Triastra Ltd v The Proprietors of Taharoa “C” Block

• Jurisdiction: New Zealand
• Judge: Fitzgerald J
• Judgment Date: 06 September 2019
• Neutral Citation: [2019] NZHC 2230
• Court: High Court
• Docket Number: CIV-2015-419-318
• Date: 06 September 2019

Between

Triastra Limited

Plaintiff

and

The Proprietors of Taharoa “C” Block

Defendant

[2019] NZHC 2230

Fitzgerald J

CIV-2015-419-318

IN THE HIGH COURT OF NEW ZEALAND

AUCKLAND REGISTRY

I TE KŌTI MATUA O AOTEAROA

TĀMAKI MAKAURAU ROHE

Contract — interpretation of contract — unlawful termination — reasonable notice for termination — damages — implied terms

Counsel:

BD Gustafson and FD Porteous for plaintiff

AJ Horne and JJK Spring for defendant

JUDGMENT OF Fitzgerald J

This judgment was delivered by me on 6 September 2019 at 10:30 am, pursuant to Rule 11.5 of the High Court Rules.

Registrar/Deputy Registrar

Date

Contents

Introduction	[1]
The pleaded claims	[7]
Observations on the evidence	[12]
Factual background — more detail
The wind farm project	[18]
The contractual arrangements with Triastra	[20]
Agreements with potential joint venture partners	[27]
Taharoa's letter of 26 July 2012 and ensuing correspondence	[30]
Triastra's work after 18 October 2012	[38]
Developments in first half of 2013	[47]
Taharoa's second purported termination	[51]
Events in the second half of 2013	[61]
Triastra claims payment for the period June to November 2013	[63]
Did Taharoa validly terminate the Final Agreement as of 18 October 2012?
Introduction	[65]
Interpretation of termination clause	[66]
Did the July Letter give three months' notice of termination?	[71]
The parties' relationship from 18 October 2012 to June 2013
The parties' submissions	[81]
Discussion	[84]
Termination of the Ad Hoc Contract
Should a term be implied that the Ad Hoc Contract was terminable on reasonable notice?	[89]
What was a reasonable notice period?	[91]
Triastra's estoppel claim
Legal principles	[103]
Discussion	[104]
Result and next steps	[113]
Costs	[117]

Introduction

1 The plaintiff (Triastra) and the defendant (Taharoa) were parties to a contract pursuant to which Triastra provided consultancy services to Taharoa. The services related to the investigation and pursuit of a wind farm by Taharoa on land it owned near the Kawhia Harbour.

2 The parties had been in a contractual relationship since 2005. This comprised a series of written agreements which were extended by mutual agreement from time to time. Under those arrangements, there was the potential for Triastra to earn a substantial success fee in connection with the wind farm project.

3 But in July 2012, Taharoa purported to terminate the contractual arrangements, by giving Triastra three month's written notice (such that the arrangements came to an end in October 2012). A key issue for determination in these proceedings is whether Taharoa was entitled to give such notice, and even if so, whether its July 2012 letter was effective in doing so.

4 Irrespective of the resolution of the above issue, there is no dispute Triastra continued to provide consulting services to Taharoa after October 2012 and that Taharoa continued to pay for them. This gives rise to subsidiary issues as to the basis upon which those services were provided and paid for, and whether a later letter sent by Taharoa in May 2013 was effective in bringing to an end whatever arrangements were then in place.

5 When Triastra first filed its claim, it sought some $2 million by way of damages for what it said was Taharoa's unlawful repudiation of the contractual arrangements. By the time of the hearing before me, however, the issues had narrowed and Triastra's claim had reduced to approximately $155,000.

6 Before setting out the factual background to the claim in more detail, and to put that background into its proper context, it is helpful first to summarise Triastra's pleaded claims.

The pleaded claims

7 There is no dispute a contractual arrangement existed between the parties over the period 25 February 2008 to 18 October 2012 (the “Final Agreement”). Taharoa says it was entitled to terminate the Final Agreement by giving three months' notice, and that it gave such notice by way of a letter dated 26 July 2012. It therefore says the Final Agreement came to an end in October 2012.

8 Triastra does not agree. It first argues that the Final Agreement does not permit (unilateral) termination on three months' notice. It further says that Taharoa's July 2012 letter, properly construed, was intended to vary the terms of the Final Agreement only, rather than to terminate it.

9 Triastra's first cause of action for breach of contract is therefore predicated on the Final Agreement remaining in force until three months after receipt by it of a letter from Taharoa's solicitors dated 3 December 2013 (which it accepts did give notice of termination of the agreement). Triastra claims approximately $155,000, being amounts it says ought to have been paid to it under the Final Agreement over the period June 2013 to March 2014.

10 In the alternative, if the Final Agreement was validly terminated by Taharoa's July 2012 letter (and thus came to an end on 18 October 2012), Triastra says that an unwritten agreement came into force at that point, which contained an implied term that it could only be terminated by giving three months' prior notice. 1 In purporting to give two weeks' notice of termination in May 2013, Triastra says Taharoa breached the implied term and the (unwritten) agreement therefore remained in force (until the three months' notice of termination referred to at [7] above). Taharoa, on the other hand, says that after 18 October 2012, no contract existed between the parties. It says that on 21 May 2013, it validly gave two weeks' notice of termination of all arrangements between the parties, with those arrangements terminating on 4 June 2013.

11 Finally, Triastra pleads in the alternative that if Taharoa is not contractually obliged to pay Triastra's outstanding invoices, it nevertheless gave instructions to Triastra over the period June to 30 November 2013 to continue to carry out work on the wind farm project (for which Triastra would be paid). Triastra says it reasonably relied on those instructions and carried out the requested work. It therefore says it would be unconscionable for Taharoa to act in a manner contrary to its representations. The same sum is sought by way of damages on this cause of action as on the contractual causes of action.

Observations on the evidence

12 Before turning to the factual background, I first make some brief observations on the evidence generally.

13 The issues in this case are relatively narrow, focussing primarily on contractual interpretation, and the proper interpretation and effect of certain correspondence which passed between the parties. Those are objective inquiries. Despite this, however, there was considerable (inadmissible) evidence of witnesses' subjective views and opinions on the interpretation and effect of various contracts and items of correspondence.

14 Triastra's evidence was largely given by its sole shareholder and director, Mr Adam Poulopoulos. I do not rely solely on Mr Poulopoulos' evidence on contested factual matters, unless corroborated by other parties' evidence or contemporaneous materials. While I do not intend any direct criticism of Mr Poulopoulos in this context, he had in my view a natural tendency to “talk up” the contents of documents and factual matters. That is perhaps understandable, given his long-standing work on the wind farm project and his inevitable disappointment when the project was abandoned. But by way of example only, Mr Poulopoulos said in evidence that his contract with Taharoa:

… provided that Triastra would not charge Taharoa its standard hourly rate of $250 per hour plus GST but instead would reduce that hourly by 50 per cent to $125 per hour plus GST for hours incurred after May 2015.

15 The contract does not, however, say anything to that effect. It simply provides that Triastra will bill Taharoa $16,000 (plus GST) a month, plus expenses. While Mr Poulopoulos said the $16,000 per month did in fact reflect a reduced fee on his part, that is quite different to a contractual term to that effect.

16 Similarly, Mr Poulopoulos said his contract with Taharoa provided that “Triastra would receive a success fee when it had completed its part in the project”. Again, however, that is not what the contract says. It instead states “ should a success fee be payable to Triastra…”. A further example is Mr Poulopoulos' evidence of ANZ Bank's willingness to fund the wind farm project. The overall impression he gave, both in contemporaneous documents and in his evidence, was that ANZ had agreed to provide funding of approximately $70 million, 2 subject to certain conditions precedent being satisfied. However, there was no documentary evidence of any formal funding offers or agreements to lend on ANZ's part.

17 A further issue was that a number of persons who represented Taharoa in its dealings with Triastra were either unavailable or not called to give evidence. This meant that witnesses who were called on behalf of Taharoa were often giving evidence on matters in respect of which they did not have any personal involvement or knowledge. There was also a lot of evidence about the overall viability of the wind farm project and Taharoa's ability to finance it. However, little, if any, of that evidence is relevant to the issues I must determine. For that reason, I have not addressed that evidence in any detail in the following factual background section of this judgment.

Factual background — more detail

The wind farm project

18 Taharoa is a Maori incorporation which owns land near the Kawhia Harbour (known as the “Taharoa C Block”). The land is known for its iron sands mining operation, for which Taharoa has received a royalty. Since 2018, it has been...