C & R Construction Ltd v Taharoa Ironsands Ltd and Others
| Jurisdiction | New Zealand |
| Judge | P J Andrew |
| Judgment Date | 28 May 2021 |
| Neutral Citation | [2021] NZHC 1222 |
| Docket Number | CIV-2020-419-000087 |
| Court | High Court |
JUDGE P J Andrew
CIV-2020-419-000087
IN THE HIGH COURT OF NEW ZEALAND
HAMILTON REGISTRY
I TE KŌTI MATUA O AOTEAROA
KIRIKIRIROA ROHE
Civil Procedure — application for tailored discovery — whether documents in an abandoned counter claim remained relevant to the substantive claim for rectification of a contract — issues of proportionality — principles relating to applications for varied discovery — for High Court Rules 2016
C P Browne and K P Woodward for Plaintiff
R J Gordon for Defendants
This judgment was delivered by Associate Judge Andrew
dated 28 May 2021 at 12 noon
pursuant to r 11.5 of the High Court Rules
Registrar / Deputy Registrar
Date
C & R Construction Ltd (C & R) owns earthmoving and other related machinery which it hires to Taharoa Ironsands Ltd (Taharoa). Taharoa uses the machinery for carrying out its iron sand mining operations south of Kawhia.
In the substantive proceedings, C & R seeks rectification of a written commercial contract entitled “ Variation and renewal of the agreement for the hire of goods (Mobile Mining Equipment); Dry Hire)” (the Variation) entered into in 2018. At issue is whether the Variation should be rectified to enable C & R to charge “minimum hours” to Taharoa as expressly provided for in the original agreement for the hire of goods in 2015.
In an interlocutory judgment dated 21 October 2020, 1 Associate Judge Smith made tailored discovery orders. They included the requirement to provide documents in “category 10”. The sealed orders of 21 October 2020 record category 10 as follows:
Category 10: Taharoa's fourth counterclaim
– Documents in a party's control relating to the “back-up arrangements for the hire of earthmoving equipment” and “holding costs” pleaded in paragraphs 86–88 of the ASoDCC, including correspondence regarding the arrangements, relevant board minutes and resolutions, order forms, delivery, receipts and payments.
In its third amended statement of defence and counterclaim dated 14 December 2020, Taharoa abandoned its fourth counterclaim. It did not provide discovery in accordance with category 10.
In the present proceeding, there are two interrelated interlocutory applications that require determination:
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(a) Application by Taharoa for an order under r 8.17 of the High Court Rules 2016 varying the tailored discovery order of Associate Judge Smith so as to remove category 10;
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(b) Application by C & R for discovery and inspection orders (rr 8.10 and 8.18) requiring Taharoa to provide discovery of documents falling within category 10.
The critical issue for determination is whether, despite the abandonment of Taharoa's fourth counterclaim, documents in category 10 remain relevant to the claim for rectification and, if so, does an issue of proportionality arise?
The factual background is comprehensively set out by Associate Judge Smith in his judgment of 21 October 2020. 2 I gratefully adopt [1]–[35] of that judgment. As Associate Judge Smith records at [13], the substantial dispute between the parties concerns whether the Variation properly recorded the actual terms discussed and agreed between the parties in March and April of 2018.
C & R's substantive case is that the parties never agreed or intended to remove the existing minimum hours provisions from the original agreement; they simply agreed to supplement those provisions so that they would apply to the additional machines. C & R contends that the Variation does not accurately record the common intention of the parties, and that it should be rectified accordingly.
Taharoa denies the rectification claim. It says that it intended the removal of the minimum hours provisions in the original agreement and that the Variation as signed correctly reflected that intention.
Taharoa filed and served a second amended statement of defence and counterclaim dated 13 November 2020 (i.e. subsequent to the tailored discovery orders of Associate Judge Smith). That pleading retained the fourth counterclaim to which category 10 relates.
The third amended statement of defence and counterclaim, which abandoned the fourth counterclaim, was filed and served on 14 December 2020.
Taharoa served its affidavit of documents (i.e. tailored discovery) on 14 December 2020, in the same email serving its third amended statement of defence and counterclaim. As noted, it did not and has not provided discovery of documents in category 10.
Rule 8.17 of the High Court Rules reads:
Variation of discovery order
(1) Subject to rule 7.7, a party may apply for an order varying the terms of a discovery order.
(2) The variation may be granted by a Judge on the ground that –
(a) compliance or attempted compliance with the terms of the order has revealed a need for a variation; or
(b) there has been a change of circumstances that justifies reconsideration.
As noted by the learned authors of McGechan on Procedure, changes to the scope of what must be discovered may be sought under r 8.17 by any party. 3 One of the grounds in sub-clause (2) must be satisfied.
In Lyttleton Port Company v Aon New Zealand, 4 Associate Judge Osborne held that the four-stage test for further and better discovery, as set out in Assa Abloy NZ Ltd v Allegion (NZ) Ltd, 5 was the correct approach to take to a variation case under r 8.17. The four factors are as follows:
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(a) Are the documents sought relevant, and if so, how important will they be?
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(b) Are there grounds for belief that the documents sought exist? This will often be a matter of inference. How strong is that evidence?
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(c) Is discovery proportionate, assessing proportionality in accordance with Part 1 of the discovery checklist in the High Court Rules?
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(d) Weighing and balancing these matters, in the Court's discretion applying the rule, is an order appropriate?
As Mr Gordon submitted, the issue is identical in both applications — and stands or falls on whether category 10 should now be varied.
It is clear that category 10 is integrally linked to Taharoa's counterclaim. That is apparent from both the heading and the description itself. Express reference is made to paragraphs 86–88 of the amended statement of defence and counterclaim. In the circumstances, it is entirely understandable that Taharoa did not provide discovery of documents in category 10 once it had abandoned its fourth...
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