Efstratiou v Archaeology North Limited HC Wanganui CIV-2011-483-175 [2011] NZHC 1099 (7 September 2011)

Last Updated: 15 October 2011

IN THE HIGH COURT OF NEW ZEALAND WANGANUI REGISTRY

_{CIV-2011-483-175}

BETWEEN CHRIS JOHN EFSTRATIOU Appellant

AND ARCHAEOLOGY NORTH LIMITED Respondent

Hearing: 1 September 2011

Appearances: J Waugh for the appellant

L Rowe for the respondent

Judgment: 7 September 2011

_{JUDGMENT OF CLIFFORD J}

Introduction

[1] The respondent, Archaeology North Limited (“ANL”), commenced proceedings in the District Court on 5 October 2010 against the appellant, Chris John Efstratiou, for $138,547.34 plus interest. ANL says Mr Efstratiou owes it that money for archaeological services supplied in connection with a local property development. Mr Efstratiou filed an appearance under protest to jurisdiction on

9 December 2010. He did so on the basis the contract between him and ANL required the dispute over the outstanding amount – it being accepted ANL’s invoices had not been paid – to be resolved by mediation before an independent mediator, which had not occurred. Interlocutory applications were subsequently filed by Mr Efstratiou to stay ANL’s proceeding, and by ANL to have Mr Efstratiou’s

appearance set aside.[1]

[2] Judge Dawson heard those applications. The Judge decided that although there was a contractual agreement between Mr Efstratiou and ANL relating to

EFSTRATIOU V ARCHAEOLOGY NORTH LIMITED HC WANG CIV-2011-483-175 7 September 2011

dispute resolution, it did not require mediation prior to the issue of proceedings. He therefore declined Mr Efstratiou’s application for stay and granted ANL’s application to set aside Mr Efstratiou’s appearance.

[3] Mr Efstratiou now appeals that decision.

Facts

[4] Mr Efstratiou is or has been engaged in a commercial property development in Wanganui. The properties involved are archaeological sites, as that term is defined in s 2 of the Historic Places Act 1993. Mr Efstratiou therefore required an authority from the New Zealand Historic Places Trust (“NZHPT”) to carry out the work involved. NZHPT granted Mr Efstratiou that authority “on standard conditions of archaeological recording, investigation, sampling, analysis, reporting and tangata whenua involvement as appropriate”. Those standard conditions required Mr Efstratiou to engage an archaeologist, approved in writing by NZHPT, to carry out archaeological work in accordance with a Management Plan and Research Strategy that Mr Efstratiou was required to commission and provide to NZHPT. Amongst other things, the Management Plan was required to include mechanisms for dispute resolution.

[5] With the approval of NZHPT, Mr Efstratiou engaged ANL as his archaeologist and, on his behalf, ANL prepared the necessary Management Plan and Research Strategy, and began to undertake the archaeological work involved. The Management Plan sets out the roles and responsibilities of those carrying out the archaeological work required to satisfy the conditions of Mr Efstratiou’s authority. It includes the following provision:

Dispute Resolution

Initially disputes will be resolved by consultation and discussion between the authority holder (or his nominee, M&L (Miller and Lockwood)), Mr Efstratiou’s building contractors (and the Project Archaeologist (ANL)), and as appropriate tangata whenua representatives.

Where attempts to resolve matters independently fail, NZHPT will be asked to resolve or adjudicate any disputes arising between affected parties.

[6] Work began on the site in early February 2010. Shortly after work began, ANL forwarded to Mr Efstratiou, at his request, a contract setting out its terms of engagement, invoicing and payment requirements. That contract was never signed. ANL rendered an invoice to Mr Efstratiou on 1 March 2010 for some $33,000 covering excavation work on the development site for the period 1 February to

26 February 2010. By the end of March ANL was writing to Mr Efstratiou, that invoice not having been paid, saying it would be unable to continue to carry the costs of the work until Mr Efstratiou brought his payments up to date. ANL contacted Mr Efstratiou whilst he was overseas, received assurances of payment from him and an agreement to meet on 14 April, and thus continued work. No payments were received, however, the meeting did not take place and on 19 April ANL ceased working on the site.

[7] On that day ANL emailed NZHPT stating:

This is notification that we are in dispute with Mr Efstratiou over the requirements of the NZHPT Authority No. 2010-121. We will cease the current archaeological work under the Authority from today, 19th April 2010. The archaeological work required under the Authority has not been completed and we will not return to complete it until all outstanding invoices are paid, a contract is in place, other issues are resolved, and we are available to carry out the work.

The dispute between Archaeology North Ltd., and Mr Efstratiou cannot be resolved by negotiation between us. The issues were raised with Mr Efstratiou but his responses have not been at all satisfactory and we are therefore asking the NZHPT to resolve or adjudicate the dispute as prescribed in the NZHPT approved ARCHAEOLOGICAL MANAGEMENT PLAN PROCEDURES FOR NZHPT AUTHORITY NO.

2010/121 RETAIL COMPLEX DEVELOPMENT WANGANUI.

[8] On 20 April Mr Efstratiou proposed a meeting with ANL. Over the next month ANL maintained its position that it was not prepared to meet with Mr Efstratiou unless and until its outstanding invoices had been paid.

[9] On 17 May Ms Baumann, NZHPT’s Senior Legal Adviser, wrote to Mr Efstratiou, noting that NZHPT had been requested by ANL to resolve or adjudicate the matter of unpaid fees and commented that “before we formally commence this mediation role we would like your response to this request by

28 May 2010”. Mr Efstratiou replied on 27 May saying that because of NZHPT’s

other involvements it was not appropriate for it to mediate in respect of any dispute between him and ANL. Mr Efstratiou’s lawyers also commented that Mr Efstratiou was happy for the matter to be mediated if an appropriate mediator could be agreed. On 14 June ANL wrote to NZHPT confirming that ANL wished NZHPT to initiate dispute resolution mediation between Mr Efstratiou and themselves. No agreement was reached that NZHPT would undertake such a mediation. Mr Efstratiou’s lawyers on his behalf, in a letter of 5 July, contended that mediation was not required.

[10] On 20 July ANL’s lawyers wrote to Mr Efstratiou’s lawyers advising:

...

We are instructed to issue proceedings against your client for recovery of the debt without further notice unless, within ten working days of the date of this letter, your client either:

(a) Pays the amounts owed to our client company or makes reasonable arrangements with our client company to do so; or

(b) Agrees to enter into the mediation process with NZ Historic Places Trust at a certain time and date agreed to by the Trust and our client company.

[11] In a letter of 20 July to NZHPT Mr Efstratiou’s lawyers stated his position was that it was not appropriate for NZHPT to assume an adjudication role, because ANL had not met its obligations to consult and discuss the issue with Mr Efstratiou. Correspondence continued to be exchanged between the lawyers, culminating in a letter on 5 August 2010 from ANL’s lawyers to Mr Efstratiou’s lawyers indicating that if Mr Efstratiou had not, by 4.00pm on 11 August, agreed to the proposed mediation process or had not paid the amounts owed, proceedings would be issued.

[12] On 30 August ANL’s lawyers sent a further letter confirming their intention to issue proceedings in the District Court. On 6 September Mr Efstratiou’s lawyers replied that he was now prepared to agree to mediation involving NZHPT.

[13] After proceedings were issued, a meeting did in fact take place between the parties on 9 November. Ms Baumann attended that meeting for NZHPT. In an affidavit she says:

17. The dispute between the parties was then aired with both parties giving their point of view and I ended up acting in the role of a mediator or facilitator between the parties. NZHPT was interested primarily in seeing that the terms of its archaeological authorities were complied with.

18. The terms of a settlement agreement were discussed with the parties and a process for settlement was agreed. This occurred after Mr Taylor and Ms Sutton were given the opportunity to consult with Mr Rowe in private before returning to the meeting to conclude the discussion on the settlement process. The process agreed was set out by me in a document which I circulated to the parties on 11

November 2010.

19. The first step in the process, as a pre-condition to settlement, was for Mr Milham to confirm the amount of the invoices agreed by the defendant and for that amount to be paid into NZHPT account of Horsley Christie by 11 November 3010.

20. The second step was that the defendant would provide construction, concept plans and timeframes and sequencing of the demolition of remaining buildings on the site by 23 November so that the plaintiff could provide NZHPT with an estimate of remaining costs.

21. The NZHPT, at the meeting, effectively agreed to act as an intermediary to decide whether or not the further estimate of costs was appropriate and to approve the payment of invoices or the defendant providing an irrevocable letter of credit to cover ongoing costs.

22. Despite several enquiries from me after 11 November, neither the defendant nor his solicitor advised me of the amount of the invoices they considered payable, nor did I receive notification of the payment of any money into Horsley Christie’s trust account.

23. I am also not aware of any compliance with the second condition, namely the provision of construction concept plans, timeframes and sequencing to allow the plaintiff to give a further estimate.

24. Accordingly, the settlement agreement has not been taken any further.

[14] On 9 December 2010 Mr Efstratiou filed his appearance under protest to jurisdiction.

Case on appeal

[15] As noted, Judge Dawson based his decision on his conclusion that the dispute resolution provision of the Management Plan did constitute a binding arrangement

between ANL and Mr Efstratiou, but that it did not require the parties to refer their dispute to mediation.

[16] On appeal, Mr Efstratiou says that the Judge erred by having regard only to the express terms of the Management Plan. When those terms were interpreted in the context of the relevant factual matrix, and in particular in light of the post contractual conduct of the parties, the proper analysis of the unwritten contract between them was that they had agreed to mediation with an independent mediator before any dispute could be the subject of formal legal proceedings.

[17] ANL’s position was, at first, that the dispute resolution provision in the Management Plan was not a binding contractual arrangement between ANL and Mr Efstratiou at all. In submissions Mr Rowe accepted that that provision was a binding contractual arrangement, but only as regards matters that arose in the course of implementing the necessary archaeological works. It did not apply to contractual disputes between ANL and Mr Efstratiou regarding payment. If it was a binding contractual provision affecting payment disputes, it did not require mediation. All it required of ANL, as ANL had done, was for ANL to refer the matter to NZHPT. Furthermore, if mediation was required then the meeting of 9 November had, in fact, been a mediation. Finally, given Mr Efstratiou’s conduct throughout the dispute, the Court should not in any event exercise any discretion which might arise to stay ANL’s proceedings.

Analysis

[18] As Mr Waugh for Mr Efstratiou realistically accepted, the dispute resolution provision in the Management Plan, whatever its contractual status as between ANL and Mr Efstratiou, cannot by itself be construed as an agreement to mediate. Even less is it the type of agreement to mediate recognised by Master Venning, as he then

was, in Braid Motors Ltd v Scott,[2] where he found that:

... the Court may invoke either the general provision of r477(c) or its inherent jurisdiction to stay proceedings that are otherwise properly before the Court where the parties have agreed on an alternative method of dispute

resolution (ie have agreed to go to mediation) and that agreement is sufficiently certain ... if they [the parties] have contractually bound themselves to attend mediation and the process is sufficiently certain either from the express terms of the agreement or otherwise from terms that may properly be implied, then the parties will be kept to the bargain they have made. To allow otherwise would be to permit an abuse of process of the Court.

[19] Not only is the dispute resolution provision not an agreement to mediate, it is simply devoid of any provisions as to process of the type referred to by Master Venning.

[20] For Mr Efstratiou, it was Mr Waugh’s submission that it was the combination of that provision, together with the actions of Mr Efstratiou and ANL, that provided evidence of an agreement to mediate with an independent mediator. That proposition may either be understood as one relating to the interpretation of the dispute resolution provision itself, or one which argues that the conduct of the parties evidences such an agreement. Mr Waugh relied in particular on the significance of the actions of ANL and Mr Efstratiou once the dispute arose. He pointed to ANL’s first letter to NZHPT and, thereafter, ANL’s wish for NZHPT to act as mediator.

[21] Putting aside the difficult question of when post-contractual conduct can be relied on to interpret the terms of a contract, it is well accepted that the terms of a contract can sometimes be discerned from the conduct of parties, particularly where

– as here – there is no formal written agreement which they have entered into between themselves. But, in my view, all ANL did was invite NZHPT to “resolve or adjudicate”, in terms of the dispute resolution provision in the Management Plan. That does not, in my view, constitute evidence of a pre-existing contract requiring mediation before an independent mediator. I accept that, once Ms Baumann responded in terms of a possible mediation, ANL was willing to engage in that process. In my view, however, whilst that evidence was a desire on its part to resolve its dispute with Mr Efstratiou, it does not evidence a pre-existing contract which provided that mediation with an independent mediator was a necessary precursor to issuing legal proceedings.

[22] On that basis, and for very similar reasons to those articulated by Judge

Dawson, I dismiss this appeal.

[23] In terms of the additional argument I heard I also conclude that, if mediation was required, that is what occurred at the meeting of 9 November. Ms Baumann’s affidavit, and the draft agreement she circulated after that meeting, in my mind provides sufficient evidence for that conclusion to be readily apparent. As Mr Rowe submitted, if the dispute resolution provision in the Management Plan did require mediation, it was mediation with NZHPT. There is, in my view, simply no basis upon which Mr Efstratiou can point to any agreement that mediation would occur with an independent mediator.

[24] In light of those conclusions, I do not need to consider what my attitude would have been to the exercise of the Court’s discretion if I had found otherwise. I only comment that I think there was considerable strength to Mr Rowe’s submission that Mr Efstratiou’s conduct would have been a factor counting against the Court now staying these proceedings.

[25] Accordingly this appeal is dismissed and these proceedings should now be timetabled in the District Court.

Costs

[26] The question of costs was not discussed. However, I see no reason why costs should not follow the outcome in the normal course.

Clifford J

Solicitors:

Horsley Christie, P O Box 655, Wanganui for the appellant ([e-mail]) Armstrong Barton, P O Box 441, Wanganui for the respondent ([e-mail])

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[1] _{District Court Rules, rr 2.12.6 and 3.38. High Court Rules, r 5.49.}

[2] Braid Motors Ltd v Scott (2001) 15 PRNZ 508 (HC).