made up of retentions claims and/or interest said to be owing under the contracts. Rintoul sought summary judgment on the basis that the application of the Construction Contracts Act 2002 (“the CCA”) meant that the Council had no defence to Rintoul’s claims for payment.
[3] The Council responded to the claim in September 2018. It did not file a statement of defence. Instead it filed an appearance under protest to jurisdiction. It claimed the contracts were the subject of genuine disputes which, under the governing terms of the contracts, were required to be referred to arbitration. As a consequence, the Council claimed the Court was required to stay the proceedings and refer the matter to arbitration.
[4] On 18 April 2019 Judge K B de Ridder decided the issues in favour of the Council.1 He took the view there was a clear dispute. He stayed the proceedings and referred the disputes to arbitration. Rintoul now appeals.
The general conditions
[5] Before moving to discuss the five contracts involved in this case it is necessary to examine the general conditions which govern the process of payment and how
1 Rintoul Group Ltd v Far North District Council [2019] NZDC 7305
disputes between the Council and roading contractors are to be dealt with under the CCA.
[6] Each of the contracts incorporated Conditions of Contract for Building and Civil Engineering Construction (“the Standard Conditions”) published by Standards New Zealand. These are contained in NZS3910:2003 and NZS3910:2013. The 2013 iteration partly superseded the 2003 version. For the purposes of these proceedings there are no material differences. For that reason, the Judge used the term “the New Zealand Standard” to refer to both.2 I shall do the same.
[7] The general conditions were summarised by the Judge. Neither party has taken issue with that summary and so I adopt it:
“[10] Condition 12 of the NZ Standard provides specific detailed provisions for the issue of payment claims as permitted by s 14 of the Construction Contracts Act and makes further provision relating to payment schedules over and above those set in s 21 of the Construction Contracts Act. Condition
12.3.1 provides that the Council retain retention monies as required under the Special Conditions of the contract. The Special Conditions of this contract specifically provided for retention monies at the specified rate.
[11] 12.3.2 requires the Council to pay Rintoul any remaining defects liability retention within 10 working days after the date of the Final Completion Certificate for the whole of the contract works.
[12] 12.4 and 12.5 make specific provision for a final payment claim and a final payment schedule, with the final payment claim to be submitted by Rintoul not later than one month after the issue of the Final Completion Certificate or within such further time as the Engineer may allow. 12.6 provides that upon the issue of the final payment schedule the Council ceases to be liable to Rintoul except to pay the amount payable on the final payment schedule together with any retention monies under 12.3.
[13] 13.1.2 and 13.2.1 of the NZ Standard provide a mechanism for referring disputes and differences concerning the contract to the Engineer appointed under the contract. 13.4.1 provides that if either the principal or the contractor is dissatisfied with the Engineer’s formal decision, or no formal decision is given within the prescribed time then either party may require the matter in dispute be referred to arbitration.
…
[23] …12.7 of the NZ Standard makes provision for the payment of interest ‘on all scheduled amounts shown as payable in the Payment Schedule and remaining unpaid after expiry of the time provided for payment’.”
2 See [2].
[8]I now turn to discuss the individual contracts.
The contracts
[9] As noted, there are five contracts relevant to these proceedings. These related to the three roading works. The chronologies which follow are drawn from the District Court judgment, the sworn evidence and the chronologies filed by both parties.
West Coast Road
[10]The relevant events are:
(a)9 January 2014: the parties entered into a contract to replace a culvert on West Coast Road (“the West Coast Road contract”). The contract documents recorded that the agreement included the NZ Standard and Special Conditions.3 Included in these was the requirement that any disputes between the parties must, after the process of the Engineer’s formal decision, be referred to arbitration;
(b)21 August 2014: Rintoul completed construction of the culvert;
(c)21 November 2014: the Council emailed Rintoul alleging certain defects;4
(d)15 December 2014: Rintoul sealed the road without addressing the Council’s concerns;
(e)17 December 2014: the Council wrote to Rintoul noting that the sealing had been carried out but assuming that the seal applied was a temporary fix (“sacrificial seal”) to cover the Christmas period before it was later rectified with a final seal;
(f)18 December 2014: Rintoul advised the Council the seal was final;
3 This is the only contract with incorporated the 2003 NZ Standard. As noted at [6] the relevant conditions are identical to the 2013 NZ Standard.
4 These related to alleged defects in the sub-soil.
(g)10 February 2015: the Council requested Rintoul to return to the site and rectify the outstanding defects including re-sealing. Rintoul did not respond;
(h)1 May 2015: the Council followed up its earlier email asking Rintoul to rectify outstanding defects including a re-seal. Rintoul did not respond;
(i)21 January 2016: the Engineer confirmed re-seal work related directly to the site and authorised an alternative contractor, Fulton Hogan, to undertake the remedial work. The Council used the contract retentions withheld from Rintoul to pay Fulton Hogan. The amount paid to Fulton Hogan was $4,440.14 greater than the total of the retentions;
(j)3 May 2016: Rintoul requested release of the retentions. The Council did not respond;
(k)31 January 2017: Rintoul lodged a payment claim for the retention monies pursuant to the CCA. The Council did not issue a payment schedule within the time prescribed by the CCA;
(l)1 November 2018: the Council’s in-house solicitor advised the Council was paying the remaining balance on the retention monies (under contracts other than the West Coast Road contract) after allowing for the shortfall between what was paid to Fulton Hogan from the retentions for the West Coast Road contract.
Awaroa/Broadway Road
[11]The relevant events are:
(a)19 December 2014: the parties entered into a contract to undertake slip repairs on Awaroa Road and Broadwood Road (“the Awaroa/Broadwood Road contract”);
(b)July 2015: the Council claimed Rintoul had failed to complete outstanding work on two projects;
(c)10 August 2015: the Council gave Rintoul notice to complete the work within five working days;
(d)21 August 2015: the Council emailed Rintoul and advised that the work remained outstanding and gave notice of its intention to engage another contractor. It appears that no other contractor was, in fact, engaged;
(e)19 October 2015: the Engineer issued a Certificate of Practical Completion;
(f)16 November 2015: the Council repeated its request that Rintoul complete the outstanding work on the defects list. Rintoul disputed it was required to do so;
(g)13 February 2017: Rintoul served a payment claim on the Council seeking payment in the sum of $36,052.23 (plus GST). Rintoul asserted this was the balance of the contract price, variations and release of retention monies. The Council did not issue a payment schedule in response. Nor did it pay the sum claimed;
(h)24 February 2017: the Council site note was issued detailing incomplete and outstanding items.
Mangakahia Road
[12]The relevant events are:
(a)2014: the parties entered into three separate, but connected, contracts for slip repairs on Mangakahia Road (“the Mangakahia Road contracts”). The NZ Standard provided for the payment of interest on all scheduled amounts shown as payable in the Payment Schedule and
remaining unpaid after the expiry of the time provided for payment. Two of the three contracts required Rintoul to provide a bond;
(b)31 May 2016: the Engineer certified practical completion of the three contracts;
(c)June 2016: the Council issued a notice certifying release of the sum of
$16,490.83, being funds retained for one of the contracts;
(d)23 August 2016: the Council issued two similar notices for payment of retentions of $3,619.56 and $6,710.45 respectively. Despite this the Council did not pay Rintoul;
(e)14 October 2016: following the reference to arbitration of a dispute concerning two of the Mangakahia Road contracts, the arbitrator found for the Council and issued an interim award as to quantum;
(f)24 November 2016: the arbitrator issued the final award. Rintoul appealed to the High Court;
(g)9 March 2017: Rintoul’s appeal to the High Court was dismissed;5
(h)31 May 2017: the defect period expired;6
(i)29 March 2018: the Council emailed a reconciliation schedule to counsel for Rintoul. This set out its calculation of a set off of the sums owed to Rintoul against the amount of the outstanding arbitration award and costs. Correspondence followed between the parties in which Rintoul claimed release of the retentions and the Council advised of disputes relating to the contracts and confirming its intention to apply set off of any sums owed to Rintoul against the award. The Council
5 By Whata J in Rintoul Group Ltd v Far North District Council [2017] NZHC 364.
6 The special conditions of the contracts stipulated a defects liability period of 12 months for the purposes of condition 11 of the NZ Standard.
referred to the arbitration provisions expressing the view that all disputes should be referred to arbitration;
(j)1 November 2018: the Council’s in-house solicitor advised that the Council had paid all outstanding retentions payable to Rintoul together with interest from 31 March 2018 to 1 November 2018 after the application of the set off.
[13] Rintoul claimed release of the retentions. It also claimed interest on these sums from the end of the defect period, being 31 May 2017.
[14] It is unclear when or if the Council released the bonds in respect of the two contracts under which Rintoul was required to provide a bond.
Rintoul’s claim
[15] The essence of Rintoul’s claim is that the Council did not issue a payment schedule in response to any of Rintoul’s payment claims. Thus Rintoul says its payment claims were due and payable through the operation of s 23 of the CCA. Rintoul claims the CCA draws no distinction between a payment claim for retentions and a payment claim for anything else, including progress payments. It says that by virtue of s 79 of the CCA if the Council wish to pursue their claims against Rintoul then they may do so through other means. But by virtue of s 23 it is indisputable that the payments claims for the retentions were a debt, due and payable.
[16]Thus Rintoul applied for summary judgment, seeking:
(a)payment for its claims for the retentions held under the West Coast Road and Awaroa/Broadwood Road contracts;
(b)interest on the retentions under the Mangakahia Road contracts from the expiration of the defects liability period (31 May 2017) until the payment of the retentions; and
(c)interest on the bonds held by the Council under two of the Mangakahia Road contracts from 31 May 2017, when Rintoul says the bonds should have been released.
Legal framework
The CCA
[17] Section 20(1)(a) of the CCA provides that a payee may serve a payment claim on the payer for payment if “the contract provides for the matter, at the end of the relevant period that is specified in… the contract”.
[18] Section 21(1) allows the payer to respond to a payment claim with a payment schedule. If the payer does not provide the payee with a payment schedule within the time specified by the contract (or within 20 working days if no time is specified), it becomes liable to pay the claimed amount on the due date for the payment.7
[19] Section 23 of the CCA sets out the consequences to the payer if it fails to pay the claimed amount before the due date:
“…
(2)The consequences are that the payee—
(a) may recover from the payer, as a debt due to the payee, in any court,—
(i)the unpaid portion of the claimed amount; and
(ii) the actual and reasonable costs of recovery awarded against the payer by that court…”
[20]A “payment” is defined by the CCA as either:8
(a)a progress payment for construction work carried out under a construction contract; or
7 Construction Contracts Act 2002, s 22.
8 Section 19.
(b)another type of payment under a construction contract to which a party who has agreed to carry out construction work under the contract is entitled for, or in relation to, construction work carried out by that party under the contract.
[21] Section 79 of the CCA provides that in any proceedings for the recovery of a debt under s 23, the Court must not give effect to any counterclaim, set-off or cross- demand raised by any party other than a set-off of a liquidated amount if judgment has been entered for that amount or there is no dispute in relation to the amount.
[22] “Retention money” is defined as “an amount withheld by a party to a construction contract (party A) from an amount payable to another party to the contract (party B) as security for the performance of party B’s obligations under the contract”.9
The Arbitration Act 1996
[23] Also of relevance is art 8(1) of sch 1 of the Arbitration Act 1996. This provides:
“A court before which proceedings are brought in a matter which is the subject of an arbitration agreement shall, if a party so requests not later than when submitting that party’s first statement on the substance of the dispute, stay those proceedings and refer the parties to arbitration unless it finds that the agreement is null and void, inoperative, or incapable of being performed, or that there is not in fact any dispute between the parties with regard to the matters agreed to be referred.”
[24] Under art 8(1) it is not a question of whether there is an arguable defence or an arguable claim; what matters is whether there is an “actual dispute” between the parties.10 As the Supreme Court commented in Zurich Australian Insurance Ltd v Cognition Education Ltd:11
“[36] …If it is clear that the defendant is not acting bona fide in asserting that there is a dispute, or it is immediately demonstrable that there is nothing disputable at issue, there is not in reality any “dispute” to refer to arbitration. In these circumstances, a stay could properly be refused and summary judgment would be available. By contrast, in other situations falling within
9 Section 18A.
10 Lusty v Magill [2018] NZHC 3006, [2019] NZAR 1 at [35].
11 Zurich Australian Insurance Ltd v Cognition Education Ltd [2014] NZSC 188, [2015] 1 NZLR 383.
the broad test (that is, the “no arguable defence” test applied on summary judgment), there will be what can properly be described as “disputes” even though they are ultimately capable of being determined by a summary process.
…
[38] The fact that one party’s view on such a question is held to be incorrect does not mean that there was no legitimate “dispute” on the point… [T]here is a real “dispute” even though a court may ultimately be prepared to grant summary judgment in relation to it. In principle, such a dispute should be referred to arbitration, given the parties’ agreement to utilise the arbitral process and the 1996 Act’s purposes of facilitating the enforcement of arbitration agreements and limiting the opportunities for intervention by the courts.”
[25] A stay may be granted even where the defendant disputes the claim on grounds which the plaintiff is very likely to overcome but not where the defendant is not really raising a dispute at all; the bald assertion of a dispute is not enough to justify the granting of a stay where it is immediately demonstrable that there is, in reality, no dispute.12
District Court decision
[26] The Judge took the view there was a clear dispute between the parties in respect of both the West Coast Road and Awaroa/Broadwood Road contracts:
“[41] …In respect of the West Coast Road contract the Council applied a set off of the sum paid to the alternate contractor instructed by the Council to repair what it says was the defective work carried out by Rintoul against the retention monies held, but that still left a shortfall to the Council. In respect of the Awaroa Road/Broadwood Road contract it appears that the Council simply retained the retention money until the set off applied relating to the arbitral award in March 2018.
[42] It appears that neither party formally invoked the dispute provisions contained in the NZ Standard, nor sought to invoke the adjudication provisions of the Construction Contracts Act. There is no evidence that Rintoul complied with the provisions in the Standard at 12 in relation to providing a final payment claim, and there is no evidence that a final completion certificate was issued.”
[27] Noting that for policy reasons different considerations apply to retentions than to progress payments, the Judge rejected Rintoul’s assertion that the operation of the
12 Zurich Australian Insurance Ltd v Cognition Education Ltd at [39].
default provision in s 23 meant that there could be no dispute.13 Given the length of time between the work completed and the issue of the payment claim for the retention monies, it was uncontroversial that Rintoul was not suffering cashflow issues. In those circumstances, the Judge held it was not appropriate to invoke s 23 to set aside what was clearly a dispute notified by the Council.
[28] In respect of the Mangakahia contracts, the Judge noted that the Council had paid the retention monies along with interest from 31 March 2018 after Rintoul filed its statement of claim. Thus the only outstanding issue was the date from which interest should be calculated: 31 May 2017 as asserted by Rintoul (being the end of the defects period), or 31 March 2018 as asserted by the Council (when the Council set off the sums owed by it to Rintoul against the unpaid arbitral award). Judge de Ridder concluded:
“[45] Neither Rintoul or the Council have pointed to any specific provision in the NZ Standard, or the special conditions of contract which provides for or allows for such a set off. But given that the arbitral award related to two of the same contracts and remained unpaid after the defects period it is at least arguable that interest should not accrue until after the set off was applied. That is clearly an issue which is disputed between the parties, but is capable of determination by arbitration.
[46] This relates equally to the issue of interest claimed on the bond which was withheld by the Council and not released. In particular is interest on the bond a scheduled amount in accordance with 12.7.”
[29] Accordingly, the Judge refused to order summary judgment. Instead he stayed the proceedings and referred the dispute to arbitration.
Submissions
Rintoul
[30] Mr Mark, for Rintoul, submits there can be no dispute that the payment claims for retentions under the West Coast Road and Awaroa/Broadwood Road contracts were a debt, due and payable. His proposition is simple. He relies on the plain meaning of the words in the statute; s 23 of the CCA has the effect that where a valid payment
13 At [43] citing Williams Investment Group Ltd v Kingsview Developments Ltd DC Tauranga CRI- 2007-070-1323, 4 September 2008.
claim has been served by the payee and no payment schedule is filed by the payer in response, there can be no dispute as to the validity and quantum of the payment claim. He says this is the situation in the present case. Through the operation of s 23 there is no dispute between the parties. Thus he submits summary judgment was appropriate and should have been entered.
[31] As for the Mangakahia Road contracts, Mr Mark submits there is no dispute that the retentions were payable from the expiry of the defects liability period in May 2017. The contracts were clear; the bonds were to be released on practical completion. The parties now disagree only on when the Council’s liability for interest runs. But that is a matter of contractual interpretation and any disagreement around the application of what are clear contractual terms cannot amount to a bona fide dispute. These are issues which could not properly be the subject of an arbitration.
Council
[32]For the Council, Mr Christie makes two primary submissions.
[33] First, he submits that the Judge was correct to stay the proceedings and refer the dispute to arbitration. In developing that submission he observed that the default positions in the CCA are to ensure payment for work completed in a particular period in order to maintain the contractor’s cashflow. In contrast, retentions are a claim for the release of a security at the end of a specified period once the contract conditions are met. Thus the default provisions contained in the CCA do not apply to Rintoul’s payment claims for retentions. They were not due and payable under the CCA. Furthermore, these were notified disputes and not amenable to summary judgment.
[34] Secondly, Mr Christie submits the appeal is nugatory. This is because the Engineer made three formal decisions on 29 October 2018. These are final and binding under the NZ Standard.14 As a consequence, irrespective of whether Rintoul is successful on this appeal, the substantive matters which are the subject of the summary judgment application have been determined by the Engineer’s formal decisions.
14 Clause 13.2.4.
Discussion
[35]I am of the view the appeal should be dismissed. My reasons follow.
Is there a bona fide dispute?
[36] First, I am satisfied there is a bona fide dispute between the parties as to whether Rintoul may recover the retentions under s 23 of the CCA. The scope of that dispute is evident in the starkly conflicting submissions. Mr Christie’s submission that it is at least arguable that the CCA provisions relied on by Rintoul are to ensure and promote timely payment for work done by a contractor in a particular period is supported by legal authority.
[37] One of the chief purposes of the CCA is to “facilitate regular and timely payments between the parties”.15 Indeed, as the Court of Appeal observed in George Developments Ltd v Canam Construction Ltd16 cashflow is the “very life blood of the enterprise” in the construction industry. That is why Judge Ingram, in drawing a distinction between progress payments and retentions, observed in Williams Investment Group Ltd v Kingsview Developments Ltd:17
“[25] Within the construction industry retentions are understood to be monies retained for an agreed maintenance period to ensure that the work done and materials supplied meet the contractual specifications. In my view, retentions fall into a different category to progress payments, in the sense that the parties are aware of the primary reason for which the money is being withheld, and agree that the money is to be withheld for the specific purpose of ensuring that contractual obligations are met.
[26] Accordingly, in claims brought under the Construction Contracts Act 2002, argument based on cashflow being the life blood of the industry does not have quite the force where retentions are in issue, as might be the case where claims are made in respect of progress payments due in the course of an extended contract, where the cashflow aspect of matters has great significance because of ongoing commitments to provide labour and/or materials. Retentions are a different beast. Whilst they are caught within the statutory definition of a progress payment, in my view the considerations applicable to retentions are somewhat different to those applicable to other types of progress payment, at least in connection with summary judgment and the residual discretion to decline summary judgment.”
15 Section 3(a).
16 George Developments Ltd v Canam Construction Ltd [2006] 1 NZLR 177 (CA) at [41].
17 Cited by Judge de Ridder at [43].
[38] Mr Mark submits that Williams Investment Group Ltd is readily distinguishable from the present case for two reasons. First, he says that unlike the present case, in Williams Investment Group Ltd there was detailed correspondence following the service of the payment claimed, denying liability for the amount claimed. Except for an acknowledgement of receipt there was no effective response from the respondent. Secondly, the defendant in that case was in liquidation and any payment made pursuant to the payment claim would not have been recoverable in further litigation.
[39] While Mr Mark may be correct, I am of the view that Williams Investment Group Ltd stands for the broader proposition that progress payments are of a different species to retentions. And while there is some attraction to Judge Ingram’s reasoning on the issue, for the purposes of this decision it is not necessary for me to decide the point. My task is to determine whether the Judge in the present case was correct to hold there was a dispute between the parties. The reasoning in Williams Investment Group Ltd drawing a distinction between progress payments and retentions is plainly apposite in this regard.
[40] Supporting that conclusion is the CCA’s statutory scheme. There are indications elsewhere in the CCA that Parliament did not intend funds held on retention to be treated as progress payments capable of being claimed under s 20. For example retentions may be held on trust and invested in accordance with the Trustee Act 1956.18 They may also be intermingled with other monies.19
[41] Secondly, an examination of the chronologies reveals the parties were far from ad idem in respect of each of the works and the consequential payments due. For the West Coast Road contract there was extensive correspondence between the Council and Rintoul. Rintoul could not have been in any doubt that the Council was dissatisfied with the standard of work and requested that Rintoul return to rectify those defects. Rintoul did not respond despite a follow up from the Council. As a consequence, the Council was obliged to engage an alternative contractor, the costs of which exceeded the total of the retentions. A year later Rintoul lodged its payment claim.
18 Section 18F(1).
19 Section 18E(2)(b).
[42] On the Awaroa/Broadway Road contract a similar pattern emerged. In July 2015 the Council claimed Rintoul had failed to complete outstanding work on two projects. It gave notice for Rintoul to complete the work. When that was not done the Council advised Rintoul it would engage another contractor. Despite that advice, the Council repeated its request three months later. Rintoul disputed it was required to undertake the outstanding work on the defects list. Nothing more appears to have happened for another 15 months. Then, on 13 February 2017 Rintoul served a payment claim on the Council despite what was plainly an enduring and unsettled dispute.
[43] The position in respect of the Mangakahia Road contracts is different. The dispute was referred to the arbitrator which Rintoul unsuccessfully appealed to the High Court. There then followed a disagreement over the setting of the date from which interest was payable.
[44] In my view it is plain that in respect of each of the works there is a documented history revealing that the parties were not in agreement.
Is the Council acting bona fide?
[45] This is not a case where the Council has cynically or improperly manufactured its opposition to Rintoul’s rightful claims in order to prevent Rintoul from seeking proper recourse to the Courts. I am satisfied its opposition is genuinely motivated and bona fide because:
(a)although the Council did not provide a payment schedule in response to Rintoul’s payment claim for the West Coast Road retentions that was because Rintoul had failed to remedy the defects and the Council was obliged to engage a further contractor. The cost of that engagement exceeded the retentions;
(b)the retentions for the Awaroa/Broadwood Road contract were never due. This was because Rintoul never attended to the defects. Thus the defects period was never triggered; and
(c)in respect of the Mangakahia Road contracts, it is also apparent there is a dispute as to the date from which interest should be calculated on the retentions. As Mr Christie submitted, it is by no means unusual for issues of contractual interpretation to go to arbitration. The time from which interest is to be calculated is an issue properly amendable to arbitration.
[46] Mr Christie also argued that the appeal has been rendered nugatory by the subsequent determinations of the Engineer. In response, Mr Mark claimed the Engineer’s appointment was in breach of the contract. Thus any decisions made by the Engineer are not binding because his appointment was invalid and made without reference to Rintoul or giving Rintoul the opportunity to be heard. But as Mr Christie pointed out, the counter-factual to that is that if the appointment of the Engineer is challenged then that, too, is indicative of a dispute. This is also a matter which may appropriately be addressed at arbitration rather than by the Court.
Should a stay have been ordered?
[47] Having found that there was a bona fide dispute, the effect of art 8(1) left the Court with no discretion on the question of a stay. That is because, as I have likewise determined, the contracts contain arbitration agreements. Rintoul has not attempted to suggest that those agreements are null and void, inoperative or incapable of being performed. Furthermore, I have found that the Council acted bona fide in asserting there is a dispute and that, in reality, there is a dispute.
Conclusion
[48] I am satisfied that the Judge was correct not to exercise his discretion to grant summary judgment in favour of Rintoul. He was also correct to order a stay pending these issues being ventilated at an arbitration.
Result
[49]The appeal is dismissed.
Moore J
Solicitors:
Mr Mark, Kerikeri
Mr Christie, Auckland
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3
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