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Court of Appeal of New Zealand |
Last Updated: 2 February 2018
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IN THE COURT OF APPEAL OF NEW
ZEALAND
CA65/06
CA156/06
CA157/06
[2007] NZCA
355
BETWEEN DOWNER CONSTRUCTION (NEW ZEALAND)
LIMITED
Applicant
AND SILVERFIELD DEVELOPMENTS LIMITED
Respondent
Hearing: 7 February 2007
Court: Chambers, Robertson and Arnold JJ
Counsel: D A R Williams QC, L J Lindsay, and S
Robertson for Applicant
T C Weston QC and C M
Meechan for Respondent
Judgment: 16 August 2007 at 11
am
|
JUDGMENT OF THE COURT
|
CA156/06
CA157/06
ALL APPEALS
REASONS OF THE COURT
(Given by Chambers J)
Table of Contents
Para No
The aftermath of a leaky homes arbitration [1]
Issues for our determination [11]
Should we grant special leave to appeal out of time against
Heath J’s decision? [17]
Did Randerson J refuse to grant leave with respect to certain
questions of law? [22]
What should be the test for leave to appeal from the High Court
to the Court of Appeal under cl 5(5) and (6)? [29]
Can an applicant for (special) leave to appeal to the
Court of Appeal widen the questions from those for which
leave to the High Court was granted? [38]
Do any of the proposed questions of law meet the special leave criteria? [45]
Costs [63]
The aftermath of a leaky homes arbitration
[1] In 2000, Downer Construction (New Zealand) Limited, the applicant, entered into a contract with Silverfield Developments Limited, the respondent, to design and construct 65 townhouses in St Lukes, Auckland. Unfortunately, many of the townhouses started leaking shortly after completion. Silverfield called on Downer to make good the damage. Silverfield relied, among other things, on a warranty Downer had given that the completed contract works would be watertight.
[2] The parties could not agree on who was at fault and what should be done. The matter went to arbitration. The arbitrator, Mr Kennedy-Grant QC, delivered his first award on 26 August 2005. In essence, he found in favour of Silverfield. He held Silverfield was entitled to a declaration that, in respects he identified, Downer had breached its obligations under the contract by constructing the units in such a way that they were not watertight. He deferred the question of other relief to see whether the parties could resolve that for themselves.
[3] They were not able to. The arbitrator proceeded to consider relief. He determined Silverfield was entitled to an order for specific performance. He set out in a schedule to his second award a proposed form of order for specific performance. Before he finalised it, he invited submissions from the parties as to the “clarity” and “completeness” of what he proposed.
[4] Silverfield responded to the second award, suggesting some changes to the draft order for specific performance. Downer elected not to respond. The arbitrator accepted Silverfield’s suggestions and issued on 16 November 2005 his third award, making a formal order for specific performance.
[5] The procedural steps after this become very complicated, but an understanding of them is essential to the issues we have to determine. The next step was Silverfield’s application to the High Court to have the awards entered as judgments, in terms of art 35 of the First Schedule of the Arbitration Act 1996. Downer did not oppose the awards’ entry as judgments. On 12 December 2005 Heath J ordered the awards be entered as judgments: HC AK CIV 2005-404-6559. The first application before us (CA65/06) is a belated attempt by Downer to appeal against Heath J’s decision. The ultimate question we have to determine under CA65/06 is whether Downer should be granted special leave to appeal out of time against Heath J’s decision. This application is brought under r 29(4) of the Court of Appeal (Civil) Rules 2005.
[6] Downer considered the arbitrator had made a number of errors of law in the awards. It sought the High Court’s leave to appeal to that court on those questions of law. That application was brought pursuant to cl 5(1)(c) of the Second Schedule of the Arbitration Act. Randerson J, Chief High Court Judge, heard the application. In a reserved decision (Downer Construction (New Zealand) Limited v Silverfield Developments Limited HC AK CIV 2005-404-6800 13 February 2006), he granted leave to appeal on one question of law said to arise out of the second award. According to the judge, during the course of the oral hearing, the questions of law originally sought by Downer “narrowed to” the one question of law in respect of which the judge was prepared to grant leave: at [25]. But Downer disputes that. It says Randerson J refused to grant it leave on other questions of law it wanted to raise. Accordingly, it sought to appeal to this court from what it said was Randerson J’s (partial) refusal to grant leave under cl 5(1)(c). Somewhat surprisingly, cl 5(5) of the Second Schedule permits, by leave, a party to appeal to this court from a refusal to grant leave. That cl 5(5) application for leave was heard by Harrison J. He declined leave: Downer Construction (New Zealand) Limited v Silverfield Developments Limited HC AK CIV 2005-404-6800 11 July 2006.
[7] Downer was now dissatisfied with the judgments of both Randerson J and Harrison J. Downer now seeks from us special leave to appeal from what is said to have been Randerson J’s refusal to grant leave to appeal to the High Court on certain questions of law. This application, which was filed under CA156/06, is brought pursuant to cl 5(6) of the Second Schedule.
[8] On 22 March last year, Harrison J heard argument on the question of law to which Randerson J had granted leave and found against Downer. Harrison J delivered his decision on 11 May 2006: Downer Construction (New Zealand) Limited v Silverfield Developments Limited [2006] NZHC 486; [2007] 1 NZLR 785. The Judge held the arbitrator had not erred in law in making an award for specific performance.
[9] Downer then applied to the High Court for leave to appeal to this court. Harrison J dismissed that application, in the same 11 July 2006 judgment to which we have earlier referred. (In these reasons for judgment, we shall refer to this 11 July decision as “Harrison J’s leave decision”.)
[10] Downer’s third application, under CA157/06, is an application for special leave to appeal against Harrison J’s substantive judgment of 11 May 2006. This application, like the application under CA156/06, is brought under cl 5(6) of the Second Schedule.
Issues for our determination
[11] The first issue is whether Downer should be granted special leave to appeal out of time against Heath J’s decision.
[12] The second issue, which arises under CA156/06, is whether Randerson J did in fact refuse to grant leave with respect to certain questions of law. Harrison J held Randerson J had not refused to grant leave. Downer’s application for leave to appeal to this court against Randerson J’s refusal to grant leave to appeal to the High Court therefore failed for lack of jurisdiction. Mr Williams QC, for Downer, challenges Harrison J’s conclusion on jurisdiction.
[13] If we determine that Randerson J did indeed refuse to grant leave on certain questions, should we now grant special leave?
[14] CA157/06 gives rise to three issues. The first is what should be the test for leave to appeal from the High Court to this court under cl 5(5).
[15] The second issue is whether any leave granted should be limited to questions for which leave to the High Court was granted and to questions substantially linked to them. This issue arises because Downer, which had been given leave to take one question of law to the High Court, now seeks to bring a myriad of questions to this court. One of Harrison J’s reasons for declining leave to this court was his view that issues should narrow, not widen, as a dispute climbed the appellate ladder. Harrison J considered Downer was now attempting to bring into the ring issues which did not arise fairly from the original question of law for which leave was granted.
[16] Finally, we need to consider whether any of the questions meet the special leave criteria.
Should we grant special leave to appeal out of time against Heath J’s decision?
[17] The first issue we have to determine is whether we should grant special leave to appeal out of time against Heath J’s decision. We have no doubt that we should not, for the following three reasons, taken together.
[18] First, the application was filed well outside the appeal period. Heath J made his decision on 12 December 2005. The appeal period expired on 30 January 2006. The application for special leave was not filed until 12 April 2006, almost two and a half months out of time. The longer the delay, the less likely it is this court will grant special leave. A delay of six weeks proved fatal in Langridge v Wilson (1989) 3 PRNZ 341. An acceptable reason for the delay may excuse it, but none is advanced here.
[19] Secondly, Downer consented to the entry of the awards as judgments. While such consent is not of itself fatal to the application for special leave, it is an important factor in the exercise of the discretion. Parties should not lightly be allowed to blow hot and cold.
[20] Thirdly, the proposed appeal has no reasonable chance of success in any event. The only grounds available to oppose an entry of judgment under art 35 of the First Schedule are those set out in arts 34 and 36, as expanded by cl 5(9) of the Second Schedule. The grounds of opposition now relied on are those questions of law advanced under cl 5 of the Second Schedule. For reasons we shall later give, we do not intend to disturb Harrison J’s substantive decision. This means the arbitrator’s awards have survived intact. The belated challenge to the awards’ entry as judgments is doomed to failure.
[21] For these reasons, we dismiss the application for special leave to appeal out of time against Heath J’s decision.
Did Randerson J refuse to grant leave with respect to certain questions of law?
[22] Downer’s application for leave to appeal to the High Court, brought under cl 5(1)(c), contained a number of questions of law. But, according to Randerson J, when the matter was argued before him the questions of law narrowed to one. The judge expressed the matter as follows:
[25] A number of points of law were raised but, during the course of argument, they have narrowed to the following question of law arising out of the second partial award:
In the particular circumstances of this case did the Arbitrator err in law in making an order for specific performance in the terms set out in the Schedule to the Third Partial Award in that:
(i) The Defendant did not have possession of the land which was the subject of the specific performance order (Second Partial Award, para 24);
(ii) The Defendant had no right to sue for the loss suffered by the individual unit owners in respect of defects in their units and resulting damage (Second Partial Award, para 35);
(iii) The only losses suffered by the Defendant were:
- an unquantified “considerable expense” in endeavouring to determine the nature, extent and effect of defects in the development;
- an exposure to potential claims by the unit owners of the development in respect of defects.
[26] I intend to grant leave in respect of the identified question of law. In terms of r 893 of the High Court Rules, where leave to appeal is granted, the court must not give reasons for granting leave unless, in the opinion of the court, the circumstances require it to do so. I am satisfied that there are no circumstances which require the court to give reasons for granting leave in this case.
[27] I also intend to grant leave to appeal in relation to the first and third partial awards. But I record the acknowledgement made by Mr Williams QC for the plaintiff that there are no separate questions of law arising in relation to the first and third partial awards. Leave will therefore only be granted to the extent that those awards are or may be consequentially affected by the determination of the question of law identified in relation to the second partial award.
[23] Downer's essential complaint was that the arbitrator should not have ordered specific performance for the three reasons given, taken either singly or together. The first argument was that Silverfield could not get an order for specific performance when it no longer had possession of the land, having sold the townhouses to residential home owners. The second argument was that Silverfield could not sue for the loss suffered by the individual townhouse owners in respect of defects in their units. The third argument was that the remedy of specific performance was disproportionate. Downer would be put to huge expense to remedy the defects in the townhouses, while its exposure to damages was, it said, limited. That arose from the fact, so Downer said, that the only losses Silverfield had suffered were the cost of investigating the defects and merely an exposure to potential claims by the townhouse owners in respect of defects.
[24] Following delivery of Randerson J’s judgment, Downer applied - belatedly - for leave to appeal to this court against what it said was Randerson J’s partial refusal to grant leave. Harrison J dealt with that application in his leave decision. He held there was no jurisdiction to grant leave because there had been no “refusal of the High Court to grant leave”. Harrison J went on to explain his reasoning:
[21] Mr Williams’ argument proceeded on the premise that the first judgment [Randerson J’s judgment] was a ‘refusal’ to grant Downer’s application for leave to appeal the third award. But, according to Ms Carr, Randerson J did no more than express a view during argument which was adverse to Downer’s second application. The company then elected not to pursue the application or, more precisely, to seek a determination. That result was the jurisdictional prerequisite to maintaining a challenge to the third award on a question of law to the Court of Appeal.
[22] Downer effectively abandoned its second application and, consequently, its challenge to the third award when or before Randerson J formulated the question of law for appeal. The Judge was not required to give a decision on the second application. Thus the first judgment was not a ‘determination’ or ‘refusal’ of Downer’s application within the meaning of clause 5(5), and I have no jurisdiction to grant leave to appeal.
[25] Mr Williams submitted that, contrary to Harrison J’s view, Downer had not abandoned its other allegations. He relied on an affidavit sworn by Sinead Carr, who had been present in court during the hearing before Randerson J. The effect of her evidence was that Randerson J had considered the papers before the hearing and expressed a preliminary view to counsel. Mr Williams attempted to persuade the judge to grant leave on the other questions, but, sensing the judge was unmoved, “retreated”.
[26] We agree with Harrison J’s conclusion. It seems to us clear that Randerson J considered that the question of law he allowed was the very question Downer itself proposed after reconsidering its position. Randerson J said at [26] of his decision that he intended to grant leave in respect of “the identified question of law”. He then made reference to r 893, which provides that the court must not give reasons when granting leave, unless the court considers the circumstances require reasons to be given. It is clear Randerson J was alive to r 893, and by inference to its mate, r 894. Rule 894 provides that, if the court refuses to grant leave, it must give reasons. Had Randerson J considered he was refusing leave in part, he would undoubtedly have given reasons for the partial refusal. Often on applications for leave to appeal to the Supreme Court, we see outcomes where the applicant has in part succeeded and in part failed. In so far as the application succeeds, the question or questions to be determined on appeal are stated, without reasons. In so far as the application fails, the Supreme Court explains why it has failed. Randerson J would have adopted that approach had he considered there was some, still live, part of the application which he was declining.
[27] This is not a case where inexperienced counsel were “bullied” by a judge into abandoning part of an application. Downer’s interests were, after all, being represented by New Zealand’s leading arbitration silk and he ultimately formulated the question in respect of which the judge granted leave.
[28] In answer to the second issue, therefore, we hold, like Harrison J, that Randerson J did not refuse to grant leave with respect to certain questions of law. There was not therefore “any refusal of the High Court to grant leave”, with the consequence that the application under CA156/06 must be dismissed. Just as the High Court lacked jurisdiction to consider it, so do we.
What should be the test for leave to appeal from the High Court to the Court of Appeal under cl 5(5) and (6)?
[29] How the discretion should be exercised under cl 5(1)(c) is well established: Gold and Resource Developments (NZ) Limited v Doug Hood Limited [2000] NZCA 131; [2000] 3 NZLR 318 (CA). But this court has never determined the criteria for leave under cl 5(5) or for special leave under cl 5(6). Certainly the test or tests under subcls (5) and (6) are different from the test for leave under cl 5(1)(c): Cooper v Symes (2001) 15 PRNZ 166 at [9] (HC).
[30] In Cooper, Randerson J suggested that the test under cl 5(5) should be akin to an application for leave to appeal to the Court of Appeal under s 67 of the Judicature Act 1908: at [10]. The test under s 67 is well established. The case normally cited is Waller v Hider [1997] NZCA 221; [1998] 1 NZLR 412, where this court described the test as follows (at 413):
The appeal must raise some question of law or fact capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal: Rutherfurd v Waite [1923] GLR 34; Cuff v Broadlands Finance Limited [1987] NZCA 93; [1987] 2 NZLR 343 at pp 346-347.
[31] This court went on to bemoan the fact that, “notwithstanding frequent reminders of the test, applications continue to be made which have little or no prospect of success”. The court, after noting that “the scarce time and resources of the High Court and of this Court are not to be wasted”, added (at 413):
Upon a second appeal this Court is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below. It is not every alleged error of law that is of such importance, either generally or to the parties, as to justify further pursuit of litigation which has already been twice considered and ruled upon by a Court.
[32] That test is broadly similar to that which applies in England. The test under s 69(8) of the Arbitration Act 1996 (UK) with respect to leave applications to the Court of Appeal requires the leave court to be of the view “that the question [of law concerned] is one of general importance or is one which for some other special reason should be considered by the Court of Appeal”. (That wording is very similar to the test applicable in respect of second appeals from summary proceedings: see Summary Proceedings Act 1957, s 144.)
[33] It does not matter particularly whether the cl 5(5) test is equated to the s 67 test or the s 144 test. Under either test the primary focus is on whether the question of law is worthy of consideration. We cannot do better than Randerson J’s summary of the position in Cooper at [12]:
- (a) The appeal must raise some question of law... capable of bona fide and serious argument in a case involving some interest, public or private, of sufficient importance to outweigh the cost and delay of the further appeal.
- (b) Upon a second appeal, the Court of Appeal is not engaged in the general correction of error. Its primary function is then to clarify the law and to determine whether it has been properly construed and applied by the Court below.
- (c) Not every alleged error of law is of such importance either generally or to the parties as to justify further pursuit of litigation that has been twice considered and ruled upon by a Court.
[34] This was the test Harrison J adopted in his leave decision at [41].
[35] Where the High Court has refused leave, this court has power under cl 5(6) to grant special leave to appeal. Obviously that should not be a second bite at the same cherry. This court will be very mindful of why the High Court declined leave, and will grant special leave only if the High Court judge’s decision was plainly wrong or if the test set out above was not applied or was misapplied. We would hesitate to say that the test under subcl (6) is different from the test under subcl (5). It is simpler to say the test is the same, but this court will exercise its powers sparingly and mindful of why the High Court declined leave. On this aspect, Mr Williams and Mr Weston QC, for Silverfield, were agreed.
[36] One further observation is appropriate. There may be a need to reconsider the criteria under s 67 of the Judicature Act, with a view to restricting second appeals even further. The British, following a report into the Civil Division of the Court of Appeal by Sir Jeffery Bowman, have done so. This was achieved by s 55(1) of the Access to Justice Act 1999 (UK), which provides that, where an appeal is made to a county court or the High Court and a decision is made by that court on that appeal, no further appeal may be made to the Court of Appeal unless the Court of Appeal considers that the appeal raises an important point of principle or practice or there is some other compelling reason for the Court of Appeal to hear it. The thinking behind that provision was “to reverse the steady increase in the number of [second appeals] reaching the Court of Appeal, and so to free up valuable and expensive judicial resources to give more and more effective attention to hearing first appeals”: Drewry, Blom-Cooper, and Blake The Court of Appeal (2007) at 59. For a discussion on s 55(1), see Tanfern Limited v Cameron-MacDonald [2000] EWCA Civ 3023; [2000] 1 WLR 1311 (CA).
[37] Given the open-textured nature of s 67 (and, for that matter, cl 5(5)), it would be open to this court to follow the English lead. But this is not the case in which to consider whether a change in approach is warranted. First, the difference between our traditional approach under s 67 and the new English criteria (as explained in Tanfern) would not in this case lead to a different result. Secondly, we have not had the benefit of argument from counsel. Any change in approach would need to be adopted by a Full Court of this court.
Can an applicant for (special) leave to appeal to the Court of Appeal widen the questions from those for which leave to the High Court was granted?
[38] Harrison J noted that Randerson J had granted leave to appeal on one question of law, which he (Harrison J) had answered in his substantive judgment. Harrison J expressed surprise then to discover that Downer alleged no fewer than ten questions of law arose from his substantive judgment, each apparently worthy of this court’s attention. He observed in his leave decision that Downer now sought “to challenge virtually every opinion, whether ratio or dicta, expressed adversely” to Downer’s interests: Harrison J’s leave decision at [42]. His Honour continued:
The company has not apparently heeded the Court of Appeal’s advice to “draw back and appraise the state of the case dispassionately” after the first appeal (Waller at 413-414). I cannot understand how a decision which answers one question of law in the negative could properly give rise to ten questions of law for determination by the Court of Appeal.
[39] His Honour then went on to express the view that “the focus of an appeal arising from an arbitral award must be limited and exact – that is, limited to the question of law formulated for determination”: at [43]. He also said that “the appellate funnel should narrow rather than widen”. He specifically held that Downer could not use a second appeal “as a backdoor means of expanding its argument into a wider challenge to the award than was contemplated when leave was granted”: at [43]. Harrison J cited High Court authority to that effect.
[40] On the application for special leave to appeal, Downer still seeks leave in respect of seven questions of law said to arise from Harrison J’s substantive decision. Mr Williams submitted that Harrison J’s “funnel argument”, as he (Mr Williams) termed it, was wrong and inconsistent with what Chambers J had said in Cullen Investments Limited v Lancaster HC AK M908-IMO1 12 June 2003 at [19]. Mr Williams submitted that cl 5(5) permitted an appeal from “any determination of the High Court”, provided of course, the proposed questions of law met the test discussed in the previous section of these reasons.
[41] We are satisfied that Harrison J’s approach was correct. He was right to express surprise as to how a determination of one question of law could possibly give rise to ten questions of law at the next rung of the appellate ladder. There will frequently be a funnelling or narrowing of issues between High Court and Court of Appeal. A question of law may meet the cl 5(1)(c) test, but not the cl 5(5) test. That might be because the High Court’s answer to the question is so obviously right that the question is no longer capable of serious argument to the contrary. It might be because the alleged error of law is just not of such importance as to justify a second appeal.
[42] There is no conflict between what Harrison J held and what Chambers J held in Cullen. All Chambers J was saying in the passage relied upon by Mr Williams was that cl 5(5) potentially permits an appeal against any determination of the High Court. He then went on to observe that the focus of proposed questions for the Court of Appeal must be on what the High Court judge allegedly got wrong. That is consistent with Harrison J’s approach. While the appeal is from the High Court judgment, the ratio of any such judgment will be the answer or answers to the question or questions the High Court was required to answer. The High Court judge has no jurisdiction to answer anything but the questions of law in respect of which leave was granted.
[43] That is not to say that the form of any question for the Court of Appeal must be the same as the form of question answered by the High Court judge. Almost invariably, the question will need, at the very least, tweaking. That is because, on the further proposed appeal, the focus will be primarily on what the High Court judge is alleged to have got wrong, rather than, as is appropriate in the High Court, an exclusive focus on alleged errors in the award. But that tweaking or massaging does not permit entirely new matters to be raised which were not the subject of the original cl 5(1)(c) leave. We agree with Harrison J that no party can use a second appeal “as a backdoor means of expanding its argument into a wider challenge to the award than was contemplated when leave was granted”.
[44] The answer to the second issue on CA157/06 is, therefore, that an application for (special) leave to appeal to the this court cannot widen the questions from those for which leave to the High Court was granted. That does not mean the questions must be identical to those or some of those for which leave to the High Court was granted. On the contrary, proposed questions to this court should focus on the alleged error or errors in the High Court’s reasoning, but the essence of the dispute must be the same or narrower.
Do any of the proposed questions of law meet the special leave criteria?
[45] Downer now seeks to advance seven questions of law. We shall deal with them in the order in which they appear in Downer’s application. This section of these reasons is principally of interest only to the parties. Accordingly, we state our reasons in this section “briefly and in general terms only”, as permitted by r 27(3) of the Court of Appeal (Civil) Rules 2005.
Did the High Court err in holding that there is no general principle in New Zealand that specific performance of building contracts should not be awarded other than in truly exceptional circumstances and that the statement of Romer LJ in Wolverhampton Corporation v Emmons [1901] 1 QB 515 was not of universal or prescriptive application?
[46] Harrison J dealt with a similar question at [50]-[53] of his leave decision. He refused leave on two grounds. First, he found that the question attempted “to reformulate and expand the original question” on which leave had been granted. Secondly, he held that Mr Williams had not shown that his argument on this issue was “bona fide and capable of serious argument”.
[47] We agree on both grounds. First, the proposed argument is different from the agreed question to which Randerson J granted leave. That limited the challenge to specific performance to three named circumstances. This general attack on the availability of specific performance of building contracts was not part of the then challenge. This is an attempt to expand what was in issue in the High Court.
[48] In any event, we do not consider that Romer LJ’s statement is of “universal or prescriptive application”. Indeed, it did not even command the express support of the other two members of the Court of Appeal in which he was sitting. Romer LJ’s dictum has been described as “too rigid to accord with equitable principles”: Spry Principles of Equitable Remedies (6ed 2001) at 114. We agree with that view. We do not consider that Harrison J’s substantive judgment can be seriously challenged on this ground.
Was the High Court wrong to hold that the fact that Silverfield had no right to sue for losses suffered by purchasers was not germane to whether or not specific performance was granted?
[49] Harrison J dealt with this question at [54]-[55] of his leave decision. He concluded that the question did not merit determination by this court, as it was not material to his decision. He added:
I have re-read with care [Mr Williams’s] synopsis of submissions in support of Downer’s appeal and my notes of his oral argument. I cannot find one reference among them to this point.
[50] Before us, Mr Williams did not attempt to dispute what Harrison J had said on this point in his leave judgment. He merely submitted that the “point had been found germane by Randerson J because it was one of the issues specified in the question of law for which he granted leave”.
[51] That is true enough, but it is not an answer to Harrison J’s reasons for refusing leave to appeal to this court. We agree with Harrison J. This argument, although raised as a ground against ordering specific performance, evidently did not feature significantly in the High Court, either in argument or in Harrison J’s substantive decision. It does not raise a question suitable for this court’s consideration.
Was the High Court’s endorsement of the order for specific performance wrong on the ground that Downer’s expected expenditure on remedial work would be grossly disproportionate to Silverfield’s investigation costs to date?
[52] This is in essence a disproportionality argument, which covers much the same ground as limb (iii) of Randerson J’s approved question. Harrison J dealt with a similar question at [56]-[58] of his leave decision. He accepted the question was of public importance, but declined leave on the ground that Mr Williams had not been able to point to any mistake in His Honour’s legal analysis on this topic in his substantive judgment: see that judgment at [83]-[92]. He also noted that Downer had given “no prominence to this disproportionality argument before the arbitrator”.
[53] Before us, Mr Williams made no attempt, either in his written submissions or in his oral argument, to take up Harrison J’s challenge as to why his legal analysis on this topic was or might be wrong. We have considered Harrison J’s reasons for not accepting the disproportionality argument. Like him, we are not satisfied that Downer has shown an arguable case that Harrison J’s reasoning was in error. We accordingly decline to certify this as a proper question for this court’s determination.
Was the High Court wrong in finding that the terms of the arbitrator’s order for specific performance were sufficiently specific and precise?
[54] This question has been dubbed the “imprecision” question. Harrison J had dealt with this matter in his substantive judgment on a contingent basis. He said that he was dealing with this topic only “in case I am wrong in concluding that my jurisdiction on appeal is limited to the three findings identified in the question of law”: substantive decision at [93]. His Honour then went on to explain why he rejected this additional argument. He held that the terms of the order were “sufficiently specific and precise” to enable the court or the arbitrator to satisfy itself if the covenanted work had been done. He thought there was ample machinery for this purpose, both within the original contract and through the additional terms of the arbitrator’s order: see the substantive decision, in particular at [101]-[103].
[55] Harrison J was right to conclude that he did not have jurisdiction to consider the imprecision argument. It was not part of Randerson J’s agreed question. We express no views on Harrison J’s views on this topic as they did not relate to the question of law he was asked to determine. It would be quite wrong now to permit an attack to be made on a part of Harrison J’s reasoning which he expressed only in case he was wrong in his view that the question fell outside the leave that had been granted. This question would certainly fall foul of the funnelling thesis earlier discussed.
Was the High Court wrong in holding that it was now too late for Downer to complain as to the unenforceability of the order for specific performance given its decision to decline to comment upon the terms of the order when invited by the arbitrator to do so?
[56] This question refers to a comment made by Harrison J at [96] of his substantive decision, when dealing with the imprecision argument. It was simply a factor in the judge’s conclusion that the arbitrator’s order was not flawed on imprecision grounds.
[57] This question does not come near meeting the criteria for consideration by this court. It is but part of Harrison J’s reasoning on the imprecision point, which was not in any event a question properly before the High Court. Secondly, the consideration was by no means decisive in any event on the imprecision point: that point failed on other, more compelling, grounds. Thirdly, it is in any event entirely specific to the circumstances of this case, with no possible general or public interest.
Was the High Court wrong in holding that the imprecision of the order for specific performance involved a factual finding, which was immune from judicial review?
[58] This question does not meet the criteria for review in this court. It is again but part of the reasoning on the imprecision point, which was not before the High Court. Further, the question does not raise an issue of sufficient interest or importance to warrant a second appeal.
Was the High Court wrong in refusing to address an argument that Downer’s remedial obligations ended with the expiry of the maintenance period?
[59] This question was the subject of two proposed questions before Harrison J when he was being asked to grant leave to appeal to this court. Harrison J dealt with these two questions at [47]-[49] and [59]-[60] of his leave decision. He refused leave for these questions (now, this question) on the following grounds. First it did not arise out of Randerson J’s agreed question of law. Indeed, it was not even the subject of a question in either of Downer’s applications for leave to appeal. Secondly, the point, although raised at the arbitration, was not dealt with by the arbitrator.
[60] We consider it is now too late to raise this issue in this court. Although an argument to this effect was run before the arbitrator, he did not deal with it, and no challenge to that failure was advanced in the original application for leave to appeal to the High Court. It is too late now to try to raise an issue upon which neither the arbitrator nor the High Court has pronounced.
Conclusion on the suggested questions of law
[61] For the brief reasons given, we are satisfied none of the seven questions raises issues which meet the leave criteria we have earlier set out.
[62] It follows that the application for special leave to appeal against Harrison J’s substantive decision must be dismissed.
Costs
[63] Silverfield has succeeded on all matters before us. It is entitled to costs. We have fixed those costs somewhat higher than normal, as preparation for the hearing was extensive. As well, this case is of significant financial significance to the parties, fully justifying senior counsel on both sides.
Solicitors:
Kensington Swan, Auckland, for Applicant
Bell Gully, Auckland, for
Respondent
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URL: http://www.nzlii.org/nz/cases/NZCA/2007/355.html