New Zealand Supreme Court

Contract, interpretation rules, admissibility of evidence

Bathurst Resources and anor v L & M Coal Holdings Ltd [2021] NZSC 85 (14 July 2021) 

Successful appeal from CA - Arose from dispute over proper interpretation of contract for sale of mining rights in Buller Coalfield - In June 2010, Bathurst Resources Ltd (Bathurst) agreed to purchase coal exploration rights and mining-related applications from L & M Coal Holdings Ltd (L&M) - Transaction structured as sale of all the shares in the company which held the assets, Buller Coal Ltd - Purchase price rights under Agreement for Sale and Purchase (Agreement) was deposit of USD 5 million and settlement cash of USD 35 million - Also, two performance payments, each of USD 40 million, were agreed to be payable when 25,000 tonnes, and then one million tonnes, of coal had been “shipped from the Permit Areas” - Alongside Agreement,  parties executed royalty deed with effect that Bathurst obliged to pay royalties to L&M on all coal sales at a graduated rate, depending on the stage of mining operations – In 2012, Bathurst and L&M entered deed varying Agreement - Deed inserted new cl 3.10 into Agreement - Provided that Bathurst failing to make performance payments when and as due would not be an actionable breach, for so long as relevant royalty payments continued to be made under royalty deed - By September 2015, Bathurst had extracted more than 25,000 tonnes of coal which it sold to a domestic buyer - By early 2016,  significant fall in international coal prices and Bathurst’s domestic buyer had announced its closure - Following these developments, in March 2016 Bathurst suspended mining operations and stopped paying royalties for ongoing mining.

Core issues

Two core issues between parties over Agreement interpretation,  both resolved in L&M’s favour in HC and CA - First, whether first performance payment obligation triggered - Turned on interpreting expression “shipped from the Permit Areas” - Bathurst argued “shipped” should be given literal interpretation, carriage by ship – Therefore, first performance payment not triggered by its extraction and transport off-site of 25,000 tonnes of coal which it sold into the domestic market - Second issue whether, if first performance payment obligation had been triggered, Bathurst contractually entitled under cl 3.10 to continue to defer payment, even though it stopped mining and paying royalties - L&M said Bathurst’s entitlement to defer payment lasted only so long as it was continuing to pay royalties flowing from ongoing mining - If this meaning could not be reached through the interpretation process, L&M asked Court to imply a term to this effect - Bathurst argued cl 3.10 was clear on its own terms, and meant Bathurst could indefinitely defer paying performance payment so long as it continued to pay any royalties that became due under the royalty deed.

Evidence outside contract words

More generally, appeal raised issue of what evidence outside contract words should be allowed to assist with contractual interpretation, and application of the Evidence Act 2006 in this area - Also raised question about test to be applied to implying contractual terms.

Contract interpretation and admissibility of other evidence

All SC agreed approach to be taken to interpreting written contracts governed by law of contract and was an objective task - However, admissibility or otherwise of extrinsic evidence an evidential issue, to be determined according to law of evidence in light of substantive law of contract – Evidence Act governed New Zealand’s evidence law - Relevance and probative value the touchstones for evidence admissibility - Meant, for example, that blanket rule rendering evidence of pre-contractual negotiations inadmissible not justifiable - Regarding implication of terms, all agreed that implication of a term was part of construction of written contract as a whole - Said  unexpressed term could only be implied if strictly necessary, in that the term would spell out what the contract, read against the relevant background, had to be understood to mean.

Implications in this case

All the Court ruled for L&M’s interpretation of the expression “shipped from the Permit Areas” – SC, agreeing with HC and CA , said “shipped” should be given the generic meaning of “transported” - Rejected subjective and uncommunicated declarations of intent as to the meaning of “shipped” from the principals of both parties as inadmissible – This meant first performance payment had been triggered - On second issue, majority said, contrary to HC and CA, cl 3.10 correctly interpreted simply required royalty payments to be made under royalty deed as and when the royalty deed required them – Deed did not impose any new requirement regarding minimum royalty level, or any obligation for Bathurst to develop and exploit the mine – Also said requirements for implying term to this effect not met, and L&M’s other fallback arguments could not succeed - Consequently, Bathurst’s deferring its obligation to pay the performance payment while suspending mining operations had not created actionable breach - Appeal allowed.

Taxation, self-represented litigant, time extension

Dowden v Commissioner of Inland Revenue [2021] NZSC 86 (15 July 2021)

Unsuccessful leave application – Self-represented D applied to appeal CA decision refusing time extension - Around 2010, the Inland Revenue Department | Te Tari Taake (IRD) began investigating D’s tax affairs relating to his business, Safeguard Security – Commissioner assessed him for tax liabilities for the period between 2004 and 2012 – D challenged assessment – Said he transferred his interest in the business to his former partner, J, in December 2003, so she was liable for the tax assessed - Taxation Review Authority (TRA) dismissed D’s challenge in 2018 – HC dismissed his appeal in 2019 – D filed notice of appeal in CA in November 2019 - After unsuccessful application to dispense with security for costs, an unsuccessful application for review of that refusal, and grant of multiple extensions to apply for a hearing date, D’s appeal deemed abandoned on 14 July 2020 – D applied for further time extension to file the case on appeal and pay scheduling fee – Applied for leave to appeal CA decision to SC – CA  acknowledged that delays subsequent to April 2020 attributable to D’s ill health and death of his son in May 2020, and also that some latitude should be allowed to unrepresented litigants – Also said insufficient merit in proposed appeal to justify time extension – SC said application did not raise any issue of general or public importance – CA applied settled law to application - No prospect of miscarriage of justice – Application dismissed.

Interim Environment Court decision, prospect of reversing HC decision, leapfrog appeal

Poutama Kaitiaki Charitable Trust and ors v Taranaki Regional Council and ors [2021] NZSC 87 (15 July 2021) 

Unsuccessful leave application - Concerned interim Environment Court decision regarding re-routing  State Highway 3 through Mangapēpeke forest and wetlands near Mt Messenger and north of New Plymouth – HC dismissed appeal against that decision and P (whose land affected) and PK Charitable Trust, sought leave to appeal to SC from HC decision - No substantial prospect of HC decision on relevant issues being reversed - Sufficient to dispose of leave application – For completeness, nothing in the proposed appeal which came close to satisfying requirements of s 75 of the Senior Courts Act 2016 for leapfrog appeal direct to SC from HC – Application dismissed.

Discovery, CA powers, representation orders

Te Warena Taua and ors v Tahi Entrprises and anor [2021] NZSC 88 (15 July 2021)

Successful leave application - approved question whether the Court of Appeal was correct to dismiss the appeal – SC also said objective of High Court Rules 2016, pursuant to which the discovery orders at issue in this appeal were made, was to secure just, speedy and inexpensive determination of proceedings - SC empowered to make any order or grant any relief that would have been available to CA  - CA, in turn, empowered to make any order which ought to have been made in HC and to make any other orders the case may require - Having heard from the parties in relation to leave, SC said questions of who was entitled to speak for whom inherent in issues arising in the appeal – Might be necessary for SC to consider whether the matter of representation orders first considered by HC should be revisited; that is, whether representation orders might provide a more just and speedy means of resolving real controversy between the parties than would discovery orders – Application granted.

Rape, evidence of gang conduct

Biddle v R; Thacker v R [2021] NZSC 89 (19 July 2021) 

Unsuccessful leave applications – B and T convicted on rape charges after DC jury trial - Third offender also convicted, but not party to these applications - Incident involving all three offenders occurred on complainant’s 18th birthday - Crown case was B contacted complainant and said he had a present for her - They arranged to meet - When they met, she got into the car, in which the other two offenders were present - She was taken to a beach where B raped her and then directed the other two offenders to also rape her - During an earlier trial that was aborted, it became apparent B had raped the complainant on an earlier occasion - He was then charged with that rape, and was convicted of that charge too - T not involved in earlier incident – Both appealed to CA against conviction and sentence - Conviction appeals and B’s sentence appeal dismissed – T’s sentence appeal allowed – Both sought leave to appeal to SC against CA dismissing appeals against conviction - Identified two issues on which they said leave should be given - First concerned incident involving a juror and the second concerned expert evidence about gang conduct – SC did not see concern about juror sufficient to found convincing apparent bias argument -  CA said proper evidential basis for  Crown theory that the rape of the complainant by the three defendants committed in a gang context – CA also said  evidence admissible under s 25 Evidence Act 2006 – Said trial Judge gave comprehensive directions to jury on the subject of gangs and there had also been comprehensive submissions from defence counsel – SC said s 25  applicability essentially factual assessment - Did raise any matter of general or public importance – Nor was there any appearance of a miscarriage of justice, given the robust direction that the Judge gave to the jury on the gang question – Application dismissed.

Supreme Court of Canada

Indigenous people, land, compensation

Southwind v Canada [2021] SCC 28 (16 July 2021) 

Successful appeal from Federal CA – S a member of Lac Seul First Nation (LSFN), a Treaty 3 First Nation in Northern Ontario -  Its reserve located on the south-eastern shore of Lac Seul - In 1929, a dam to power hydroelectricity generation to Winnipeg completed under agreement between Canada, Ontario and Manitoba -Project involved raising Lac Seul water level 10 feet, or approximately 3 metres, to create water reservoir - Canada aware from outset that flooding Lac Seul would cause considerable damage to the LSFN’s reserve - Despite repeated warnings about impacts, project advanced without LSFN consent of the LSFN, without compensation, and without required lawful authorization – Project resulted in almost one‑fifth of best LSFN reserve land being permanently flooded - Damage extensive and included destruction of homes, wild rice fields, gardens, haylands, and gravesites - Years later, the LSFN claimed for damage – FC ordered Canadian  government to pay the LSFN $30 million in compensation - Judge considered 1920s land value without the added value for hydroelectricity project - LSFN appealed to FCA - Said amount did not sufficiently compensate them for the loss of the flooded land – FCA disagreed – LSFN appealed to SC – SC majority agreed with LSFN - Said project caused major damage to LSFN reserve land - Compensation should have included the added value for the hydroelectricity project - Compensation Canada owed to LSFN should be the amount that a properly negotiated deal earned them – This meant deal based on value of land to those who were wanting to use it, which in this case was the hydroelectricity project - Majority agreed with the LSFN that $30 million was not enough to include that project and ordered that FC reassess the amount – Said Canada’s specific duty towards Indigenous Peoples a fiduciary duty - Canada obliged to act in Indigenous Peoples  best interest especially  concerning reserve land - If that land to be taken away or damaged, as here, Canada had to get best price for the land on their behalf – Appeal allowed.

United Kingdom Supreme Court

Deportation, Article 8 ECHR

Sanambar v Sectretary of State for Home Department [2021] UKSC 30 (16 July 2021)

Unsuccessful appeal from CA - S an Iranian national born in 1995 - Arrived in the UK with his mother in 2005, having been given indefinite leave to remain - Had a difficult upbringing due to his father’s violent conduct, but had particularly strong bond with his mother, with whom he has lived all his life - No family ties with Iran, although spoke Farsi with his mother - Between 2009 and 2013  S convicted of three counts of attempted robbery (2009), possession of an offensive weapon (2011) and six counts of robbery, three counts of attempted robbery, and one count of handling stolen property (2013) - 2013 robberies all committed at night and at knifepoint - Victims were aged between 15 and 18 - In light of his 2013 convictions, for which S sentenced to three years’ detention in a Young Offender Institution, the Secretary decided that S’s deportation would be conducive to the public good and would not be in breach of his European Convention on Human Rights (ECHR) article 8 right to respect for his private and family life - She made a deportation order against him – S appealed against that decision - Following a rehearing Upper Tribunal dismissed his appeal was dismissed - Upper Tribunal said S  had not met threshold under the Immigration Rules (Rules) for resisting his removal, essentially because he had failed to show that there were very significant obstacles to his integration in Iran – CA dismissed further appeal – SC unanimously dismissed appeal – Said Upper Tribunal correctly approached balancing exercise article 8 required -  Entitled to conclude that interference with S’s private and family life was outweighed by the public interest in the prevention of crime – Appeal dismissed.

Contract, liquidated damages clause

Triple Point Technology Inc v PTT Public Company Ltd [2021] UKSC 29 (16 July 2021)

Partially successful appeal from CA - On 8 February 2013, PTT Public Company Ltd (PTT), entered into a contract (CTRM Contract) with Triple Point Technology, Inc (Triple Point" - Contract subject to English law - Contract, provided Triple Point was to design, install (by data transmission), maintain and license a customised software system for PTT to assist in its commodities trading business - Project had two phases - Phase 1 involved replacing PTT’s existing software system and Phase 2 involved developing the Triple Point system for new types of trade - Triple Point to be paid by reference to "milestones" with particular work to be completed by each milestone - Triple Point entered into a perpetual licence agreement with PTT, annexed to the main part of the CTRM Contract - Also annexed to the main part was a document entitled Terms of Reference for the CTRM System, which contained a list of agreed "functionality" criteria - These allowed for checking that the software provided conformed to specification and fulfilled the specified functions.

Triple Point completed first two stages of Phase 1 on 19 March 2014, 149 days late -  PTT paid Triple Point’s invoice for that work -  PTT terminated the CTRM Contract on 23 March 2015 - Triple Point commenced proceedings in the Technology and Construction Court to recover outstanding sums on unpaid invoices - PTT counterclaimed for damages and liquidated damages for delay under article 5.3 - Article 12.3 placed a cap on the amount of damages that could be recovered and contained an exception from that cap for "negligence" – Judge dismissed Triple Point’s claim - Said PTT entitled to US$4,497,278.40 damages under heads of: liquidated damages for delay (uncapped), costs of procuring an alternative system and wasted costs (both subject to the article 12.3 cap) - Triple Point appealed and PTT cross-appealed against the finding that any of the damages were capped - CA set aside the judge’s award of liquidated damages, saying PTT only entitled to liquidated damages for work which had been completed prior to termination of the contract, that all damages were subject to the cap and that the exception for "negligence" applied only to freestanding torts and not to breaches of contractual obligation to exercise care - PTT appealed to SC on all three issues.

The central issue (Issue 1) on appeal concerned interpreting liquidated damages clauses - Liquidated damages clause here in familiar form, providing for liquidated damages to be paid for each day of contractor delay "from the due date for delivery up to the date [the employer] accepts such work" -  Issue whether liquidated damages payable under  clause for work which had not been completed before contract terminated - Issue 2 involved interpreting exception to cap on contractor’s liability for damages when liability resulted from negligence - Question whether "negligence" in exception meant tort of negligence or whether it includes breach of the contractual duty of skill and care - Issue 3 whether liquidated damages  subject to cap in the contract on amount of recoverable damages – SC unanimously allowed appeal on Issue 1 and dismissed on Issue 3 - On Issue 2, majority allowed appeal.

On Issue 1 SC said CA departed from generally understood position that, subject to precise wording of the clause, liquidated damages would accrue until contract terminated - At that point contractor became liable to pay damages for breach of contract – CA said in some cases might be inconsistent with the parties’ agreement to categorise employer’s losses as subject to liquidated damages clause until contractual termination and thereafter as damages - Approach not consistent with commercial reality and the accepted function of liquidated damages -Parties should be taken to know that liquidated damages would cease to accrue on termination - They did not have to provide for that expressly - Reading the clause in that way reduced the risk that the contractor was not liable for liquidated damages for delay and the extinction of accrued rights to liquidated damages - Under the CTRM Contract, liquidated damages were payable where Triple Point never completed the work.

On Issue 2, SC said in English law "negligence" covered both separate tort of failing to use due care and a breach of the contractual provision to exercise care - CA wrong to say, if it covered damages for breach of the contractual provision to exercise care, the exception to the cap for "negligence" removed the core liability made subject to the cap - CTRM Contract was not only for services – It drew distinction between the services in respect of which Triple Point owed a contractual duty of care, and other matters that Triple Point was under an absolute obligation to provide, such as providing software which met the functionality specifications - No realistic example of an independent tort, especially as liability for "negligence" had to be one which arose out of the CTRM Contract.

On Issue 3, liquidated damages subject to the cap in the contract on recoverable damages – CA reasoning correct.